Bloom Energy, Illumina and Everpure are joining the S&P 500 in the index's third-quarter rebalancing, while Molson Coors Beverage, Builders FirstSource and Trade Desk are being removed. The changes take effect before trading opens on Sept. 21.
S&P Dow Jones Indices tabbed Bloom Energy for inclusion in the S&P 500 after Friday's closing bell, ending several quarters in which the fuel-cell maker was passed over. Bloom Energy's shares rose more than 7% in Friday's regular session and gained another 7% in after-hours trading, leaving the company with a market capitalization north of $74 billion as of Friday's close.
Bloom Energy was the largest eligible name
The company was the largest company eligible for inclusion in the S&P 500. Bloom Energy has been a beneficiary of the artificial-intelligence power craze, and its shares have nearly tripled so far this year.
Illumina and Everpure also join
The index will also welcome Illumina, a $33 billion maker of DNA-sequencing technology, and Everpure, a company worth $33 billion that runs a platform for cloud and data storage. Shares of both companies were up 2% in Friday's extended session.
Three smaller names get cut
In turn, the index committee is removing Molson Coors Beverage, Builders FirstSource and Trade Desk from the S&P 500. Those three companies each have market capitalizations of about $7 billion. Adding a large company while removing a smaller one creates a size imbalance for an index weighted by market capitalization, since it requires selling off some of each of the other 499 components to fund the new company's bigger weighting.
This rebalancing also lines up with a broader review of constituents' float weightings. Stephens analyst Melissa Roberts told MarketWatch: "already seeing larger trade sizes on a dollar basis", adding that this affords the opportunity to make more changes without a bigger impact on the remaining members.
Cheniere and Twilio miss the cut
Roberts had previously flagged Cheniere Energy and Twilio as leading candidates for inclusion, but neither was chosen for this reshuffle. Cheniere's stock was down 4% in Friday's extended trading, while Twilio's was off more than 2%.
The S&P 500 is not simply a collection of the 500 largest U.S.-listed companies. Prospective members must meet requirements around profitability and market capitalization, but the index committee retains discretion over which qualifying companies make the cut.
Source: MarketWatch
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