What happened
Rivian Automotive (RIVN 6.10%) was booted from a stock index just before last weekend, an event that probably limited its upside on Monday. The electric vehicle (EV) maker's share price inched up only 0.9% today. That matched the bump of the S&P 500 index but fell short of the EV sector's pace car, Tesla, which motored more than 2% ahead.
So what
Nasdaq announced after market hours on Friday that it was replacing Rivian in the Nasdaq-100 index, effective prior to market open on Tuesday. Its slot will be taken by specialty semiconductor company ON Semiconductor.
As its name suggests, the Nasdaq-100 is made up of 100 Nasdaq-listed companies, all of them non-financial. While not as much of a bellwether listing as the S&P 500 or other top-level stock indexes, it does carry a degree of prominence and influence.
Unlike S&P Dow Jones Indices, the company that manages its near-namesake indexes, Nasdaq does not typically provide the reasoning behind its modifications. It kept to this habit with the Rivian/ON Semiconductor announcement.
The EV maker has not yet officially commented on its axing from the Nasdaq-100.
Now what
No investor is overjoyed when a holding get dropped from an index. Inclusion on such a listing confers legitimacy and keeps the company on the radar of the many index funds active on the market.
Yet because the Nasdaq-100 is not often considered a top-tier index, it's doubtful the move will be too damaging in the mid to long term for Rivian. Investors are far more concerned about the company's production and its ability to sell vehicles than its participation in a stock index.
