Story
Five9 Shares Rise on S&P SmallCap 600 Index Inclusion
Shares of Five9 Inc. (NASDAQ:FIVN) surged in extended trading Wednesday following an announcement that the company will be added to the S&P SmallCap 600 index. The stock rose 6.3% in after-hours activity on the news.
Details of the Index Change
Five9, an information technology and cloud software company, is set to replace Two Harbors Investment Corp. (NYSE:TWO) in the index. The change will be effective prior to the opening of trading on Monday, August 3, according to the announcement.
The substitution is prompted by the pending acquisition of Two Harbors Investment Corp. by CrossCountry Mortgage LLC. The deal is expected to be finalized soon, contingent on final closing conditions.
AdMarket Implications
The upward move in Five9's stock price is a typical market reaction to an index inclusion. The addition forces passive investment funds and exchange-traded funds (ETFs) that track the S&P SmallCap 600 to purchase the company's shares to rebalance their portfolios and accurately reflect the benchmark's new composition.
This mandatory buying from institutional investors creates a significant, short-term increase in demand for the stock. The S&P SmallCap 600 is a key benchmark for the U.S. small-capitalization equity market, representing a broad and diverse segment of publicly traded companies.
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