PANews reported on January 10 that Matthew Sigel, head of digital asset research at VanEck, posted on the X platform that the financial technology company Block is expected to become the first company in the S&P 500 to hold Bitcoin. For a stock to be included in the index, it must meet six major criteria, including: 1) a market value of more than $18 billion; 2) more than 10% of public shares; 3) earnings in the most recent quarter should be positive, and the sum of GAAP earnings in the previous four quarters should also be positive; 4) high liquidity; 5) listed for at least 12 months; 6) the company is headquartered in the United States.
Block meets the last criterion (earnings) after the release of its first quarter earnings in 2024. However, inclusion in the S&P 500 is not strictly based on a formula, but is determined at the discretion of the index committee. Historically, companies that meet all the requirements have been included within 3 to 21 months (LULU is a special case, which took 65 months).
Sector diversification is one of the factors that the index committee considers, and they aim to maintain a sector composition that is roughly consistent with sector economics. The phrase "consistent with sector economics" is not clearly defined, so the S&P Total Market Index can be used as a reference: Financials currently account for 13.9% of the S&P 500, while it accounts for 14.6% of the broader index, which suggests that there is still room for financials to increase.
