Despite record asset growth and aggressive expansion into private markets, performance fees and revenue fell short of expectations, sending shares down nearly 7%
BlackRock Inc. (BLK) shares fell as much as 6.8% on Tuesday, marking the company’s sharpest drop since April, after second-quarter revenue and performance fees missed Wall Street estimates. The slide came despite the firm achieving a record $12.5 trillion in assets under management.
Revenue rose 13% year-over-year to $5.4 billion, slightly below the $5.5 billion forecast. Performance fees came in at $94 million, well below the $114 million analysts had anticipated, largely due to softer advisory fees and a redemption by a major institutional client.
The company reported $68 billion in total net inflows, including $85 billion into exchange-traded funds (ETFs) and $14 billion into digital-asset ETFs. Retail client inflows were notably low at just $2 billion, the weakest level since Q4 2023. Despite this, BlackRock attracted $9.8 billion into alternative investments and added $22 billion into cash and money-market funds.
CEO Larry Fink emphasized the firm’s shift into higher-margin sectors, including private credit and infrastructure. “Our longstanding relationships and history of reinvention are resulting in a higher, more diversified organic base-fee growth,” he said on the earnings call.
BlackRock recently completed its $12 billion acquisition of HPS Investment Partners, adding $165 billion in assets. Other major moves include deals to acquire Global Infrastructure Partners and Preqin. These additions position BlackRock to manage over $600 billion in alternatives, with a goal of reaching $1 trillion by 2030.
Still, analysts warned that successful execution across all three major acquisitions will be critical. “The bar is high,” said Edward Jones analyst Kyle Sanders, “and BlackRock must deliver on private market expansion to meet its long-term financial targets.”
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