People wait in line for T-shirts at a pop-up kiosk for the online brokerage Robinhood along Wall Street after the company went public with an initial public offering earlier in the day on July 29, 2021 in New York City.
Spencer Platt | Getty Images
Robinhood shares sold off on Monday as the online brokerage was snubbed in the latest quarterly rebalance of the S&P 500 after months of speculation that it could earn a coveted spot in the benchmark.
Shares of Robinhood dropped more than 5% during Monday’s session. The stock rallied 3.3% on Friday to bring last week’s gain to more than 13% before S&P Dow Jones Indices said after the bell that the S&P 500 would remain unchanged.
Just last week, Bank of America called Robinhood a top candidate to join the S&P 500 during the big reshuffling in June. The S&P 500 rebalance, which typically comes on the third Friday of the last month in a quarter, is usually an impactful event as it can spark billions of dollars of trading and spur passive funds to snap up its shares. Companies being added to the index can generally expect funds like that to buy huge amounts of their shares in the coming weeks.
Crypto exchange Coinbase was the latest beneficiary of such an inclusion. The stock skyrocketed 24% in the next trading session following the announcement last month.
Still, Robinhood has had a major comeback this year so far with shares up nearly 90%. The online brokerage’s shares hit a fresh record high last week amid a rebound in both stocks and crypto. The company had fallen out of favor after the GameStop trading mania of 2021 fizzled and the collapse of FTX triggered a sell-off in digital assets.