Block (XYZ) stock jumped 8.5% in Friday’s extended trading session on the news of the fintech company’s inclusion in the S&P 500 Index (SPX). The company would be replacing Hess Corporation, which has been acquired by oil and gas giant Chevron (CVX) in a $53 billion deal. Block’s S&P 500 inclusion marked the second change to the benchmark last week, following the S&P Global’s (SPGI) announcement that ad tech company Trade Desk (TTD) will replace software maker Ansys, which was acquired by Synopsys (SNPS).
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How S&P 500 Inclusion Could Benefit XYZ Stock
Block will join the S&P 500 before trading commences on July 23. The inclusion of a stock in the S&P 500 is viewed positively as fund managers of financial instruments tracking the index need to rebalance their portfolios to reflect the changes. The inclusion is expected to help it gain more interest from institutional investors.
Generally, changes are made to the index as part of the quarterly rebalancing process. However, changes are also made upon the closing of a company’s acquisition. Recently, Datadog (DDOG) was added to the S&P 500 to replace Juniper Networks, which was acquired by computer hardware company Hewlett-Packard Enterprise (HPE).
Block, known for its Cash App and Square ecosystems, has expanded into crypto and other financial services in recent years. The payments company founded by Jack Dorsey changed its name from Square to Block to emphasize its focus on blockchain technologies. The company had Bitcoin (BTC-USD) holdings worth $2.3 billion at the end of the first quarter.
Block Joins S&P 500 Ahead of Q2 Earnings
Block’s S&P 500 inclusion comes ahead of the company’s second-quarter results on August 7. Wall Street expects Block to report earnings per share (EPS) of $0.67, indicating a year-over-year decline of about 28%.
In May, the company disappointed investors by reporting a huge earnings miss for the first quarter of 2025. Block also issued weak guidance, citing macro challenges.
Is Block Stock a Good Investment?
Heading into Q2 results, Wall Street has a Moderate Buy consensus rating on Block stock based on 28 Buys, six Holds, and two Sell recommendations. The average XYZ stock price target of $71.29 indicates a 2.1% downside risk.
