What happened?
Robinhood, the popular retail brokerage, saw its shares rise by 7% after it was announced that the company would be joining the S&P 500 index. The stock closed just above $101 but soared past $108 in extended trading following the announcement. Despite its $95B valuation and $70B in Bitcoin holdings, Strategy, previously known as MicroStrategy, was notably left out of the reshuffle.
Who does this affect?
This affects the shareholders and potential investors of Robinhood, as the inclusion in the S&P 500 often leads to an increased demand for a company’s stock. The news is also significant for Strategy, a Bitcoin treasury firm, whose shares fell 3% in after-hours trading following the announcement of its exclusion from the index. Furthermore, this development impacts the wider world of crypto-native companies and the traditional financial markets they interact with.
Why does this matter?
The market impact of this event is significant, as being included in the S&P 500 can boost a company’s visibility, reputation, and attractiveness to investors. For Robinhood, this is an added boost on top of strong Q2 earnings, with $989M in revenue and $386M in profit. However, the exclusion of Strategy, despite its substantial valuation and Bitcoin holdings, indicates that not all crypto-related companies are yet being embraced by traditional financial indices.