Will Robinhood or AppLovin fill the open spot in the S&P 500 index after Chevron-Hess shakeup?

S&P 500 index: A high-stakes guessing game is unfolding on Wall Street, and Robinhood Markets and AppLovin Corp, both NASDAQ-listed stocks, are at the center of it, as per a report.

Robinhood and AppLovin in Spotlight as S&P 500 Eyes New Addition

After Chevron completed its acquisition of Hess on Friday, a rare opening has emerged in the prestigious S&P 500 index, and now, all eyes are on which company will fill the spot, as per a Barron's report. Based on market speculations, both Robinhood and AppLovin are strong contenders, as reported by Barron's.

There have been speculations that both these companies might join the S&P 500 as they are the biggest US companies based on market capitalisation that are not currently in the benchmark index, according to the report.


AppLovin, the mobile technology firm based in California, is valued at $123 billion, while Robinhood, the popular trading platform based in California, is worth around $93 billion, as reported by Barron's. Despite their massive market capitalisations, neither company is currently in the S&P 500, according to the report.

Both stocks jumped in early trading on Friday, with Robinhood rising more than 4% and AppLovin gaining over 3% as investors appear to be betting that one of them will be tapped to join the benchmark index, as per the Barron's report.

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What’s Driving the Speculation?

However, the speculation isn’t just random. It comes as the S&P Dow Jones Indices, which manages the S&P 500 index, recently added The Trade Desk, which operates an online ad platform, it will join the index on Friday, replacing Ansys following its acquisition by Synopsys, according to the report.

The S&P Dow Jones Indices had announced the Trade Desk addition on July 14, which was the same day Synopsys revealed it would close the Ansys deal on July 17, as reported by Barron's.

According to the report, the S&P Dow Jones Indices' announcement of a replacement for Hess, which was a former constituent in the S&P 500, could come late Friday.

S&P Dow Jones Indices has a major say in which companies it wants to add to the S&P 500, but it generally does not mention the reasons why particular ones are added, according to the Barron's report. However, it has a pattern of usually adding the largest companies that are not in the index, as per the report.

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Are There Other Candidates?

However, apart from Robinhood and AppLovin, other potential candidates that could be added to the index include Carvana, Ares Management, and Cheniere Energy, as even these three companies are among the largest companies that are not in the S&P 500 index, according to the Barron's report.

Cheniere might have a higher chance compared to Carvana and Ares Management because it is an energy company and has a similar market value to Hess at about $50 billion, as per the report. Cheniere operates a large liquefied natural gas facility and is a big exporter of the fuel, the stock increased more than 5% in early trading on Friday, according to the report.

How Does S&P Make These Decisions?

As per Barron's analysis, S&P Dow Jones Indices sometimes replaces a company with one in the same industry, and also wrote that "technology and financials are underrepresented in the index relative to their weighing in the overall stock market, which could mean a tech or financial company will be added."

FAQs

What’s going on with Robinhood and AppLovin?
They might be added to the S&P 500, and investors are getting excited about the possibility.

Why are people talking about the S&P 500 spot now?
Chevron just acquired Hess, creating an open slot in the benchmark index.