Why Beyond Meat Stock Popped 10%

What happened

Shares of recent IPO Beyond Meat (NASDAQ: BYND) are surging -- yes, again -- up 10.1% as of 11:50 a.m. EDT. It's the reason these shares are up that may surprise you.

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Over the weekend, The Wall Street Journal reported that "the recent crop of initial public offerings that includes ... Beyond Meat ... will join FTSE Russell's popular U.S. stock indexes at the end of June."

So what

As the Journal explained, May 10 was the cutoff for new additions to the Russell 1000 index, which tracks the performance of the 1,000 largest U.S. companies by market cap. Beyond Meat did its IPO on May 2, well within the cutoff date. And with a market capitalization of more than $10 billion, it also "meets" the qualification for inclusion in the index -- which includes stocks as small as $2.4 billion in market cap.

Now what

As a result, on June 28 (the last trading day of the month), Beyond Meat will be added to the Russell 1000. Mutual funds and ETFs that track the Russell will accordingly need to buy some shares of Beyond Meat so that their holdings accurately reflect the composition of the index -- resulting in automatic buying pressure on the stock.

Investors who are buying Beyond Meat today are trying to beat that rush, in hopes that when June 28 rolls around, Beyond Meat stock will go up even more.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.