DoorDash’s Stock Surges Following S&P 500 Inclusion, Stability Outweighs Volatility

DoorDash Makes the Cut

DoorDash Inc. (DASH), the online food delivery giant, is set to join the prestigious S&P 500 index, marking a significant achievement for the company as it becomes one of four new entrants in the benchmark index later this month. Along with DoorDash, TKO Group Holdings Inc. (TKO), Williams-Sonoma Inc. (WSM), and Expand Energy Corp. (EXE) will also be part of this latest reshuffle. This decision, announced by S&P Dow Jones Indices, reflects a strategic choice for relative stability over the volatility often associated with other candidates.

The S&P 500’s Selection Criteria

The S&P 500 is not merely a ranking of the largest U.S. companies by market capitalization; the selection committee employs specific criteria regarding profitability, float, and market cap, among other factors. This comprehensive assessment allows them the flexibility to favor companies that may not be the largest but provide a more stable investment environment. Notably, DoorDash is one of the more prominent candidates meeting these criteria, even though larger entities such as AppLovin Corp. (APP) and Interactive Brokers Group Inc. (IBKR) did not make the final list.

Stability Over Volatility

DoorDash is classified within the consumer discretionary sector, which is perceived as a more stable investment compared to the tech-centric firms that have constantly topped the market lists. The decision to bypass tech-heavy candidates like AppLovin, which has recently faced scrutiny due to short-seller reports, indicates a preference for companies with relatively lower volatility. While AppLovin experienced a staggering 700% stock surge last year, its recent downturn raised concerns about its sustainability, leading to its exclusion from the index.

Market Behavior Post-Inclusion

On the other hand, DoorDash’s stock has had a more measured journey, rising by about 70% last year and maintaining a solid upward trajectory in early 2025. Its recent achievement in meeting the profitability prerequisite for the S&P 500 has positioned it favorably as a new entry. Despite being smaller in size, Coinbase Global Inc. (COIN)—another company frequently discussed for inclusion—also missed the cut. The cryptocurrency platform has been grappling with regulatory uncertainty, a factor that contributes to its higher volatility in comparison to DoorDash.

Concerns Surrounding Volatile Entrants

The S&P committee’s hesitation to add more volatile stocks is well-founded, especially considering the past performances of recently included companies like Super Micro Computer Inc. (SMCI). Following its inclusion, Super Micro’s stock plummeted by over 50%, raising alarms about its financial practices and competitive position in the server market. Analysts have noted that while stocks typically see an immediate boost upon being named as future S&P 500 entrants, this enthusiasm may be tempered shortly thereafter. For instance, a report from Bernstein indicated that newly added stocks have shown substantial gains before their inclusion but only mild outperformance in the days following the announcement.

Immediate Market Reactions

In the wake of this announcement, DoorDash’s stock witnessed a commendable 6% increase in extended trading. Other new entrants also saw positive movements, with TKO rising by 2.4%, Williams-Sonoma by 1.6%, and Expand Energy by 2.3%. Conversely, the companies left out of this round faced declines, with AppLovin’s shares down by 4.3%, Interactive Brokers slipping by 2.6%, and Coinbase dropping by 2.1% in after-hours trading.

What Lies Ahead

The integration of these four new companies is scheduled to take place before the commencement of trading on March 24, replacing BorgWarner Inc. (BWA), Teleflex Inc. (TFX), Celanese Corp. (CE), and FMC Corp. (FMC) in the S&P 500. As this transition unfolds, investors will be keenly watching how each of these companies performs within this elite index, particularly in comparison to their less volatile peers.

Conclusion

DoorDash’s entry into the S&P 500 serves as a potent reminder of the market’s growing preference for stability in an era defined by volatility. This decision highlights the importance of profitability and prudent risk assessment by the index committee, setting the stage for what could be an exciting chapter for both DoorDash and its fellow entrants.

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DoorDash’s Stock Jumps 6% After S&P 500 Inclusion: A Shift Toward Stability Over Volatility