Twitter has been promoted to one of Wall Street’s major leagues, and investors are flocking to the stock.
The social-networking company’s stock is being added to the S&P 500 index, marking a coming-of-age moment for Twitter. In addition, Netflix is being elevated to the S&P 100 index of large-cap companies.
On the news, Twitter shares were up 4% in premarket trading, after closing at a three-year-high $37.88 per share Monday. The stock is up 55% year to date, after Twitter posted two straight quarters of net profit (for Q4 2017 and Q1 2018) — the first in its 12-year history. S&P Dow Jones Indices announced the changes after market close Monday. [UPDATE: Twitter shares closed Tuesday up 5.1%, to $39.80 per share. The stock’s all-time high closing price was $73.31 per share on Dec. 26, 2013, less than two months after its IPO.]
Twitter’s entree into the S&P 500 isn’t just symbolic: The index, weighted by market capitalization, is widely used by financial services firms to offer funds based on the S&P 500. Twitter’s market cap currently stands at more than $28 billion.
Meanwhile, Twitter this week restructured its content-partnerships organization, shifting to a regional management structure rather than the previous one based on categories like news, sports and live video. The company positioned the move as a way to “streamline” the group. Among the changes, Twitter disbanded its live-video business unit and is merging the team into the regional structure.
On the S&P indices, Twitter and Netflix are replacing pharmaceutical giant Monsanto, which is being acquired by Bayer in a $63 billion deal. The changes to the respective S&P indices are set to go into effect on Thursday, June 7.
Netflix shares, also at record highs, rose 0.2% in premarket trading Tuesday. The stream-video company is currently the world’s most valuable media company in terms of market capitalization, currently at more than $157 billion, having surpassed Disney’s market cap on May 25.