Workday Shares Jump 9% After Being Added to S&P 500 Index
Workday shares surged 9% in extended trading on Friday after S&P Dow Jones Indices announced that the cloud software vendor will be added to the S&P 500 index. The company will replace Amentum Holdings in the index, effective December 23. Workday’s market cap is approximately $70 billion, and it will be the latest prominent technology stock to join the index, following Dell and Palantir.
Workday was founded in 2005 and went public on the New York Stock Exchange in 2012, before switching its listing to the Nasdaq. The company reported $193 million in net income on $2.16 billion in quarterly revenue, a 16% increase from a year earlier. It has forecasted 14% revenue growth in the 2026 fiscal year.
To be eligible for inclusion in the S&P 500, companies must show a profit in the most recent quarter, as well as profit in the four most recent quarters. Prior to fiscal 2022, Workday was reporting net losses. New CEO Carl Eschenbach, a former VMware operating chief and Sequoia Capital investor, has committed to releasing an artificial intelligence agent for creating and submitting expense reports this year, and an agent for identifying inefficiencies in business processes will arrive in 2025.
Stocks often rally when added to a major index, as fund managers need to rebalance their portfolios to reflect the changes. However, not all newly added tech companies have been profitable for investors who buy index funds, as seen with Server maker Super Micro’s turbulent performance after being added to the S&P 500 in March.