Robinhood (HOOD) shares tumbled 5.18% in pre-market trading on Monday, following the disappointment of being passed over for inclusion in the S&P 500 index. This decline comes after the stock had experienced a significant rise of more than 10% in the previous week, likely fueled by speculation about its potential addition to the prestigious index.

The S&P Dow Jones Indices made no changes to the S&P 500 index on Friday, contrary to analysts' expectations. Robinhood, along with AppLovin, had been considered among the most likely candidates for addition to the index. This unexpected exclusion appears to have triggered a sell-off among investors who had positioned themselves in anticipation of the stock's inclusion.

The negative reaction highlights the importance investors place on inclusion in major stock indices, which can lead to increased demand from index funds and enhanced visibility. As Robinhood continues to navigate its path in the competitive fintech landscape, this setback may prompt the company to focus on improving its fundamentals to strengthen its case for future index inclusion consideration.