Blackstone, Airbnb to join S&P 500 after index rebalancing

PRIVATE equity giant Blackstone is the latest addition to the S&P 500 Index, the first alternative asset manager to join the equity gauge. Airbnb is added as well.

The New York-based Blackstone and Airbnb will replace Lincoln National and Newell Brands prior to the start of trading on Sep 18, S&P Dow Jones Indices said in a press release late Friday (Sep 1).

Shares of Blackstone, the world’s largest alternative asset manager, were up 4.1 per cent in after hours trading while Airbnb’s rallied about 4 per cent.

Wall Street analysts had predicted that Blackstone would be added to the S&P 500 after an April decision by S&P Dow Jones to drop a 2017 rule that barred corporations with multiple share classes from index membership. Blackstone has a dual share structure with unequal voting rights.

To qualify for the S&P 500, companies must be highly liquid US firms with a market capitalization of at least US$14.5 billion, and meet profitability, liquidity and share-float standards. As of July 5, thresholds for the S&P MidCap 400 Index and S&P SmallCap 600 Index are US$5.2 billion to US$14.5 billion and US$850 million to US$5.2 billion, respectively.

Additions and removals to the S&P 500 often but not always happen when the index is rebalanced each quarter. They can also occur at other points of the year, like after mergers and acquisitions. S&P Dow Jones makes these adjustments to account for shifts in market capitalizations and, on occasion, to adjust for the market’s gyrations.

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Inclusion in the benchmark gauge is becoming more important for companies in a world increasingly dominated by passive investment funds. Furthermore, a spot in the coveted S&P 500 boosts a firm’s investor profile and adds to trading liquidity – factors that can potentially propel a company’s stock price higher. 

Last week, Kenvue, the maker of Tylenol and Listerine, replaced Advance Auto Parts in the S&P 500. The move came after Kenvue’s record split-off from Johnson & Johnson. 

Meanwhile, Lincoln National and Newell Brands were removed from the S&P 500 Index. Expulsion from the benchmark can weigh on stock prices, as passive investors are forced to sell the shares and realignment with the S&P 500’s new composition. BLOOMBERG