Tech Stock Tipped as Next S&P 500 Addition by Barclays
May 9, 2024: Financial services firm Barclays has pinpointed Block Inc. (SQ), a leading fintech company, as a strong contender for inclusion in the prestigious S&P 500 stock market index. This potential addition is expected during the upcoming quarterly rebalancing scheduled for June 7, 2024.
The S&P 500 serves as a benchmark index for the U.S. stock market, tracking the performance of 500 large-cap companies listed on stock exchanges in the United States. Inclusion in this index signifies a company’s financial strength, stability, and market influence.
Barclays analysts arrived at this conclusion after analyzing Block’s recent financial performance. The company achieved positive net income in the fourth quarter of 2023, exceeding $178 million. This positive trend continued into the first quarter of 2024, with net income surpassing $472 million. Block’s positive net income over the trailing twelve months ending in December 2023 also met the S&P 500’s eligibility criteria.
While inclusion is not guaranteed, Barclays analysts believe Block exhibits strong characteristics that align with the S&P 500’s selection process. The S&P 500 committee considers various factors beyond financial performance, including industry sector representation. Block’s classification under “Financial Services” within the Global Industry Classification Standard (GICS) system might be a strategic factor for its inclusion. Through Block’s addition, the S&P 500 committee might aim to address a potential underweighting of the financial services sector.
Inclusion in the S&P 500 carries significant implications for Block. It would likely result in increased investor interest and potentially lead to a company stock price rise. Additionally, S&P 500 inclusion can enhance a company’s brand reputation and solidify its position as a major player in the U.S. financial landscape.
It is important to note that Barclays’ analysis constitutes an expert opinion and does not guarantee Block’s definitive inclusion in the S&P 500. The S&P 500 committee operates with a degree of discretion during the selection process, and other factors not publicly known may influence their final decision.
