Datadog (DDOG) will be the next company to be added to the broader S&P 500 Index following Juniper Network’s acquisition by Hewlett-Packard Enterprises (HPE).
The announcement from index compiler S&P Dow Jones regarding the inclusion, which is said to take effect before the market opens on July 9, sent Datadog stock up by about 15% on Thursday.
The rally was also partly aided by the broader market strength seen in the session following a stronger-than-expected June non-farm payrolls report.
Against the backdrop, Stocktwits asked its users, “Which stock should be the next addition to the S&P 500?” The ongoing poll has received responses from 4,300 users so far.
The overwhelming preference of the retail community was Robinhood Markets, Inc. (HOOD) (61%). The retail trading app offers commission-free trading for its users and allows trading in a diverse range of financial instruments, including stocks, exchange-traded funds (ETFs), and cryptocurrencies.
Menlo Park, California-based Robinhood has seen its share surge by over 150% so far this year, benefiting from new features, strong operational metrics, and the prospects of inorganic growth.
Robinhood stock breached the $100 psychological barrier on an intraday basis for the first time last Wednesday but has since then come off this mark.
The next favorite among Stocktwits users was the community-based social media platform Reddit, Inc. (RDDT) (16%), followed by AppLovin Corp. (APP) (13%) and Tempe. Arizona-based used car retailer Carvana, Inc. (CVNA) (10%).
Reddit stock has had a volatile year, trading in the $79.75-$230.41 range. The stock is down about 4%, underperforming the broader market.
AppLovin stock is up about 6% despite the App marketing platform coming under attack from short sellers for misrepresenting key operational metrics.
Meanwhile, Carvana stock, although considered a speculative bet, has added over 70% this year. The positive sentiment can be traced back to a solid first-quarter report it released in early May.
The S&P 500 Index, a market-cap-weighted index, is considered the best single measure of large-cap U.S. equities, comprising 500 leading companies that collectively cover approximately 80% of the total market capitalization. The eligibility criteria for addition to the index include a market cap of $22.7 billion or more.
Index inclusion typically generates positive sentiment toward the stock, as investors view it as a validation of the company’s credentials as a stable and growing entity. Also, funds tracking a particular index would load up on the stock to align their portfolio weighting with that of the index.
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