Cash App Parent Block Added to the S&P 500 — Here’s What To Know
Another day, another S&P 500 all-time high — and another surprise addition. The S&P 500 Selection Committee has been pulling unexpected names out of a hat lately, first adding DatadogDDOG, then programmatic ad giant The Trade DeskTTD. But to cap off last week, they finally gave investors an addition they’d been banking on.
New name on the block: Chevron’s $54B acquisition of rival Hess opened up a spot in America’s most-tracked index. The S&P 500 Selection Committee selected BlockXYZ, the parent company of the consumer finance platform Cash App, to fill the vacancy. The change takes effect on Wednesday. It marked the third shake-up in the index in just the last 11 days, following a quarterly rebalancing where the committee opted to leave things unchanged. It’s a perplexing selection, but not at all surprising.
- It’s a curious pick, given that the organization is still trading 75% below the all-time highs it set in 2021 and has barely moved since prominent short seller Hindenburg targeted it in 2023.
- Block recently posted disappointing earnings and guidance, with revenue down 3% year-over-year and net income falling 59%. (You can tell it was rough — the shareholder letter leaned hard on ‘gross profit’ as the key metric, lol.)
BLOCKportunities Galore
So why Block? If nothing else, it’s a bit of a wildcard — much like co-founder Jack Dorsey, who helped found Twitter (now X). That’s because it’s no longer just Square, the payments pioneer that started it all (though Square still matters — it drove $898M in gross profit from $54.1B in gross transactions last quarter). Now, it’s a collection of quirky growth opportunities.
- Cash App, for example, is no longer adding transacting monthly active users, but is still scaling gross profit as it expands its neobank, brokerage, and BNPL tools acquired from the $29B Afterpay deal.
- The eccentric Dorsey is also full-speed ahead on some of its crypto and blockchain ventures, which aren’t mentioned in its shareholder letter, but include bitcoin mining systems and decentralized finance tools.
Neounifintechapp: Dorsey has indicated a desire to connect the entire Square-Cash App ecosystem together in the future, reducing friction and creating a powerful connection between patrons and merchants. It’s a possible opportunity for the operation’s two largest segments — and a potential way to fight incursion from neobank aspirants like RobinhoodHOOD and payment newcomers like ToastTOST and Clover (a subsidiary ofFI.
Forward-looking: The S&P 500 Selection Committee could have many more chances to surprise investors this quarter. With many index stocks sagging, even in the face of all-time highs, turnover at the bottom of the index could give room to fresh blood.