Is another S&P 500 change on the horizon? Here's what to know.

MW Is another S&P 500 change on the horizon? Here's what to know.

By Emily Bary

The Paramount-Skydance deal could open the door for a membership change, but Robinhood and AppLovin may once again miss out on inclusion

Paramount Global's pending sale to Skydance Media could set the stage for another S&P 500 membership change - but there's no guarantee that will happen.

With a $9.5 billion market capitalization at recent check, Paramount (PARA) sits well below the $22.7 billion threshold that's required for new companies to make it into the S&P 500 index SPX. Since Paramount is already in the S&P 500, it won't get bumped just for being below that level, but the impending closure of the Skydance deal could give the S&P 500 index committee an opportunity to make a change, according to Melissa Roberts, an analyst with Stephens.

The deal is set to close on Aug. 7, at which point the combined company will start trading under the ticker "PSKY," with Skydance owning about 70% of the equity. The S&P 500 looks at not only overall market cap, but also float-adjusted market cap, and in the case of the new company, the large stake owned by Skydance would be excluded from the float, Roberts explained.

S&P Dow Jones Indices has made a few changes to the S&P 500 in recent weeks following acquisitions of member components, but that was to replace companies whose shares would no longer trade because the businesses were being acquired by other S&P 500 members. For example, when Hewlett-Packard Enterprise $(HPE)$ closed its deal for Juniper Networks earlier this month, that briefly brought the number of companies in the S&P 500 down to 499 until the index committee named a replacement.

The Paramount case is different because the new "PSKY" shares will start trading next week in place of the current Paramount shares, and the number of S&P 500 components will stay the same. Still, Roberts thinks the sale might be a chance for S&P Dow Jones Indices to move "PSKY" to the S&P MidCap 400 MID, which would be more fitting for its market cap.

Investors have been paying close attention lately to S&P 500 changes, because there are some flashy names waiting to be added. AppLovin Corp. (APP) and Robinhood Markets Inc. (HOOD) both easily clear the market-cap hurdle and meet the other requirements around profitability, domicile and more.

Read: Robinhood misses out on the S&P 500 yet again, with Trade Desk to soon join the index

But if the index committee opts to drop "PSKY" down to the midcap index, the least disruptive option would be to elevate an S&P MidCap 400 member to the S&P 500, Roberts told MarketWatch. That would mean that instead of AppLovin and Robinhood, which aren't in the midcap index, names like Interactive Brokers Group Inc. (IBKR), Emcor Group Inc. $(EME.UK)$ or Comfort Systems USA Inc. (FIX) are more probable candidates.

The financial sector is underrepresented in the S&P 500 relative to its weight in the broader market, according to Roberts, but the index committee swapped in Block Inc. $(XYZ)$ earlier this month and Coinbase Global Inc. (COIN) earlier this year, so the committee members might not want to bring in another new entrant from the sector by adding Interactive Brokers now.

The communications sector is also underrepresented in the index, so if S&P Dow Jones Indices wanted to go with a fresh entrant instead of promoting a midcap company, the committee might consider Reddit Inc. (RDDT) or Pinterest Inc. (PINS), Roberts said. Those two companies are also much smaller than AppLovin and Robinhood, which means they'd be less "disruptive" replacements for Paramount and its lower market cap.

Then again, it's possible the committee will do nothing at all. Paramount is a company that people are interested in, Roberts noted, so S&P Dow Jones Indices might opt to leave it in the index and see how it does. The market-cap and float-adjusted market-cap requirements are just for newcomers to the index, and while the idea is that the S&P 500 is an index for large companies, members don't swiftly get the boot just for being smaller than the current thresholds.

-Emily Bary

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July 30, 2025 14:25 ET (18:25 GMT)

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