BlackRock Inc. Stock Underperforms Despite Daily Gains

BlackRock Inc. (BLK) shares underperformed on Thursday, January 23, 2025, despite posting daily gains. The company's stock fell 2.92% over the past month, while the financial sector as a whole outperformed the market. This underperformance can be attributed to BlackRock's lack of exposure to banks, which are benefiting from rising interest rates. However, it is important to note that BlackRock's underperformance in the short term does not necessarily indicate long-term underperformance.

BlackRock's long-term stock performance has been strong, with the company's shares rising 26% in 2024, beating the market. Additionally, BlackRock's total return over the past 12 months is 64.80%, compared to the S&P 500's 38.58%. This strong long-term performance is a result of the company's ability to grow its assets under management (AUM) and generate revenue, even after becoming the largest player in the asset management industry.

Furthermore, BlackRock's private markets opportunity and the potential for increased merger and acquisition (M&A) activity under the Trump administration could drive long-term growth for the company. Private markets AUM currently make up only 2% of BlackRock's total AUM but contribute 11% of the firm's base fee revenue. This ratio of revenue versus AUM far exceeds any other BlackRock product, making assets in the area more valuable and at a higher margin. As a result, there is significant room for BlackRock to grow its private markets business, which could drive long-term growth for the company.

In conclusion, BlackRock's underperformance on Thursday does not necessarily indicate long-term underperformance. The company's strong long-term stock performance, private markets opportunity, and potential for increased M&A activity under the Trump administration could drive long-term growth for BlackRock.