Block shares rise 10% after joining the S&P 500

Block Joins S&P 500, Shares Surge

Jack Dorsey, co-founder and CEO of Twitter and Square, will be present at the Bitcoin 2021 conference in Miami, Florida, on June 4, 2021.

Block’s shares saw a remarkable increase of over 10% during after-hours trading on Friday following the announcement that the FinTech firm would join the S&P 500 index. This marks the second adjustment to the benchmark this week as announced by S&P Global. On Monday, The Trade Desk, an ad tech company, is also set to join the S&P 500.

Meanwhile, Hess is set to depart after Chevron completed a substantial $54 billion acquisition from oil producers, successfully competing against ExxonMobil in a legal issue concerning offshore oil assets in South America.

Block is scheduled to officially join the S&P 500 before trading starts on July 23, according to a statement from S&P. Typically, stocks experience a surge when added to a major index, as fund managers need to adjust their portfolios in response.

Changes to the S&P 500 usually occur during the index’s quarterly rebalancing, but if a company’s acquisition wraps up, it can be removed from the index at any point. For instance, last week, Datadog made a move into the S&P 500 as part of the quarterly adjustments.

The inclusion of Block adds more technical strength to the index, which has been evolving in that direction lately, reflecting increased market capitalization for firms within the tech sector. Originally known as Square, Block gained traction thanks to its payment terminals but has expanded its services into cryptocurrency, lending, and other areas.

Founded by Dorsey in 2009, Square rebranded as Block in 2021, emphasizing its commitment to blockchain technology. However, shares of Block have dipped 14% this year, lagging behind the broader U.S. market. The NASDAQ saw over an 8% rise, while the S&P 500 went up by 7%. Despite the drop, Block holds a market cap of about $45 billion, significantly exceeding that of many companies central to the index.

In May, Block fell short of Wall Street’s expectations and provided a gloomy outlook after reporting first-quarter results, resulting in a sharp decline in stock prices. The forecasts for the second quarter and the full year indicate a tough economic environment following the announcement of tariffs by President Donald Trump.

“We understand we’re operating in a more dynamic macro environment, so we’ve adjusted our annual guidance to reflect this outlook,” the company mentioned in its quarterly report.