The logo for the U.S. tech firm Block is displayed and reflected in numerous digital screens in London, England, on March 3, 2023.
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Block shares jumped 7% on Monday after S&P Global said the company will join the S&P 500, replacing Hess, which was acquired by Chevron for $54 billion.
The stock rose following the announcement late Friday as investors sought to get in ahead of index fund managers, who will need to buy shares to mimic the changes. Square’s $48 billion market cap at Monday’s close places it well above the median S&P 500 constituent, though shares are still down 8% this year.
Passive funds are expected to purchase roughly 101 million shares of Block due to its inclusion, equivalent to about 11 days of average trading volume, according to a note from Stephens.
Block is working to reestablish investor confidence after uneven performance from its Cash App business. Gimme Credit’s Stu Novick noted that while gross profit growth missed estimates last quarter, the company still delivered strong adjusted earnings and improving cash flow.
While Block is joining the benchmark index, a major player in the fintech industry remains on the sidelines.
Robinhood has delivered one of the strongest recent runs in the U.S. stock market, soaring 345% over the past year. Yet, despite nearing $100 billion, the company has been repeatedly passed over for S&P 500 inclusion.
Robinhood shares fell almost 5% on Monday.