S&P 500 Inclusion Gave Twilio 1%, Not 7.4%

S&P 500 inclusion is no longer a payday. Twilio (TWLO) joined the index before the open on October 6, 2026, replacing Warner Bros. Discovery, and the three largest S&P 500 index funds had to buy roughly $1.65 billion of stock. TWLO added about 1% on the news and then closed at $273.00 on October 7, down 2.64%. Harvard research puts the modern index effect at zero.

Key takeaways

• Twilio entered the S&P 500 on October 6, 2026 at a 0.06% index weight.
• VOO, IVV and SPY hold $2.75 trillion combined, forcing about $1.65 billion of buying.
• Index-addition abnormal returns fell from 7.4% in the 1990s to about 1.0% in 2010–2020.

What happened when Twilio joined the S&P 500?

S&P Dow Jones Indices announced on October 1, 2026 that Twilio would join the S&P 500 before the opening of trading on Tuesday, October 6, replacing Warner Bros. Discovery (WBD), which is being acquired by Paramount Skydance. Twilio moved up from the S&P MidCap 400. The index effect that followed was close to invisible.

The same announcement removed Corteva (CTVA) from the S&P 500 and added it to the MidCap 400, after Corteva spun off Vylor (VYLR) on October 1. Vylor took the vacated S&P 500 seat the same day.

Twilio shares added roughly 1% in extended-hours trading once the change was announced, according to TipRanks. That is the entire visible reward for an event that forces hundreds of billions of dollars in tracking capital to transact.

By the next session the move had reversed. TWLO closed at $273.00 on October 7, 2026, down $7.41 or 2.64%, on a day the S&P 500 itself slipped 0.22% to 7,801.77 as the 10-year Treasury yield touched 5.36% intraday, its highest since April 2002.

Which S&P 500 index funds had to buy Twilio, and what do they cost?

Three funds dominate S&P 500 tracking: Vanguard’s VOO, iShares’ IVV and State Street’s SPY. Together they held about $2.75 trillion as of October 6, 2026. All three had to add Twilio at its index weight on the effective date. Two of them charge 0.03%. One charges more than three times that.

Fund	Expense ratio	Net assets	Annual cost on $10,000
Vanguard S&P 500 ETF (VOO)	0.03%	$1,032.3B	$3.00
iShares Core S&P 500 ETF (IVV)	0.03%	$899.6B	$3.00
SPDR S&P 500 ETF Trust (SPY)	0.0945% gross	$819.0B	$9.45

The fee gap matters more than the index change. On a $10,000 position, SPY costs $9.45 a year against $3.00 for VOO or IVV — a $6.45 annual difference for identical index exposure, including identical exposure to Twilio.

SPY’s structure is the reason. It is a unit investment trust from 1993 that cannot lend securities or reinvest dividends intraday, so it carries a fee the newer funds undercut. We covered a parallel structural gap in currency-hedged ETFs.

Does S&P 500 inclusion still move a stock?

No, not meaningfully. The best measurement of the index effect comes from Robin Greenwood and Marco Sammon of Harvard Business School. Their paper “The Disappearing Index Effect” tracks the abnormal return earned by stocks added to the S&P 500, decade by decade, and the trend only goes one way.

The decade-by-decade decay

Greenwood and Sammon report an average abnormal return of 3.4% in the 1980s, peaking at 7.4% in the 1990s, then 5.2% in the 2000s and roughly 1.0% across 2010–2020 — a figure the authors call statistically indistinguishable from zero.

Twilio’s roughly 1% pop lands exactly on that modern average. The event behaved as the research predicted, not as index-trade folklore predicts.

Deletions collapsed even harder

The same paper measures the deletion effect falling from -16.1% in the 1990s to -0.6% in 2010–2020. Being thrown out of the S&P 500 used to be a punishment. Now it is paperwork.

That matters for anyone who heard “Warner Bros. Discovery is being deleted” and read it as a signal. WBD left because Paramount Skydance is buying it, not because the index judged it.

How much Twilio did index funds actually have to buy?

About $1.65 billion from the three largest funds alone — and the stock still fell the next day. Twilio entered the S&P 500 at a 0.06% weight, per SlickCharts. Applying that weight to the big three funds’ combined assets produces the dollar figure every index-trade thesis rests on.

Here is the arithmetic, step by step:

1. VOO $1,032.3B + IVV $899.6B + SPY $819.0B = $2.751 trillion in tracking assets.
2. $2.751 trillion × 0.06% index weight = $1.65 billion of Twilio to buy.
3. $1.65 billion ÷ $273.00 per share = about 6.05 million shares.
4. 6.05 million ÷ 153.58 million shares outstanding = 3.94% of the company.

Nearly 4% of Twilio changed hands into index hands, and the price went nowhere. That is the single cleanest illustration of why the index trade stopped working: liquidity providers now front-run and absorb the demand well before the effective date.

Add every other S&P 500 tracker, mutual fund share class and institutional mandate and the true demand is larger still. The price response did not scale with it.

Is the index-inclusion trade worth it in 2026?

For almost everyone, no. The measurable edge is about one percentage point before costs, it arrives in a single unpredictable session, and the announcement is public. What remains is a transfer from index funds — which must trade at the close regardless of price — to the desks positioned ahead of them.

