Blackstone (BX) is the biggest company in the private equity industry with over $1.07 trillion in assets under management (AUM).
It operates its business through several segments, including credit and insurance, real estate, private equity, and hedge fund solutions.
Its credit and insurance segment has over $320 billion in assets and is involved in private lending and insurance solutions. Private credit has become one of the fastest-growing industries in the financial services industry.
Blackstone is the biggest holder of real estate in the US, meaning that it benefits when rents are rising. In private equity, the company buys companies, improves them, and then either sells or takes them public.
Blackstone’s hedge fund solutions invests funds in other hedge funds to maximize shareholder returns.
Ideally, the company mostly makes money in two ways. It charges its investors an administration fee and then takes in performance fees based on its performance. As a result, its business does well when assets under management are rising and when its performance is thriving.
Blackstone stock was trading at $143.27 on Wednesday while its HypeIndex metric rose to 105%.
Positive hype
Blackstone has been growing its assets substantially in the past few years as demand for alternative investments has jumped.
The company has grown its AUM from about $335 billion in 2015 to over $1.076 trillion as in the last quarter. This means that, if the trend continues, the company has more room to grow its AUM to over $2 trillion in the next few years.
Its fee-earning AUM rose to over $808 billion while the perpetual capital AUM jumped to over $418 billion. Perpetual capital refers to funds that are difficult to redeem. Its total inflows jumped to over $39 billion in the last quarter.
Blackstone is one of the top players in the booming industry of private credit, where it provides loans to medium-sized companies that large banks ignore. Blackstone believes that it can get its private credit AUM to over $500 billion.
The company will benefit when interest rates start coming downwards because it will stimulate exits, either through M&A or through IPOs. It is estimated that private equity companies have firms worth over $3 trillion that can be taken public.
Blackstone’s second quarter revenue came in at $2.76 billion, down from $2.8 billion in the same quarter in 2023. Its trailing twelve months revenue was $10.3 billion, a big increase from $6.9 billion in 2023.
Blackstone, a mature company, is still seeing double-digit revenue growth. Analysts expect its revenue to hit $11.89 billion this year and $14.7 billion in 2025.
The company has almost $200 billion in dry powder, which is earning it interest. Dry powder refers to funds raised but not yet deployed.
Negative hype
Blackstone, as the biggest player in the PE industry, trades at a big premium compared to its peers. It has a forward P/E ratio of 32, up from the sector median of 12. This means that it needs to have strong growth to justify the valuation.
There are concerns about the growing private credit industry and the valuation metrics the companies use to value the funds’ recipients. Some analysts believe that we are in the private credit bubble.
It operates in a fairly competitive industry, with the other top players being Apollo, Carlyle, KKR, and TPG.
Summary on Blackstone
Blackstone stock has formed a unique technical pattern that could push it much higher in the coming months. The stock formed the cup and handle pattern and has recently moved above the upper side.
Blackstone has also remained above the 50-week and 100-week Exponential Moving Averages (EMA), which is a positive sign.
Momentum oscillators are also positive, with the MACD indicator remaining above the neutral point. The Relative Strength Index (RSI) has also remained above the 50-week moving average.
Therefore, the Blackstone stock price will likely continue soaring as bulls target the initial resistance point at $150 followed by $200.
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