Facebook Joins S&P 500, Shares Soar 4%

Less than two years after its initial public offering, social networking site Facebook has joined the S&P index of some of the biggest companies in the world, replacing chip-testing equipment manufacturer Teradyne.

Eligibility for index

facebookThe decision follows Facebook reporting its fourth profitable quarter, one of the criteria that S&P uses to determine eligibility. Facebook shares rose 4% following S&P’s announcement after trading hours.

Companies that join in the S&P 500 can be registered  on either the Nasdaq or New York Stock Exchange.

The S&P is considered the best representation of the United States stock market and a bellwether for the country’s economy.

Surging shares

Analysts see that Facebook’s move could add to the surge in the company’s shares this year.

After a botched initial public offering last year, Facebook shares declined to less than half of their initial $38 each, before recovering during summer of 2013.

The social networking site has been pleasing investors recently, reporting better than expected profit and strong mobile ad sales.