BlackRock's Mixed Bag: A Buying Chance?

BlackRock, the world's biggest asset manager, saw its shares drop by 5% after releasing its second-quarter earnings. The results were a mix of good and not-so-good news. Revenue went up by 12. 9% compared to last year, reaching $5. 42 billion. However, this was a bit less than what experts expected, which was $5. 46 billion. On the bright side, the company's earnings per share were better than predicted, coming in at $12. 05 instead of the expected $10. 82. The total value of assets under management hit a new high of $12. 53 trillion, which was more than the estimated $12. 15 trillion. Even though the stock was at an all-time high before the earnings report, some investors decided to take profits, leading to the drop in share price. Despite this, the company is well-positioned for the rest of 2025, making the current dip a good opportunity for long-term investors to buy in. CEO Larry Fink pointed out that the strong growth in fee revenue, driven by rising asset prices, was overlooked by those selling the stock. He also mentioned that the recent acquisition of HPS, completed on July 1 for $17 billion, will have a positive impact in the future. This deal is part of BlackRock's strategy to expand its presence in the fast-growing private credit market. Looking under the hood, there were several positive signs. Organic base fee growth was 6%, marking the fourth straight quarter of 5% or higher growth. The adjusted operating margin was 43. 3%, which was better than expected, although it was slightly lower than the previous year. CFO Martin Small noted that currency fluctuations and rising asset prices mean the company started the third quarter with a base fee run rate about 5% higher than the previous quarter. Total assets under management increased by 18% year over year to $12. 5 trillion. However, net inflows were lower than expected due to a large institutional redemption of $52 billion from low-fee index funds, resulting in $48 billion of net outflows. Despite this, iShares ETF inflows in the first half of the year reached a new record for the company. Technology services and subscription revenue increased by 26%, with Preqin contributing approximately $60 million to the second-quarter revenue. BlackRock's $3. 2 billion purchase of Preqin, an alternative assets data provider, is seen as a significant move. The company is working with regulators to provide more transparency and liquidity in private markets, which include assets like private credit and infrastructure investments. Annual contract value (ACV) increased by 32% year over year, including Preqin, and by 16% organically. Despite the positive outlook, shares of BlackRock are down more than 5%. The company's recent acquisitions are expected to boost sales and earnings, allowing it to expand its client base and cross-sell newer products to existing customers. As these acquisitions are integrated, the adjusted operating margin is expected to rebound.