Block, formerly known as Square, is considering becoming the first Bitcoin holder in the S&P 500 index. Key requirements for inclusion relate to market capitalization, public investor share, and profitability.
Criteria for S&P 500 Inclusion
To be included in the S&P 500, a company must meet several criteria: its market cap should exceed $18 billion, more than 10% of shares should be publicly traded, and the company should be profitable in the last quarter and also over the previous four quarters in terms of GAAP earnings. High liquidity and being domiciled in the U.S. are also required. Block achieved the earnings criterion after the first quarter of 2024 reporting. However, S&P 500 inclusion is determined at the discretion of the Index Committee and is not strictly formulaic.
Block's Early Bitcoin Investment
Block initially bought $50 million worth of Bitcoin in October 2020, followed by an additional $170 million in February 2021. The company's CEO, Jack Dorsey, is known as a long-time proponent of Bitcoin.
Other Crypto Contenders
As previously reported, MicroStrategy, the leading corporate Bitcoin holder, was recently added to the tech-heavy Nasdaq-100 index. However, MSTR's inclusion in the S&P 500 soon is highly unlikely. Eric Balchunas from Bloomberg opined that the S&P 500 committee might block the stock's addition even if it meets the criteria. It was also predicted that Coinbase would be included in the S&P 500 this year, but this decision could be more controversial for the committee compared to Block.
Block could become the first company holding Bitcoin in the S&P 500, but the process depends on the Index Committee's decision. Despite meeting all requirements, the inclusion remains debatable.
