Robinhood Markets (HOOD) saw its stock plummet 6.62% in pre-market trading on Monday, following the disappointing news that the company was not included in the S&P 500 index as many analysts had anticipated. This sharp decline comes after the stock had rallied more than 10% last week on speculation of its potential addition to the prestigious index.

The S&P Dow Jones Indices announced on Friday that it would not be making any changes to the components of the benchmark S&P 500 as part of its quarterly rebalancing. This decision caught many investors off guard, as Robinhood was widely considered a prime candidate for inclusion. Bank of America analysts had even touted the company as the "primary candidate" to join the index in a note dated June 3.

The exclusion from the S&P 500 is seen as a significant setback for Robinhood, as inclusion in the index often leads to increased demand for a company's shares due to index fund buying. The stock's pre-market plunge reflects a quick reversal of investor sentiment, highlighting the volatility often associated with stocks subject to speculative index inclusion.

Despite this setback, it's worth noting that Robinhood's shares have more than doubled in value year-to-date, trading well above its 2021 IPO price of $38. The company had a market valuation of $66.1 billion as of Friday's close, meeting the minimum market capitalization requirement of $20.5 billion for S&P 500 inclusion. However, index inclusion also depends on other criteria, including profitability standards, which the S&P index committee evaluates.