Block jumps after S&P 500 inclusion in new milestone for fintech
(Reuters) -Tech billionaire Jack Dorsey-led Block's shares rose nearly 10% before the bell on Monday after the payments firm was added to the benchmark S&P 500, marking a milestone for the fintech sector.
The inclusion cements Block's status as one of the most valuable and influential players in the fintech space, and shows how digital payments and financial apps have moved into the mainstream and disrupted traditional banking models in the U.S.
Block -- with a market value of about $44.8 billion -- will replace Hess Corp, following its $55 billion merger with oil major Chevron.
The change takes effect before trading begins on Wednesday, S&P Dow Jones Indices said.
Shares of a company often rise after being added to the S&P 500 as index-tracking funds are required to add them to their portfolio, boosting demand for the stock.
J.P. Morgan estimates that Block's inclusion should drive net indexer demand of 54.2 million shares of the company.
"We believe XYZ (Block) deserves a higher multiple given recent momentum around product velocity and marketing efforts, and joining S&P 500 helps."
The inclusion boosts Block's profile among institutional investors and signals its growing influence in the U.S. financial sector.
Co-founded by Jack Dorsey in 2009 as Square, the company rebranded to Block in 2021 to reflect its broader focus on blockchain technology.
Block sits at the intersection of traditional payments and digital assets, with products spanning from point-of-sale systems, peer-to-peer transfers and bitcoin services.
Crypto payments have also gained momentum this year and are expected to grow further after U.S. President Donald Trump signed a law on Friday establishing a regulatory framework for dollar-pegged stablecoins, a milestone that could help make digital assets a routine way to pay and transfer money.
Block's shares have fallen about 14% so far this year through the previous close, underperforming the S&P 500's roughly 7% gain.
(Reporting by Manya Saini in Bengaluru; Editing by Shinjini Ganguli)
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