Uber is Joining the S&P 500, Signaling Significant Market Milestone

Ride-hailing giant Uber is set to make waves on Wall Street as it joins the prestigious S&P 500, reaching a new 52-week high last week in anticipation of its debut in Monday trading.

Uber’s inclusion in the S&P 500, announced by S&P Dow Jones Indices on December 4, reflects the company’s remarkable turnaround under CEO Dara Khosrowshahi’s leadership. With a current valuation of approximately $127 billion, Uber becomes the largest US company not yet part of the index.

Celebrating the milestone, Khosrowshahi expressed his pride in the Uber team, emphasizing the significance of S&P 500 inclusion as the company continues its positive trajectory. The move follows a year of regulatory victories in the US and the UK, robust quarterly earnings, record ridership, and a remarkable surge in its stock, which has risen by over 150% in 2023.

Uber’s journey to the S&P 500 marks a substantial achievement for the company, demonstrating its expanding influence, market stability, and solidifying its status as a major player. The inclusion is not only a pivotal moment for Uber on Wall Street but also has broader implications, impacting the retirement accounts of countless individuals tied to funds tracking the S&P 500, such as 401(k)s, personal investment portfolios, and IRAs.

The automatic purchasing of Uber stock by these funds during the rebalance could potentially drive up the stock price further. Already, Uber’s stock has gained approximately 10% since the initial announcement of its inclusion in the benchmark index on December 4, approaching its all-time high set in February 2021.

The quarterly rebalance of the S&P 500, which represents 500 of the largest US companies, serves to maintain an accurate representation of the market. The criteria evaluated by the S&P Dow Jones Indices committee include market capitalization, corporate earnings, and liquidity. Uber’s addition to the index, along with other changes in this rebalance, is expected to generate significant market activity, with approximately $13 trillion tied to the S&P 500. This major liquidity event holds particular significance, especially during the holiday season, when trading volume tends to drop as traders take leave.