5 Stocks Kicked Off the S&P 500 Apartment Investment and Management (AIV) was removed from the S&P 500, and Tesla (TSLA) was added in 2020. But six months after Tesla replaced it, AIV’s relative return was over 80% better. Like most of the real estate business, AIV was feeling the heat from rising interest rates, but its stock price has nevertheless improved substantially over time. And AIV is not alone. S&P 500 first-timers tend to capitulate to the pressure of expectations, whereas the exiles have, on average, beaten the market by as much as 5% a year during the subsequent five years.
It’s a lesson, like sports, that often the best comeback stories in investment start with a setback. This article tells the story of five such firms, all of which have beaten the index after leaving it. We also clarify some misunderstandings about the price spikes firms should anticipate upon entering the S&P 500 index.
when the S&P 500 adds or removes stocks from the index.
No one gets delisted from an index for being successful. Including, especially with so much of the market turned over to passive investment, is considered to help a company’s share price. It also enhances the firm’s exposure and credibility. It shows everyone that the company is among the greatest and largest in the nation.
Getting dumped might have a silver lining. Research shows that many firms that have been dropped from the S&P 500 index outperform the market. One major study by Research Affiliates found that, between 1990 and 2022, the stocks that dropped from the S&P 500 index outperformed the new entrants by more than 5% per year in the five years after their exit. The outperformance is due to the fact that these equities are initially discounted because they are heavily sold after being dumped, the study’s authors noted.
Experts attribute this trend to the relative valuation of stocks upon addition and deletion: additions tend to be expensive, while deletions are cheap. Firms joining the index often see high P/E ratios and increased investor selling pressure, while those that have dropped may be undervalued and offer greater upside.
The market frequently over-penalizes stocks removed from major indexes, triggering an immediate decline. Over time, these stocks may recover strongly as the market corrects its initial overreaction and contrarian investors step in, demonstrating that index removal can create profitable opportunities.
The “Index Effect”
No one gets delisted from an index for being successful. Including, especially with so much of the market turned over to passive investment, is considered to help a company’s share price. It also enhances the firm’s exposure and credibility. It shows everyone that the company is among the greatest and largest in the nation.
Getting dumped might have a silver lining. Research shows that many firms that have been dropped from the S&P 500 index outperform the market. One major study by Research Affiliates found that, between 1990 and 2022, the stocks that dropped from the S&P 500 index outperformed the new entrants by more than 5% per year in the five years after their exit. The outperformance is due to the fact that these equities are initially discounted because they are heavily sold after being dumped, the study’s authors noted.
5 Stocks Kicked Off the S&P 500
These and other experts believe that the trend is mostly due to the awareness that additions are expensive and deletions are cheap. Eventually, firms in the index trade at frothy price-to-earnings (P/E) ratios, and heavy buying prompts investors to sell them.
The market tends to penalize stocks that are booted from indexes too hard after the first tumble. They will rebound over time and provide higher profits when the market corrects its overreaction. This means that while the removal from the index hurts share prices at first, some businesses get back on their feet when contrarian investors come in, seeing value in their battered equities.
The “Index Effect” Catches the Falling Knife
But as is true for many tales taken for granted on Wall Street, the facts tell a different story. There was a large index impact back in the day, as research from the National Bureau of Economic Research (NBER) demonstrates, and additional deep dives into the data back this up. Stocks introduced to the S&P 500 in the 1980s and 1990s delivered high, positive, and abnormal returns (3.4% in the 1980s and 7.6% in the 1990s).
Meanwhile, dropped equities had sharp declines: around -4.6% in the 1980s and -16.6% in the 1990s.
By the 2000s, studies showed these impacts had greatly diminished. In the 2010s, stocks added to the index saw only a slight 0.8% gain—some studies report as low as 0.1%—while removed companies had negligible returns (−0.6%). By the 2020s, the difference between index inclusions and exclusions appears statistically insignificant.
How is this possible? There should be a larger demand for equities added to the index, after all. Analysts have given numerous causes for this:
- Market efficiency: The market has become more efficient at absorbing demand shocks associated with index fluctuations. Institutions are better able to provide liquidity during such shifts, easing pricing pressure.
