Standard & Poor's on Wednesday said Facebook Inc (NASDAQ:FB) will join its S&P 500 stock index after the close of trading on December 20, cementing the social media network's rise into one of the biggest, most powerful U.S. companies.
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The decision follows Facebook reporting its fourth straight profitable quarter in October, one of the criteria that S&P uses to determine eligibility for the index.
Facebook shares rose 4.3 percent to $51.51 following S&P's announcement after regular market hours. Shares often rise after a company is tapped for inclusion in the S&P 500, because many investors track the index and buy shares of companies that enter it.
The Menlo Park, California-based company's shares had closed Wednesday down 87 cents at $49.38, about 30 percent above their $38 initial offering price in May 2012, and giving it a roughly $121 billion market value, Reuters data show.
S&P said on December 20 it will also add marketing solutions company Alliance Data Systems Inc and floor covering company Mohawk Industries Inc to the S&P 500, and remove Abercrombie & Fitch Co, JDS Uniphase Corp and Teradyne Inc. Facebook will also replace Williams Cos in the S&P 100 index of large U.S. companies. Williams will remain in the S&P 500.
(Reporting by Jonathan Stempel in New York; Editing by Bernard Orr)