Investor	What inclusion changes	What actually matters more
Index fund holder (VOO, IVV, SPY)	Nothing you can act on; your fund buys at the close	Your expense ratio: $3.00 vs $9.45 per $10,000
Existing TWLO shareholder	A broader holder base; no cash-flow change	Forward P/E of 45.46 as of October 7, 2026
Event-driven trader	About 1% of abnormal return, pre-announced	Spreads, borrow cost and close-auction slippage
Long-term equity buyer	Index membership is not a quality screen	Revenue and margin trend; $1.50B Q2 2026 revenue

The skeptical point cuts at the index itself. S&P’s own methodology requires only a $22.7 billion market cap, a float-adjusted liquidity ratio of 0.75 and 250,000 shares traded monthly. Those are size and tradability screens, not business-quality screens.

Twilio’s fundamentals have improved — Q2 2026 EPS of $1.47 beat the $1.32 consensus and revenue of $1.50 billion beat $1.43 billion — but its index seat reflects its $41.93 billion market cap, nothing more. Analysts are not uniformly convinced: TipRanks shows a $262.18 average target across 23 analysts, below the October 7 close.

That mirrors what we found comparing Accenture and Cognizant and Micron and SanDisk: the multiple, not the index label, does the work.

What to watch next

Three dated events could change the picture. Two are calendar-certain; one depends on whether the Fed follows through on language already in its minutes. All three move index-level pricing more than any single addition does.

• October 27–28, 2026: FOMC meeting. September minutes said another rate increase “would likely be appropriate by year end”; traders priced roughly 17% odds of an October hike as of October 7.
• December 8–9, 2026: FOMC meeting with a Summary of Economic Projections, per the Federal Reserve’s published calendar.
• December 18, 2026: S&P’s quarterly rebalance takes effect after the close on the third Friday of December, under its U.S. Indices methodology — the next scheduled share-count and float revision.

Twilio’s next quarterly report has not been confirmed by the company. MarketBeat estimates October 29, 2026 based on last year’s schedule; treat that as unconfirmed.

Frequently asked questions

When did Twilio join the S&P 500?

Before the opening of trading on Tuesday, October 6, 2026, announced by S&P Dow Jones Indices on October 1, 2026. Twilio moved up from the S&P MidCap 400 and replaced Warner Bros. Discovery.

How much does S&P 500 inclusion raise a stock price?

Greenwood and Sammon measure about 1.0% of abnormal return for additions in 2010–2020, down from 7.4% in the 1990s, and call the recent figure statistically indistinguishable from zero.

Why was Warner Bros. Discovery removed from the S&P 500?

Because Paramount Skydance is acquiring it. S&P DJI’s October 1, 2026 release listed the deal as pending closing conditions. Deletions tied to mergers carry no judgment about the business.

What does it take to qualify for the S&P 500?

The methodology requires at least $22.7 billion in total market cap, a float-adjusted liquidity ratio of at least 0.75, and at least 250,000 shares traded in each of the six months before evaluation, plus U.S. domicile and profitability tests.

Which S&P 500 ETF is cheapest?

VOO and IVV both list 0.03% expense ratios, versus 0.0945% gross for SPY. On $10,000 that is $3.00 a year against $9.45 for the same index exposure.

Do index funds have to buy on the effective date?

Funds tracking the index with low tracking error generally trade in the closing auction on the day before the change takes effect, which is precisely why the demand is anticipated and arbitraged in advance.

When is the next S&P 500 rebalance?

The quarterly rebalance takes effect after the close on the third Friday of December, which is December 18, 2026. Additions and deletions can also be announced between rebalances, as Twilio’s was.

The bottom line

S&P 500 inclusion is now an administrative event, not a price event. Twilio’s October 6, 2026 entry forced roughly $1.65 billion of buying from three funds, equal to about 3.94% of its shares outstanding, and produced a move of about 1% that reversed within a session.

What it depends on is narrow and specific: the index effect still shows up when a stock is small, illiquid, or added with little notice. Twilio was none of those — $41.93 billion in market cap, a MidCap 400 member already, announced five days ahead.

The measurable money for ordinary investors is in the fee column, not the ticker list. Paying $9.45 instead of $3.00 per $10,000 for the same index costs more over a decade than the entire modern index effect was ever worth.

This article is journalism, not investment advice. Do your own research before investing.

Sources

• S&P Dow Jones Indices — index changes announcement, October 1, 2026
• S&P U.S. Indices Methodology (July 2026)
• Greenwood & Sammon, “The Disappearing Index Effect,” Harvard Business School
• iShares Core S&P 500 ETF (IVV) fund page
• State Street — SPDR S&P 500 ETF Trust (SPY)
• Vanguard S&P 500 ETF (VOO)
• Federal Reserve — FOMC meeting calendar
• stockanalysis.com — TWLO quote and fundamentals, October 7, 2026
• SlickCharts — S&P 500 component weights
• TipRanks — Twilio gets a bump from S&P 500 inclusion
• Yahoo Finance — market close and Treasury yields, October 7, 2026
• MarketBeat — Twilio earnings history and estimated next date

Wealth Engine researches and drafts with AI tools and checks every figure against the sources above. How we report.