Facebook share price rises as company joins S&P 500 index

on Dec 12, 2013
Updated: Oct 21, 2019
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iNVEZZ.com, Thursday, December 12: Facebook Inc. (NASDAQ:FB) will join the US benchmark equity index, Standard & Poor’s 500 after the close of trading on December 20, Standard & Poor’s said yesterday. The social media giant will also join the S&P 100 index of large US companies. It will replace automatic test equipment provider Teradyne Inc. (NYSE:TER) in the S&P 500 and energy infrastructure company The Williams Companies Inc. (NYSE:WMB) in the S&P 100.

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Facebook’s share price fell 1.7 percent to close at $49.38 on the NASDAQ yesterday before S&P’s statement was released. The stock then surged 4.01 percent to $51.36 in after-hours trading, nearing its all-time high of $54.83 reached on October 18. Traders now expect that Facebook’s addition to one of the world’s most commonly followed financial market indicators will help boost the company’s share price. The S&P 500 is tracked by a number of index funds and investors, so the inclusion of new companies in to the index usually spurs demand for those shares.

Facebook’s inclusion in the blue chip index, which many analysts view as a bellwether for the US economy, comes after the company reported quarterly profits for the fourth quarter in a row in October. This is one of the criteria that the S&P committee assesses to determine eligibility for the index. The social media network floated on the NASDAQ in May 2012 in one of the most frenzied initial public offerings ever. Its share price fell after the IPO and remained below the float value for more than a year, but has grown strongly in the last four months and is now trading some 35 percent above the IPO price of $38. Facebook’s market capitalisation stands at about $123 billion, below Google’s (NASDAQ:GOOG) $360 billion, but significantly above LinkedIn’s (NYSE:LNKD) $28 billion and Twitter’s (NYSE:TWTR) $30 billion.

Facebook has a consensus rating of ‘buy’ and an average target price of $57.83 according to a survey of 45 analysts published by Analyst Ratings Network.
**Other S&P 500 additions**
Two other companies will be also included in the S&P 500 index – marketing solutions company Alliance Data Systems Corp. (NYSE:ADS) and floor covering company Mohawk Industries Inc. (NYSE:MHK). They will replace apparel retailer Abercrombie & Fitch Co. (NYSE:ANF) and communications solutions provider JDS Uniphase Corp. (NASD:JDSU).
**As of yesterday’s NASDAQ close buy Facebook shares at $51.37.**
**As of yesterday’s NASDAQ close sell Facebook shares at $51.34.**
Trade stocks with Hargreaves Lansdown from £5.95 per deal.
Prices can go up and down meaning you can get back less than you invest. This is not advice. Dealing services provided by Hargreaves Lansdown.

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