Blackstone
stock fell Monday on evident disappointment that it will have to wait to join the
S&P 500.
While there has been speculation that
Blackstone
(ticker: BX) would soon be included in the index, S&P Dow Jones Indices said Friday that security software maker
Palo Alto Networks
(ticker: PANW) was instead chosen to replace
Dish Network
(DISH) as part of its quarterly rebalance. The change will begin before the start of trading June 20.
Blackstone shares fell 3.9% to $85.52 on Monday.
The speculation about Blackstone began after S&P Dow Jones Indices, which oversees the index, relaxed rules in April and permitted entry of companies with dual-class stocks into the S&P 500, S&P MidCap 400, and SmallCap 600.
It is a good bet that Blackstone, the largest manager of alternative assets including private equity and real estate, will make it into the S&P 500 this year. S&P Dow Jones Indices presumably made the change to allow companies such as Blackstone and
KKR
(KKR) into the index.
While Blackstone doesn’t have two classes of stock, it has preferred stock held by CEO and founder Steve Schwarzman that effectively gives him control of the company. KKR has a similar structure.
It took
Tesla
(TSLA) about three months from the time it became eligible for inclusion in the S&P 500 in mid-2020 and its late-year inclusion.
Tesla
needed to meet a requirement of four quarters of cumulative profitability.
Shares of
Palo Alto Networks
have reacted favorably—as stocks of new additions invariably do—amid expectations of buying from index funds. The stock was up 4.4% to $226.79 Monday, while DISH was off 2.7% to $7.10. KKR rose 0.8% to $54.05.
DISH stock is trading for about a third of its stock price a year ago and had one of the lower market capitalizations of any companies in the S&P 500 at $4 billion, making it vulnerable to deletion. It will be moving to S&P’s small-cap index, apparently being judged too small for the mid-cap index.
Palo Alto Networks was one of the larger U.S. companies ranked by market value not in the S&P 500—it is valued at about $68 billion. Blackstone is the largest such company at $100 billion, but S&P might not include it in the index at its full market value—assuming it gets in—because more than $30 billion of stock is held by employees as partnership units.
Some of the largest companies not now in the index include
Uber Technologies
(UBER), although it may not be eligible now due to profit issue;
Snowflake
(SNOW);
Marvell Technology
(MRVL);
Airbnb
(ABNB); KKR; and
Workday
(WDAY). All weigh in at more than $40 billion.
Write to Andrew Bary at [email protected]
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