US Markets
Monday, September 9th, 2024 7:18 pm EDT
Key Points
- Palantir’s S&P 500 Inclusion: Palantir shares surged 13% on Monday, reaching their highest level since early 2021, following the announcement that the company will be added to the S&P 500 index along with Dell, replacing American Airlines and Etsy.
- Financial Criteria and Performance: To qualify for the S&P 500, Palantir met the requirement of reporting a profit for the latest quarter and having cumulative profitability over the past four quarters. The company reported a net income of $135.6 million for Q2, a significant increase from the previous year, and became profitable in Q4 2022.
- Market Impact and Tech Sector Growth: The addition of Palantir highlights the increasing representation of tech companies in the S&P 500. With a market cap of over $76 billion, Palantir exceeds the median market cap of S&P 500 companies, reflecting the growing significance of tech firms in the broader economy.
Palantir shares surged 13% on Monday, reaching their highest levels since early 2021, following the announcement that the company will be added to the S&P 500. Palantir, along with Dell, will replace American Airlines and Etsy in the index. This change was disclosed by S&P Global in a press release on Friday.
The addition of Palantir to the S&P 500 has generated excitement among investors, as companies that join the index typically see a rise in stock price. This is due to fund managers adjusting their portfolios to reflect the updated composition of the index. Dell shares also experienced a boost, rising nearly 4% on Monday in response to the news.
To be eligible for inclusion in the S&P 500, a company must meet specific financial criteria, including reporting a profit in its most recent quarter and having cumulative profitability over the last four quarters. Palantir met these requirements, reporting a net income of $135.6 million in the second quarter, a significant increase from the $27.9 million it reported during the same period the previous year. The company turned profitable in the final quarter of 2022, solidifying its position for S&P 500 inclusion.
The increasing representation of tech companies in the S&P 500 reflects the growing influence of the technology sector on the broader economy. In recent months, other tech companies like CrowdStrike and Super Micro Computer have also been added to the index, highlighting the sector’s prominence. Palantir, a data analytics and software company, has seen its market capitalization exceed $76 billion, well above the median market cap of approximately $33.5 billion for S&P 500 companies.
Palantir went public in 2020, and its stock reached an all-time closing high of $39 in January 2021. On Monday, Palantir’s shares rose to $34.30, just 14% below its previous peak. The company’s inclusion in the S&P 500 is expected to further bolster its stock performance, as the move signals greater confidence in Palantir’s profitability and growth trajectory.
For the full original article on CNBC, please click here: https://www.cnbc.com/2024/09/09/palantir-soars-13percent-on-software-vendors-inclusion-in-sp-500.html
