In an action that forces index funds with trillions of dollars in assets to own it, the social media company will replace Monsanto Co in the S&P 500 prior to the start of trading June 7. A much larger internet rags-to-riches story, Netflix Inc, was added to the S&P 100, S&P Dow Jones Indices said.
Twitter’s 58 per cent gain in 2018 would be the fifth-largest in the S&P 500. Reflecting the interest of index-tracking funds, the stock jumped 5.5 per cent after news of the addition was disclosed.
Analysts are not sanguine about the stock’s prospects. Their average forecast implies a 19 per cent decline over the next 12 months, data compiled by Bloomberg showed.
San Francisco-based Twitter has more than doubled from last year’s low on optimism over Chief Executive Officer Jack Dorsey’s strategy to push into live video and more personalised content. After more than 16 quarters of losses, the company reported a second quarter of profits earlier this year.
More than US$7.8 trillion of assets are benchmarked to the S&P 500, S&P data on its website showed.—Bloomberg