Block’s S&P 500 Debut May See 759% Volume Surge, 54M Buys: JPMorgan - Block (NYSE:XYZ)

Block Inc. XYZ is gearing up for a major milestone. The fintech company is set to join the S&P 500 index ahead of trading on Wednesday, July 23.

Analysts expect the inclusion to trigger significant buying pressure from index funds. JPMorgan analyst Min Moon is forecasting a net demand of 54.2 million shares. That’s equivalent to 759% of Block's average daily trading volume.

Indexer Demand Breakdown

The surge in demand comes from two main forces. S&P 500 index funds will need to purchase roughly 70.9 million shares of Block to accurately track the updated index. On the flip side, funds tracking the broader S&P Composite index will sell about 16.7 million shares due to Block's removal from their benchmark. The net effect is a strong buying wave of approximately 54.2 million shares.

This massive demand influx is likely to create heightened trading volumes and could drive short-term price volatility as indexers rebalance their portfolios around the inclusion date.

JPMorgan Raises Price Target

In light of this development and ongoing positive momentum, JPMorgan has increased its price target on Block from $60 to $90. The new target reflects a five-times next-twelve-month gross profit multiple, which offers a slight premium over Block's current valuation and remains a discount to fintech peers trading at multiples of seven to nine times.

JPMorgan highlights Block's accelerating product velocity and marketing efforts as key drivers of growth. The company's addition to the S&P 500 is expected to further enhance its visibility and investor appeal.

What Investors Should Expect

While the index inclusion is a powerful catalyst, investors should be prepared for elevated volatility around July 23, due to heavy trading in index funds.

However, longer-term stock performance will depend on Block's execution and fundamentals beyond the mechanical demand from indexers.

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