MW S&P 500 changes are due out soon - and this could be a big update

By Emily Bary

AppLovin, Reddit and Robinhood are candidates to join the index at the quarterly rebalance. And Strategy, formerly known as MicroStrategy is newly eligible for inclusion.

AppLovin is the largest company eligible to be added to the S&P 500.

The index committee in charge of the S&P 500 is expected to announce a round of changes after Friday's close, and there could be some meaningful updates this time around.

S&P Dow Jones Indices usually announces a scheduled reshuffle of S&P 500 SPX members on the first Friday of the last month of the quarter, and the changes go into effect two weeks after that. The qualifier "usually" is important here because last quarter, investors who were highly anticipating updates went away empty-handed, as the committee decided against swapping in new members at its usual quarterly cadence.

See more: The S&P 500 isn't changing for now. Did this company get snubbed?

There's always the chance that happens again, but the third-quarter reshuffle "is typically the largest rebalance because it includes annual constituent float-factor changes," noted Stephens managing director Melissa Roberts. What that means is that every year with the September update, S&P Dow Jones Indices adjusts to account for changing share counts. The committee removes some shareholders, like private equity and insiders, from the counts, which are used to determine index weightings.

S&P Dow Jones Indices "historically took advantage of the liquidity opportunity to make more discretionary changes than in other quarters," Roberts wrote recently.

The S&P 500 encompasses some of the largest companies in the U.S., but the committee has latitude to decide which U.S.-domiciled businesses make the cut - provided they meet various criteria, like a market capitalization of at least $22.7 billion, a float market capitalization of at least $10.25 billion and "financial viability." To show financial viability, companies must have been profitable on a GAAP basis in the most recent quarter, and when looking at the sum of the past four quarters.

While companies need to meet those criteria to get in, they don't get booted automatically for falling below the requisite market-cap levels, for example, which is why there are usually only a handful of new changes with each quarterly rebalance.

Some investors like to speculate ahead of time on who will get the nod, given the potential for a short-term bump in the stock price for companies that end up getting chosen. Being in the S&P 500 comes with various perks, like forced attention from fund managers that track the index and the metaphorical badge of legitimacy that comes from being in an exclusive club.

Among the candidates for entry this time around: AppLovin Corp. (APP), Reddit Inc. (RDDT), Pinterest Inc. (PINS), Robinhood Markets Inc. (HOOD), Sofi Technologies Inc. $(SOFI)$ and Carvana Co. (CVNA)

With a $164 billion market capitalization at recent check, AppLovin is the largest company to be eligible for inclusion. Strategy Inc. (MSTR), formerly known as MicroStrategy, ranks second by market cap among the candidates and is newly eligible, according to Roberts, as the software company and noted bitcoin (BTCUSD) holder recently cleared the "financial viability" hurdle.

Other newly eligible names include Astera Labs Inc. (ALAB), a semiconductor company that has crossed the market-cap threshold, and Pure Storage Inc. (PSTG), which has seen its stock rise 42% in the last month alone and could be considered for a promotion from the S&P MidCap 400 MID by virtue of that appreciation in its value.

Read: This under-the-radar storage stock is cashing in on Meta's AI spending

Some thought Robinhood would make the cut at the last expected rebalance, but the committee didn't make changes at that time. Nor did it choose Robinhood when it made various unscheduled swaps to account for recently closed mergers involving components. Robinhood is the third-largest eligible company not to have a place yet in the index.

But Roberts said she wonders if a financial-technology addition is less likely this time around, since Interactive Brokers Group Inc. $(IBKR)$, Block Inc. $(XYZ)$ and Coinbase Global Inc. (COIN) all recently got nods.

Don't miss: Robinhood misses out on yet another S&P 500 rebalance. This fintech company will soon join instead.

-Emily Bary

This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

September 05, 2025 14:57 ET (18:57 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.