Facebook(FB) is finally set to join the S&P 500, an announcement late Wednesday that prompted the stock to jump in after-hours trading.
The Menlo Park, Calif. company will join the broad stock index after the close of trading on Dec. 20, S&P Dow Jones Indices announced late Wednesday. Facebook will replace chip-testing equipment maker Teradyne Inc.(TER)
Facebook shares rose more than 4% in after-hours trading. The stock, which closed Wednesday at $49.38, is up 86% this year. Facebook’s market capitalization of about $123 billion means it will immediately catapult into the top 30 biggest companies in the S&P 500.
The social network’s addition to the S&P 500 is expected to give a boost to the shares, spurred by buying from the many mutual and exchange-traded funds that track the index. Roughly $1.6 trillion were linked to the index at the end of last year, according to S&P Dow Jones Indices.
Facebook will join the S&P 500 19 months after the company started trading on the Nasdaq Stock Market(NDAQ) on May 18, 2012. Shares wavered out of the gate following a troubled launch, then amid concerns over whether the company could make money from mobile advertising. But investors over the summer put many of those concerns to rest following upbeat quarterly results. The stock pushed back above its $38 IPO price in August.
The move comes after months of speculation over when Facebook would finally join the index. It had qualified for the index in recent months, but was overlooked in the past few index changes, including last month when J.C. Penney Co.(JCP) was dropped from the index.
Facebook's wait to join the S&P 500 was roughly in line with Google Inc.(GOOG), which joined less than two years after its August 2004 IPO. Others waited longer. Amazon.com Inc.(AMZN), eBay Inc.(EBAY) and Yahoo Inc.(YHOO) each took over three years to join the S&P 500.
Facebook is also set to join the S&P 100, replacing Williams Cos.(WMB) The moves come amid a slew of changes S&P Dow Jones Indices announced late Wednesday.
S&P is a unit of McGraw Hill Financial Inc.(MHFI)