As a financial analyst, I find it intriguing that Block Inc., a leading player in financial services and digital payments, could potentially break new ground by adopting an “explicit” Bitcoin strategy. This strategic move, according to Matthew Sigel, head of digital assets research at VanEck, might make Block Inc. the first company with such a focus on Bitcoin to be included in the prestigious S&P 500 index.
On January 9th, Sigel clarified his thought process regarding X. He highlighted that for a stock to qualify for inclusion in the index, which consists of the top 500 U.S. companies ranked by market capitalization, there are six primary conditions that need to be fulfilled.
For a company to qualify for listing, several criteria must be met:
1. The market capitalization should exceed $18 billion.
2. The public float should be more than 10%.
3. The most recent quarter’s earnings should be positive.
4. The sum of the previous four quarters’ GAAP earnings should also be positive.
5. It should demonstrate high liquidity.
6. It should have been publicly traded for at least 12 months following its Initial Public Offering (IPO).
7. The company should be based in the United States, as stated by a VanEck executive.
He mentioned that Block satisfied the earning requirements by the end of the first quarter in 2024, yet emphasized that the S&P 500 index inclusion isn’t solely based on a set formula, but rather a decision made by the Index Committee.
historically, companies that fulfilled all necessary criteria were added within a timeframe of three to twenty-one months, as stated.
When questioned about the absence of Tesla in his list of “hodlers” (long-term holders of Bitcoin), Sigel responded by explaining that “Tesla possesses Bitcoin, but I don’t consider them as hodlers since they don’t have a clearly defined strategy like Block does.
On a consistent basis, Block sets aside 10% of its monthly Bitcoin earnings for Bitcoin investments, avoiding the difficulties associated with market timing.
In simpler terms, “Coinbase might be a less favored choice for the committee due to its direct association with cryptocurrencies,” he pointed out.
According to Sigel, the Index Committee takes sector diversification into account, implying there’s potential for adding more financial companies since they only represent about 14% of the S&P 500 at present.
Originally named Square, which was established by Jack Dorsey in 2009, currently ranks as the eighth-largest Bitcoin owner, holding approximately 8,363 Bitcoins valued at roughly $775 million, as per BitcoinTreasuries.NET.
On January 10th, Block revealed their plan to switch their stock symbols from ‘SQ’ and ‘SQ2’ to ‘XYZ’, coinciding with the company’s rebranding to Block, which occurred in December 2021.
It also revealed that it will release financial results for the fourth quarter of 2024 on Feb. 20.
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2025-01-10 05:55