MW An S&P 500 reshuffle is coming. These are the top candidates to join the index.

By Emily Bary

Coinbase, AppLovin and Block are among companies that meet the criteria for S&P 500 inclusion

Get ready for the next shakeup of the S&P 500, which could usher in one of several hot financial-technology companies - or perhaps AppLovin Corp., which saw runaway stock performance last year.

S&P Dow Jones Indices makes quarterly changes to the S&P 500 SPX, and the next one is due to take place after the close on the third Friday of March. Typically S&P Dow Jones Indices announces the changes two weeks before they take effect, meaning the next update would be due after today's close.

While several candidates meet the criteria for inclusion, recent quarterly reshuffles have brought the addition of two or three new components at a time and, correspondingly, two or three exits. The committee sometimes makes changes at unscheduled times, such as when a component company gets acquired.

The S&P 500 isn't a pure compilation of the largest 500 U.S. companies by valuation, though having a market capitalization of at least $20.5 billion is one of the requirements for entry. The index committee has latitude in making selections among the companies that meet its criteria, and the committee may consider factors like sector diversification in choosing new components.

AppLovin (APP) is the largest company by market cap that meets the criteria and isn't yet in the index. But that wasn't enough to earn the app-monetization company entry last time around, and its stock fell hard in the wake of the snub.

Investors sometimes speculate about which companies will be the next members of the S&P 500, since there are benefits to being in the index. For instance, there are trillions of dollars of assets in the index funds that track the S&P 500, and those funds have to buy up shares of the new entrants. This can give an immediate boost to the shares of the new entrants, which is why some investors try to guess beforehand who will make the cut.

That may have been the case ahead of the last rebalance, when AppLovin's stock rose 22% in the six sessions prior to the S&P Dow Jones Indices announcement and went on to drop nearly 15% in the session immediately after other companies were announced to be the new arrivals instead. The backdrop is certainly different this time around, as AppLovin shares were down 23% over the prior three sessions and off 49% since the close of trading on Feb. 14.

Below is a table showing the 15 largest companies that meet various criteria for S&P 500 inclusion. This screen, conducted by Dow Jones Market Data and using FactSet data, looks at U.S.-domiciled companies with market caps of at least $20.5 billion that aren't already in the S&P 500.

As per index requirements, they also have had positive GAAP earnings for the most recent quarter, and the sum of the past four quarters of GAAP earnings were positive as well. The list excludes limited partnerships. While these are just the largest 15, there were 28 companies that met the requirements.

   Company                           Market capitalization 
   AppLovin Corp. (                  $88.2 billion 
   Interactive Brokers Group Inc. (  $80.2 billion 
   DoorDash Inc. (                   $75.7 billion 
   Southern Copper Corp. (           $72.3 billion 
   Coinbase Global Inc. (            $54.4 billion 
   Ares Management Corp. (           $48.4 billion 
   Cheniere Energy Inc. (            $48.2 billion 
   Carvana Co. (                     $39.8 billion 
   Robinhood Markets Inc. (          $39.7 billion 
   Veeva Systems Inc. (              $38.3 billion 
   Datadog Inc. (                    $38.2 billion 
   Block Inc. (                      $37.0 billion 
   HubSpot Inc. (                    $34.0 billion 
   Ferguson Enterprises Inc. (       $33.4 billion 
   Vertiv Holdings Co. (             $31.4 billion 

A number of the big companies are financially oriented, including Interactive Brokers Group Inc. $(IBKR)$, Coinbase Global Inc. $(COIN)$, Robinhood Markets Inc. (HOOD) and Block Inc. $(XYZ)$

Coinbase is no stranger to the list of contenders, having gotten passed over before. But MicroStrategy Inc. $(MSTR)$, a software company on paper and bitcoin (BTCUSD) holding company in practice, recently met the criteria for Nasdaq-100 NDX inclusion, making its way into that index in December. Will Coinbase soon get its S&P 500 embrace?

"The next step [for Coinbase] is S&P 500 inclusion, which could occur March 7 under our best-case scenario," Oppenheimer analyst Owen Lau wrote last month.

Meanwhile, Bernstein analyst Harshita Rawat, who flagged Block as a candidate ahead of the last reshuffle, noted in a February report that an S&P 500 nod is still something investors should keep in the back of their minds.

DoorDash ranks high from a market-cap perspective, and it's newly eligible thanks to big improvements on the bottom line. While the company booked losses in the first two quarters of 2024, its profits across the second half of 2024 more than offset them, and the food-delivery company sported positive net income when looking at the cumulative amount over the last four reported quarters.

Within industrials, Vertiv Holdings Co. spent last year as a hot play on the power needs of data centers, with its stock rising 137% over that span. But the shares are down 28% this year as the artificial-intelligence trade generally has lost some steam. Still, the company meets the threshold for S&P 500 inclusion.

Carvana Co. (CVNA) also meets the eligibility criteria again this quarter, further showcasing the used-car retailer's ability to recover from the brink of bankruptcy in 2022.

-Emily Bary

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March 07, 2025 08:27 ET (13:27 GMT)

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