MW DoorDash's stock pops as it gets the S&P 500 nod over these more volatile names

By Emily Bary

DoorDash is one of four companies that will soon join the S&P 500. AppLovin and Coinbase didn't make the cut.

The committee responsible for choosing S&P 500 components has flexibility in deciding new entrants - and this time around, it seems to be opting for relative stability over volatility.

Four new companies will be joining the index later this month, S&P Dow Jones Indices said Friday, with DoorDash Inc. $(DASH)$ being the largest of the forthcoming entrants. Joining DoorDash in the S&P 500 SPX will be TKO Group Holdings Inc. $(TKO.UK)$, Williams-Sonoma Inc. (WSM) and Expand Energy Corp. $(EXE)$

The S&P 500 is home to some of the largest U.S. companies by market capitalization, but it's not simply a rundown of the biggest 500. For one, companies must meet criteria around profitability and float, among other things. And even when it comes to market cap, there's latitude in deciding who makes the cut, as the committee may look at things like sector diversification and volatility.

So while DoorDash is one of the bigger companies that met the criteria for inclusion this time around, it wasn't quite the biggest: AppLovin Corp. (APP) and Interactive Brokers Group Inc. $(IBKR)$ are both larger, yet didn't get chosen.

This time, the index committee didn't opt to make any changes to the technology components of the S&P 500. Online food-delivery company DoorDash, while tech-adjacent, is considered a consumer-discretionary company. It may have been seen as a more stable play than app-monetization company AppLovin, which was the subject of two short-seller reports late last month.

AppLovin's stock is also coming off a 700%-plus run last year, though it's down to start this year. Shares of DoorDash have seen sizable but less dramatic gains, having risen 70% last year and a bit more so far in 2025. The company is newly eligible for entry as it recently met the profitability criteria.

While smaller than DoorDash, Coinbase Global Inc. $(COIN)$ is another name that was much discussed as a possible entrant, but it also didn't get the call this time. Coinbase is a destination for cryptocurrency trading, but the crypto market is beholden to a rapidly evolving regulatory landscape. Its stock has risen more than 500% since the end of 2022.

One issue for the S&P 500 index committee is that the flashiest candidates for entry have often seen big stock rallies, which is why they stand out, in terms of market cap, for their lack of inclusion in the index. But there could be volatility risk among stocks that rose so much so fast.

That's been seen in the past year with Super Micro Computer Inc. $(SMCI)$, which was tapped to join the S&P 500 during the March 2024 reshuffle. Super Micro shares are off by more than half since the time of that announcement, weighed down by concerns about the company's financial controls and as well as competitive pressures in the red-hot server market. Super Micro's stock is also prone to big swings and has a habit of landing among the index's biggest daily movers.

Bernstein analysts noted ahead of the December shakeup that while new entrants meaningfully outperform the S&P 500 in the year before they're added to the index, they see only mild outperformance in the five days following the announcement, "with relative returns continuing to trail off postannouncement."

Stocks tend to get immediate bumps once they're named as future S&P 500 entrants because there are trillions of dollars worth of assets invested in funds that track the S&P 500. Those index funds must buy up shares of the new arrivals.

Indeed, those immediate boosts were on display in Friday's extended session, with DoorDash's stock up 6%. Shares of TKO - which houses World Wrestling Entertainment (WWE) and the Ultimate Fighting Championship (UFC) - were up 2.4%, while shares of Williams-Sonoma were up 1.6% and Expand Energy's stock was up 2.3%.

Meanwhile, shares of the snubbed companies were losing ground. AppLovin's stock was down about 4.3% in Friday's extended session, while Interactive Brokers shares were down 2.6%. Coinbase's stock was off 2.1%.

The four new entrants are due to replace BorgWarner Inc. $(BWA)$, Teleflex Inc. $(TFX)$, Celanese Corp. $(CE)$ and FMC Corp. (FMC) in the benchmark index before the start of trading on March 24.

-Emily Bary

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March 07, 2025 19:20 ET (00:20 GMT)

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