In a surprising market development, trading platform Robinhood (HOOD) has been selected for inclusion in the S&P 500 index over cryptocurrency-focused Strategy Inc. (MSTR). The decision represents a significant setback for Strategy, which had met all the technical requirements for index inclusion, and triggered immediate after-hours share price movements.
Market participants expressed widespread surprise at the committee’s announcement, which saw Robinhood shares advance by 7% while Strategy equity declined approximately 3%, completely erasing the day’s earlier gains. The rejection comes despite Strategy’s impressive second-quarter 2025 financial performance, which included a record $10 billion profit and a market capitalization exceeding $97 billion—far above the index’s minimum $22.7 billion threshold.
Committee Exercises Discretionary Judgment
Although Strategy satisfied all formal financial criteria, including GAAP-based profitability requirements, the S&P 500 committee utilized its discretionary authority to exclude the company. Market analysts suggest that beyond quantitative metrics, the committee likely considered additional factors such as volatility concerns and business model sustainability.
Should investors sell immediately? Or is it worth buying Strategy?
Bloomberg ETF analyst Eric Balchunas noted his surprise at the outcome, indicating that Strategy’s substantial Bitcoin exposure potentially influenced the decision. The company’s treasury strategy, which heavily incorporates cryptocurrency holdings, appears to have been a determining factor in the committee’s assessment.
Substantial Financial Implications
The exclusion carries significant financial consequences beyond symbolic value. Inclusion in the benchmark index would have triggered automatic buying from passive funds that track the S&P 500, generating substantial investment inflows. Strategy will now forego these potential billion-dollar investments, at least temporarily.
Despite this setback, Strategy remains eligible for future index consideration. The next rebalancing is scheduled for December 2025, providing the company another opportunity for inclusion. Until then, investment in Strategy shares will require active decisions from investors rather than benefiting from passive index-driven demand.
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