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Financial services and digital payments company Block Inc. may become the first company with an “explicit” Bitcoin strategy to be listed in the S&P 500, according to the head of digital assets research at VanEck, Matthew Sigel.
Sigel explained his reasoning on X on Jan. 9, stating that for a stock to be added to the index, which comprises the stocks of the top 500 US companies by market capitalization, six main criteria must be met.
To get listed, the firm must have a market cap greater than $18 billion, a public float of greater than 10%, and the most recent quarter’s earnings should be positive. The sum of the previous four quarters’ GAAP (Generally Accepted Accounting Principles) earnings should also be positive; it should have high liquidity, more than 12 months of IPO (Initial Public Offering) seasoning, and be domiciled in the United States, said the VanEck executive.
He added that Block achieved the earnings criteria after the first quarter of 2024 but added that “S&P 500 inclusion is not strictly formulaic but is determined at the discretion of the Index Committee.”
Historically, companies that have met all requirements were included within three to 21 months, he said.
Block Inc. reportedly meets the criteria for inclusion in the S&P 500. Source: Matthew Sigel
When asked why he didn’t include Tesla, which already holds Bitcoin (BTC), Sigel said “Tesla owns Bitcoin but I don’t count them as a hodler because they don’t have an explicit strategy as Block does.”
Block allocates a 10% portion of its monthly Bitcoin gross profits to Bitcoin investment “on a predetermined and recurring cadence, we sidestep the challenges of market timing,” he pointed out.
Coinbase, which also meets the requirements, would probably be “a more controversial pick for the committee given the pure-play crypto exposure,” he said.
Related: Block’s Bitcoin revenue stagnates in Q3, shares drop 12% on revenue miss
Sigel said that sector diversification is one of the Index Committee’s considerations, and financial firms currently make up around 14% of the S&P 500, suggesting that there is room for more additions from this sector.
Block, formerly known as Square, was founded by Jack Dorsey in 2009 and is the eighth-largest corporate holder of Bitcoin with 8,363 BTC worth around $775 million, according to BitcoinTreasuries.NET.
On Jan. 10, Block announced that it would be changing its ticker symbols from ‘SQ’ and ‘SQ2’ to ‘XYZ’ in connection with the firm’s name change to Block 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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