New Additions to the S&P 500: What’s Next?

New Additions to the S&P 500: What's Next?

The S&P 500 index could soon see the addition of Dell Technologies, Apollo Global Management, Coinbase Global, Palantir Technologies, and Workday. This prospective move follows the recent announcement of KKR, CrowdStrike Holdings, and GoDaddy joining the index, signaling a potential expansion and diversification within the S&P 500 constituents.

Dell’s Dominance and Market Dynamics

Dell, renowned for its excellence in servers and personal computers, proudly holds its position as the leading U.S. company beyond the realm of the S&P 500 index, boasting a staggering valuation of $93 billion. Trailing closely behind is Apollo, a significant player in asset management and insurance, commanding a substantial market value of $64 billion.

Dell’s market prowess highlights its tech dominance; Apollo’s ascent underscores alternative investment appeal, Barron’s Print Edition said.

Shifting Index Landscape

Previously, KKR and CrowdStrike, valued over $80 billion, were ranked second and third among non-index U.S. firms. S&P Dow Jones Indices’ recent decision mandates their inclusion, effective June 24th, along with GoDaddy. Comerica, Robert Half, and Illumina are consequently ousted.

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Potential Entrants and Market Dynamics

Several contenders like Palantir, Coinbase, and Ares Management vie for inclusion in the S&P 500 index. Their market valuations surpass $40 billion, exceeding the $12.7 billion eligibility threshold. These companies fiercely strive for acknowledgment and the opportunities within this esteemed benchmark. Alongside forthcoming entrants, they shape the index’s future landscape.

Benefits of Inclusion

Inclusion in the S&P 500 boosts stock price appreciation due to heightened demand from index funds. This trend was evident with KKR, CrowdStrike, and GoDaddy experiencing significant surges. Anticipation of these benefits often precedes the actual inclusion.

Criteria and Considerations

S&P Dow Jones Indices imposes stringent criteria for S&P 500 inclusion, emphasizing profitability and adherence to U.S. jurisdiction. Eligible entities must demonstrate profitability per generally accepted accounting principles (GAAP) across four consecutive quarters, among other requirements.

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