A close-up of the Workday logo at its headquarters in Pleasanton, California.
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Work day shares fell 9% in extended trading Friday after S&P Dow Jones Indices said the cloud software vendor would be added to the S&P 500.
The company, which has a market capitalization of about $70 billion, will take over Amentum Holdings share price in the index effective on Dec. 23, according to the statement. The S&P 500 has added several other outstanding tech stocks this year, including Dell again Palantir.
Workday, founded in 2005 and based in Pleasanton, California, went public on the New York Stock Exchange in 2012. Five years later, the company switched to its Nasdaq listing.
In November, Workday reported $193 million in revenue on $2.16 billion in quarterly revenue, which was up 16% from a year ago. The company has sought 14% revenue growth in fiscal 2026. Ahead of fiscal 2022, Workday, which sells human resources and financial software, was reporting a net loss.
To qualify for inclusion in the US’s leading index, companies need to show profitability in the most recent quarter, as well as profitability in the four most recent quarters.
In February, Carl Eschenbach, former VMware CEO and Sequoia Capital investor, became the sole CEO of Workday after becoming CEO from late 2022, along with founder Aneel Bhusri. Workday will release an automated intelligence agent to create and send expense reports this year, and an agent to identify inefficiencies in business processes will arrive by 2025, Eschenbach told analysts on a November conference call.
Stocks tend to rally when added to a major index, as fund managers need to rebalance their portfolios to reflect the changes.
While many technology companies have joined the S&P 500, not all have proven to be moneymakers for investors who buy index funds. Server manufacturer Super Micro added to the S&P 500 in March after a big rally in stocks, driven by demand Nvidiasupported servers.
Super Micro’s shares hit a high immediately after that announcement but then fell in the months that followed as the company failed to make its payments on time. The stock is about 60% off its high, and the company said on Friday it had received an extension from Nasdaq to maintain its listing.
WATCH: Workday CEO Carl Eschenbach on the impact of AI, the job market in 2024
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