Zoom Video Hits New Highs: Is S&P 500 Inclusion Next?

Zoom Video Communications ZM has had a great week. The company reported strong growth for its second quarter and saw its stock hit new highs during Tuesday’s session. Could inclusion in the S&P 500 be the next catalyst for the stock?

The S&P 500: Among the rules for S&P 500 inclusion are: a market capitalization of $8.2 billion, highly liquid shares, being public for 12 months or more, and a public float of 50% of shares. The float requirement went away recently and is the only one Zoom does not currently meet. It passed its one-year anniversary of being a public company in April.

The S&P 500 holds the most valuable companies while also hitting numerous industries. The index says “it covers leading companies from leading industries.” The index counts 11 sectors, 24 industry groups, 69 industries, and 158 sub-industries amongst its make-up.

Why It’s Important: Inclusion in the S&P 500 would put Zoom shares in many of the top ETFs. The SPDR S&P 500 Trust ETF SPY, iShares Core S&P 500 ETF IVV, and Vanguard S&P 500 ETF VOO have assets under management of $307 billion, $220 billion, and $142 billion, respectively.

Back in April, Zoom joined the Nasdaq 100 Index NDX.

ZM Price Action: Zoom shares closed up 40% Tuesday at $457.69. Shares hit an all-time high of $478 earlier in the trading day.

Posted In: NASDAQ 100S&P 500NewsMoversTechTrading Ideas