S&P 500 friends Facebook in major boost for giant social network

SAN FRANCISCO -- In a dramatic rebound from its bungled initial public offering last year, Facebook Inc. will join the Standard & Poor’s 500 Index next week, capping its fitful rise to one of the nation's most powerful technology companies.

Facebook will replace Teradyne in the S&P 500 at the close of trading Dec. 20, S&P Dow Jones Indices said Wednesday. It will also join the S&P 100 Index, replacing Williams Cos.

Being friended by the index is a vote of confidence in the giant social network and means Facebook can now count on a solid base of shareholders from funds that follow the indexes. It's also likely to boost Facebook shares, which have already been on a tear.

Facebook closed down 86 cents, or 1.7%, to $49.38 on Wednesday, but rose in after-hours trading on the S&P news. Many investors track the index and buy shares of companies when they enter it.

Facebook has been a front-runner for the index since it reported its fourth straight profitable quarter in October, a key criteria to be eligible for the S&P 500. Analysts have been speculating for months when Facebook would be tapped by the index.

Joining the S&P caps a big year for Facebook, which has seen its market value more than double to $123 billion.

Its shares have soared 86% this year as the Menlo Park company continued to build its advertising business, especially on mobile devices.

Facebook has more than 1 billion users, more and more of whom log in on smartphones and tablets.