As Larry Fink reshapes BlackRock Inc. beyond public markets, its latest results show one thing: Expectations for the world’s largest asset manager are going up.
BlackRock shares fell as much as 7% Tuesday and were on track for the worst earnings-day drop in more than a decade, wiping out the bulk of the stock’s 2025 gains.
That came after the asset manager reported earnings surpassing the average estimate, in a quarterly performance that most analysts deemed somewhere between solid and strong.
BlackRock “is entering into a new chapter in its growth story,” said Kyle Sanders, an analyst at Edward Jones. “While the past two decades have been marked by the explosive growth in ETFs, the next phase of the firm’s evolution will depend on private markets and technology via Aladdin.”
That shift, echoed across the asset-management industry as firms race to respond to the relentless pressure on fees from low-cost indexing, was on display in the firm’s second-quarter earnings.
The company reported a day after BlackRock shares had rallied to a record and some analysts predicted more upside in the months ahead.
Shares fell 5.1% to $1,054.92 at 1:02 p.m. in New York.
TD Cowen analysts led by Bill Katz called the share drop “an overshoot” but cautioned that the path to BlackRock’s long-term story, while intact, is a “bit bumpier.”
The world’s largest money manager took in less client cash than expected, largely because a single large institutional client pulled $52 billion from a low-fee index strategy.
Multi-asset and overall fixed-income strategies also had redemptions, while total performance fees were down $70 million from a year earlier. Revenues rose 13% to $5.4 billion from a year earlier, just missing analyst estimates.
Still, BlackRock pulled in money — $68 billion overall — including $22 billion to cash management accounts and $9.8 billion in alternatives and $85 billion in aggregate to ETFs. Client assets under management overall hit a record $12.5 trillion.
“This is just Wall Street, hedge funds, going in an out of the market, and that’s fine,” Fink said Tuesday in a CNBC interview after shares declined. “Long-term, I’m a huge buyer of BlackRock at these prices.”
Fink attributed the share move to investors thinking the company expenses are high, which he said was intentional as it integrates three major acquisitions to become a key player in private markets.
High Bar
In his latest annual letter to investors, Fink said the firm is no longer a “traditional asset manager” and pledged to bring private assets to the masses. Just after the quarter ended, BlackRock completed its $12 billion acquisition of private-credit shop HPS Investment Partners, its third major purchase in about 18 months.
BlackRock Chief Financial Officer Martin Small told analysts that HPS would add about $450 million of revenue, including $225 million in management fees, in the third quarter.
In addition to its private-credit bet, BlackRock also struck deals to buy Global Infrastructure Partners and private-markets data firm Preqin. The firm surpassed the fundraising target for GIP’s fifth flagship, raising $25.2 billion, BlackRock said in the statement.
With the acquisitions, BlackRock will manage more than $600 billion of alternative investments, and the company has set a goal to raise another $400 billion in private assets by 2030.
“The bar is high, and BLK will need to successfully deliver on each of its three acquisitions in the private markets space to achieve its financial goals,” Sanders of Edward Jones said.
At the start of the second quarter, Trump’s announcement of unexpectedly stringent tariffs sent global stock markets plunging and led to convulsions in bond markets — at one point rivaling the volatility of the 2008 financial crisis and onset of the pandemic in 2020.
About a week later, the president issued a 90-day pause on tariffs for dozens of trading partners.
After the anxiety subsided, investors added to stocks and bonds as the S&P 500 and global indexes quickly recovered. The market upheaval showed signs of weighing on certain investors.
BlackRock said its long-term net inflows from retail clients during the period totaled $2 billion, the lowest since those investors pulled money during the last three months of 2023.
BlackRock also pulled in $14 billion for digital-asset ETFs. The company has been finding ways to push into that market and disclosed that it held a $330 million stake in stablecoin issuer Circle Internet Group Inc. at the end of June.
That company went public earlier that month and has soared 560% from its initial public offering through Monday’s close.
(Credit: AP)
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