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The stock was in focus among investors at a meeting about potential index changes for financial stocks, analysts led by Craig Siegenthaler wrote in a note. Robinhood's stock has surged as both equity and cryptocurrency markets rally, and on Tuesday, it closed at its first record high in nearly four years.
The shares were 0.3% higher on Wednesday afternoon after swinging between gains and losses.
Companies that win addition to the US benchmark can see a big stock boost. Crypto-exchange operator Coinbase Global Inc. notched a 34% gain in the week its addition was announced in May, even as investors digested news of a hack and regulatory scrutiny. Passive mutual funds and exchange-traded funds that track the S&P 500 are required to reshuffle their holdings to match the gauge, and the Bank of America analysts expect 'significant buying activity from passive funds' if Robinhood joins the index.
'The S&P 500 and Russell 1000 are the two major benchmarks for our large cap long-only clients,' the analysts wrote. 'When companies are added, we experience significantly higher interest from long-only portfolio managers which are essentially now forced to cover them and make a call.'
Ares Management Corp., Carvana Co. and AppLovin Corp. are among other companies that the analysts flagged as possible additions, while Interactive Brokers Group Inc. could migrate from the S&P 400. Brookfield Asset Management Ltd. is likely to be added to the S&P Total Market Index in June after it won entry to the Russell 1000, with addition to the S&P 500 coming later in the year, they wrote.
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