- Migrations increase: Some say it’s not like firms move from not being in any index at all to being in the S&P 500. A major proportion of index changes involves firms shifting between the S&P MidCap 400 and the S&P 500, rather than the addition or deletion of entirely new companies. Index monitoring funds will then make offsetting transactions, thereby reducing the size of net demand shocks.
- Predictability: Index fluctuations have grown more predictable as indexation has taken hold. index announcements by arbitrageurs front-running. This pre-change trading reduces the price effect when the change occurs.
- Market liquidity: Stock market liquidity has improved, with narrower bid-ask spreads. This helps the market absorb large trades, minimizing price impacts.
To understand why stocks move in and out, let’s look at the S&P 500’s selection criteria.
The S&P 500 is meant to reflect the biggest, most important corporations in the U.S. economy. The index has to evolve with the market to remain relevant, including firms that better represent the economy and excluding those that no longer meet the criteria. A committee at S&P Global reviews the firms in the index quarterly and makes any necessary revisions to this procedure.
5 Stocks Removed From the S&P 500 That Have Outperformed the Index
It’s no surprise that some S&P 500 stocks that dropped perform well. Which firms? Here are a few, with share price data as of Dec. 26, 2025:
Zions Bancorporation N.A.
- Removal date: March 18, 2024
- Share price performance since exclusion: 50%
- S&P 500 performance since exclusion: 35%
Confidence in regional banks declined in 2023 after several high-profile collapses, causing Zion Bank’s stock to fall and leading to its removal from the S&P 500.
Zion rebounded quickly, aided by an improved economic outlook and rate cuts, with shares rising even before its removal from the index.
Lincoln National Corporation
- Removal date: Sept. 18, 2023
- Share price performance since exclusion: 81%
- S&P 500 performance since exclusion: 56%
Lincoln Capital faced difficult years, falling below the S&P 500 benchmark and prompting its removal.
The life insurer was also affected by the Silicon Valley Bank failure, a rise in pandemic-related deaths, and several other issues, all of which impacted its balance sheet and placed it in uncertain financial territory.
The firm has been recovering. Business is up, management controls costs, and investors have taken notice, driving the shares up over the past year.
How Often Does the S&P 500 Add or Remove Companies?
The S&P 500 may add or drop firms as it sees fit. The index is rebalanced every quarter, so that’s the most apparent moment to make adjustments. But the committee that selects the index components may make modifications at any time. For example, if a business in the S&P 500 were to be taken over or delisted, it would be replaced before the regular revision date.
What Stocks Have Been Removed From the S&P 500 in 2025?
The following stocks were removed from the S&P 500 in 2025:
- Charter Communications (CHTR)
- MarketAxess Holdings (MKTX)
- Caesars Entertainment (CZR)
- LKQ (LKQ)
- Solstice Advanced Materials (SOLS)
- Mohawk Industries (MHK)
What Stocks Have Been Added to the S&P 500 in 2025?
Among the stocks added to the S&P 500 in 2025 are Uber (UBER), Robinhood Markets (HOOD), Emcor (EME), Carvana (CVNA), and Comfort Systems USA (FIX).
How Many Companies Fall out of the S&P 500 Each Year?
No, there is no fixed number. It fluctuates every year . For instance, in 2025, 12 firms were eliminated from the index and another 12 in 2024.
The Bottom Line
Some investors may sell the stocks that are being dropped from the S&P 500. But this knee-jerk move might mean leaving money on the table. Conventional wisdom says to avoid these business pariahs; the numbers, however, tell a different story, one of surprise twists and amazing comebacks: Companies booted from the index have roared back, outpacing the market by as much as 5% a year on average in the five years after their ejection.
This counterintuitive trend underscores an important concept of investing: The finest chances seem to come when everyone else is going the other way. Being ejected from the S&P 500 may provoke automatic selling by index funds and unfavorable headlines. But it can also motivate corporations to undertake harsh but essential reforms. These companies are frequently trading much below their former highs, which means less optimism is factored in and greater upside potential if the firm can turn things around.