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.