The S&P 500 Index, the most widely followed benchmark for US stocks, has welcomed two new members: Airbnb Inc. and Blackstone Inc. The online lodging platform and the private equity giant will replace Lincoln National Corp. and Newell Brands Inc. in the index, effective from Sept. 18.
Airbnb and Blackstone Shares Rally on the News
The announcement of the index changes by S&P Dow Jones Indices on Friday night boosted the shares of both Airbnb and Blackstone in extended trading. Airbnb jumped 5%, while Blackstone rose 4.1%, signaling a move back above their 50-day moving averages. Both stocks have been consolidating in recent weeks after hitting record highs in July.
Being added to the S&P 500 is a significant milestone for any company, as it reflects its growth, profitability, and liquidity. It also increases its visibility and attractiveness to investors, especially those who track the index through passive funds. According to S&P Dow Jones Indices, about $11.2 trillion of assets are benchmarked to the S&P 500, with about $4.6 trillion of them indexed.
Blackstone Becomes the First Alternative Asset Manager in the S&P 500
Blackstone, founded in 1985 by Stephen Schwarzman and Peter Peterson, is the world’s largest alternative asset manager, with $684 billion of assets under management as of June 30. It operates in four segments: private equity, real estate, hedge fund solutions, and credit.
Blackstone’s inclusion in the S&P 500 is notable because it is the first alternative asset manager to join the index, and because it has a dual-class share structure that gives Schwarzman and other insiders more voting power than other shareholders. Such structures were previously barred from the index under a rule adopted in 2017, but that rule was dropped in April this year, paving the way for Blackstone’s entry.
Blackstone has been benefiting from strong demand for alternative investments amid low interest rates and high valuations in public markets. It has also been expanding its retail business, offering its products to individual investors through partnerships with brokerages and wealth managers. In the second quarter, Blackstone reported a 21% increase in fee-related earnings and a 30% increase in distributable earnings year-over-year.
Airbnb Joins the S&P 500 Less Than a Year After Its IPO
Airbnb, founded in 2008 by Brian Chesky, Joe Gebbia, and Nathan Blecharczyk, is the leading online platform for booking and offering short-term rentals and experiences around the world. It has over 4 million hosts and more than 800 million guest arrivals across 220 countries and regions.
Airbnb’s addition to the S&P 500 comes less than a year after its initial public offering in December 2020, which was one of the biggest and most successful IPOs of last year. The company raised $3.5 billion at a valuation of $47 billion, and saw its shares more than double on their first day of trading.
Airbnb has been recovering from the impact of the Covid-19 pandemic, which severely disrupted the travel industry last year. It has been adapting to changing consumer preferences, such as increased demand for domestic, rural, and longer-term stays. In the second quarter, Airbnb reported a 299% surge in revenue and a 197% increase in nights and experiences booked year-over-year.
Lincoln National and Newell Brands Move Down to the S&P SmallCap 600
The two companies that Airbnb and Blackstone are replacing in the S&P 500 are Lincoln National Corp., a provider of life insurance and retirement services, and Newell Brands Inc., a consumer goods company that owns brands such as Rubbermaid, Sharpie, and Yankee Candle.
Both companies have been struggling with sluggish growth and declining profitability in recent years, lagging behind their peers and the broader market. Lincoln National’s revenue fell 14% in 2020, while Newell Brands’ revenue dropped 9%. Both companies also reported net losses for the year.
Lincoln National and Newell Brands will move down to the S&P SmallCap 600 Index, where they will replace Uniqure NV and Universal Insurance Holdings Inc., respectively. Uniqure is a biotechnology company that focuses on gene therapies for rare diseases, while Universal Insurance is a property and casualty insurance company.