Rally of CrowdStrike following addition to S&P 500 index

CrowdStrike witnessed a surge of up to 10% on Monday as the cybersecurity software provider was announced to be joining the S&P 500, stepping in for financial entity Comerica. The update from S&P Dow Jones Indices on Friday confirmed CrowdStrike’s entry to the benchmark index, alongside global investment giant KKR and internet domain vendor GoDaddy. These entities will be replacing Robert Half and Illumina, respectively, effective June 24.

Companies added to the benchmark often experience a rally post the announcement as fund managers adjust their portfolios to match the new additions. Analysts from Evercore predicted substantial buying activity in CrowdStrike shares by index trackers, estimating around 30 million shares to be acquired.

Cybersecurity-related ETFs also saw gains on Monday, with the First Trust Nasdaq Cybersecurity ETF rising by 1.3% and the Amplify Cybersecurity ETF, identified by the ticker symbol “HACK,” climbing by 1.2%.

With profitability shown in the past five quarters, CrowdStrike met the criteria for inclusion in the S&P 500. The company boasts a market cap exceeding $90 billion, more than double the median valuation of S&P 500 firms.

CEO George Kurtz expressed gratitude for the achievement, acknowledging the relentless effort and support from the team, customers, and partners since the company’s establishment in 2011 via a post on LinkedIn during the weekend.

Following the surge on Monday, CrowdStrike’s stock hit a fresh high, propelling its year-to-date gains to 49% subsequent to a notable 143% surge in 2023. Earlier this month, the company disclosed a 33% surge in revenue from the preceding year, amounting to $921 million.

Click to watch: Exclusive interview of CrowdStrike CEO George Kurtz with Jim Cramer