Labor Day shares are off 9% of the S&P 500 index

Work day shares fell nearly 10% in extended trading Friday after S&P Dow Jones Indices said the cloud software vendor would be added to the S&P 500.

It will replace Amentum Holdings share price index effective December 23, according to the statement.

The index has picked up a number of other prominent technology 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. In 2017 Workday switched its listing to the tech-focused Nasdaq.

In November, Workday posted $193 million in revenue of $2.16 billion in quarterly revenue, which was up 16% year over year.

In each fiscal year through 2022, Workday had reported a loss. Inflation and high interest rates made investors less interested in supporting unprofitable companies, and many software managers realized they had to cut costs.

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 Workday’s sole CEO after becoming CEO through late 2022 with Aneel Bhusri, a co-founder.

It is common for stocks to move higher on news of their arrival in a dominant index, as fund managers are required to rebalance their portfolios to reflect changes in the index.

While many technology companies have joined the index, not all have proven to be moneymakers for investors who track the benchmark. Server manufacturer Super Micro added to the S&P 500 in March after a big rally in stocks, driven by demand Nvidiasupported servers.

Shares rose soon after but then fell in the following months after 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.

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