Blackstone (BX) Soars 3.8% on 25% Earnings Surge

Blackstone's stock rose 3.8% in pre-market trading on July 24, 2025, driven by a significant increase in its distributable earnings for the second quarter.

Blackstone's second-quarter earnings report revealed a 25% surge in distributable earnings, primarily attributed to the performance of its retail funds and perpetual funds. These funds, which include private equity investment tools for high-net-worth clients and large real estate trust funds, generated substantial incentive fees. Unlike traditional private equity strategies, these perpetual funds can collect fees without actually realizing investment gains, as long as they achieve sufficient book profits to meet minimum thresholds.

This resulted in a 167% increase in what Blackstone calls "fee-related performance income" compared to the same period last year. The $4.72 billion in unexpected earnings helped alleviate the challenges faced by Blackstone and its competitors in generating profits from investments made during the period of extremely low interest rates.

Despite the rise in interest rates and the trade wars initiated by former U.S. President Donald Trump, which led to a slowdown in transaction activities, Blackstone's retail business continued to support its performance. Blackstone's President Jon Gray highlighted that the perpetual fund business has been a strong driver for the company, especially in a challenging environment where realizing gains is difficult.

Gray emphasized that this business model allows Blackstone to earn substantial incentive fee income even in a more challenging liquidation environment, demonstrating the breadth of their business. The company's distributable earnings, or the profit available to shareholders, increased to $1.57 billion, or $1.21 per share, exceeding market expectations of $1.10 per share.

In addition to incentive fees, new fund inflows drove a 13% increase in management fees. Approximately one-fifth of the $520 billion raised during the period came from private wealth channels. By mid-year, Blackstone managed $280 billion in assets for private wealth clients, accounting for about a quarter of its total $1.2 trillion in managed assets.

However, Blackstone's net realized gains for the second quarter were only 63% of what they were four years ago. The performance varied across different business segments. The private equity division saw a 12% year-over-year increase in net realized gains, while the real estate business experienced a 37% decline. Gray noted that while the real estate market is showing signs of recovery, it has not yet reached a breakthrough.

Blackstone's credit and insurance divisions continued to thrive, accounting for more than half of the company's net inflows for the quarter. Over the past 12 months, this division has seen the highest inflow of funds compared to all other major business units. Gray also mentioned that while Blackstone's transaction channels slowed down after the tariffs imposed by Trump on April 2, they have since expanded.