Facebook (FB) Can't Get Any S&P 500 Love... The Reason Explained
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Now a public company for over a year and a half and sporting a nearly $120 billion market value, Facebook (NASDAQ: FB) would appear to be a shoe-in for the S&P 500. Yet, time and time again the social media giant has been snubbed.
Yesterday was the latest example. Rumors during the day had Facebook being tapped to replace Molex (being acquired by Koch) in the S&P 500, sending Facebook's stock up 4% on Wednesday. However, when an index change announcement was made after the close it was General Growth Properties, Inc (NYSE: GGP) that got the nod; a company that was bankrupt not too long ago. This resulting in Facebook shares falling back about 1% and General Growth rising 3%.
We asked S&P why Facebook was snubbed again and here is what they said:
"The are many factors that we look at before deciding to add a company to the S&P 500. In this particular instance, we were looking to add a Financials company to the Index to maintain the market representation of that sector. General Growth Properties is the largest Financial outside of the S&P 500 that meets all of the index criteria. In addition, when we make changes to the S&P 500, we generally try to swap in/out companies that are relatively close in size. General Growth Properties is about $19 billion in market cap and Molex is about $7 billion."
So there you go... apparently Facebook is going to need a social media stock with a $120 billion market to be dropped before it is added. Joking aside, one of these days Facebook will be added to the popular index but it is anyone's guess when. Betting on when may be nothing more than folly.
Yesterday was the latest example. Rumors during the day had Facebook being tapped to replace Molex (being acquired by Koch) in the S&P 500, sending Facebook's stock up 4% on Wednesday. However, when an index change announcement was made after the close it was General Growth Properties, Inc (NYSE: GGP) that got the nod; a company that was bankrupt not too long ago. This resulting in Facebook shares falling back about 1% and General Growth rising 3%.
We asked S&P why Facebook was snubbed again and here is what they said:
"The are many factors that we look at before deciding to add a company to the S&P 500. In this particular instance, we were looking to add a Financials company to the Index to maintain the market representation of that sector. General Growth Properties is the largest Financial outside of the S&P 500 that meets all of the index criteria. In addition, when we make changes to the S&P 500, we generally try to swap in/out companies that are relatively close in size. General Growth Properties is about $19 billion in market cap and Molex is about $7 billion."
So there you go... apparently Facebook is going to need a social media stock with a $120 billion market to be dropped before it is added. Joking aside, one of these days Facebook will be added to the popular index but it is anyone's guess when. Betting on when may be nothing more than folly.
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