Jack Dorsey's Block to join S&P 500: Why it matters
What's the story
Jack Dorsey's fintech firm, Block Inc, will soon be a part of the prestigious S&P 500 index. The move highlights the growing impact of digital payments and cryptocurrencies on traditional finance. Block will take Hess Corp's place in the index after Chevron's $53 billion acquisition of Hess. The changes will come into effect before trading begins on July 23, S&P Dow Jones Indices has announced.
Company growth
From payment processor to fintech giant
Formerly known as Square, Block has evolved from a payment processor to a full-fledged fintech company. It now provides peer-to-peer transfers, merchant services, as well as consumer lending. Earlier this year, its industrial bank subsidiary Square Financial Services Inc, got the green signal from the US Federal Deposit Insurance Corporation to offer consumer loans through Cash App Borrow product.
Crypto integration
Block's focus on Bitcoin
Block is also adding Bitcoin payment capabilities into its Square terminals. This move is in line with Dorsey's long-standing support for Bitcoin. He continues to be a major player in the digital-asset space, having recently released open-source coding projects on X. Despite facing mixed earnings results, Block plans to transform Cash App into a comprehensive banking and lending product.
Market influence
Impact of S&P 500 inclusion on stocks
Being part of the US equity benchmark can boost a company's profile and is becoming increasingly important with the rise of passive investment funds. On the flip side, removal from this benchmark can hurt stock prices as index funds offload shares to match with new S&P 500 composition. Following the announcement of its inclusion in S&P 500, Block's shares jumped as much as 14% during after-hours trading.