Private Markets Push Raises Expectations and Volatility
BlackRock shares slid as much as 7% on Tuesday, marking their worst earnings-day drop in over a decade. The decline came despite second-quarter results that beat average earnings estimates, as investors responded to lower-than-expected net inflows and rising company expenses. The selloff erased most of the stock’s 2025 gains, reflecting the high bar now set for the world’s largest asset manager as it transitions toward private markets and technology-driven services.
Analysts described the results as solid, even strong, but not sufficient to support the elevated share price following a rally to record highs. BlackRock reported $5.4 billion in revenue, up 13% from the prior year, though still shy of analyst projections. A significant $52 billion redemption by a single institutional client from a low-fee index strategy weighed on the quarter’s inflows.
Fink Reframes BlackRock’s Identity
CEO Larry Fink emphasized that BlackRock is no longer a traditional asset manager. The company is undergoing a strategic shift into private markets, with major acquisitions including private credit firm HPS Investment Partners, infrastructure manager Global Infrastructure Partners, and data firm Preqin. The goal: manage over $1 trillion in alternative investments by 2030.
Fink defended increased expenses as necessary for integrating the firm’s three major acquisitions, stating, “Long-term, I’m a huge buyer of BlackRock at these prices.” Chief Financial Officer Martin Small said the HPS acquisition alone would add approximately $450 million in revenue in the third quarter, with $225 million from management fees.
Investor Caution Despite Record AUM
Even with investor concerns, BlackRock achieved a new milestone, with assets under management climbing to $12.5 trillion. Net inflows totaled $68 billion, including $85 billion into ETFs, $22 billion into cash management accounts, and nearly $10 billion into alternatives. Still, retail net inflows came in at just $2 billion — the weakest since late 2023.
The company’s performance fees fell $70 million year over year, and fixed income strategies saw redemptions. Despite this, TD Cowen analysts called the stock drop an “overshoot” but warned of a bumpier path ahead as BlackRock integrates its acquisitions and navigates higher expectations.
Tariff Uncertainty Adds to Market Volatility
The quarter began with market turbulence triggered by President Trump’s announcement of strict new tariffs, causing volatility rivaling the 2008 crisis. A subsequent 90-day pause helped stabilize markets, and equities rebounded. However, investor anxiety lingered, impacting BlackRock’s retail flows and highlighting the broader economic uncertainty surrounding policy shifts.
BlackRock also continued its expansion into digital assets, pulling in $14 billion for digital-asset ETFs and disclosing a $330 million stake in stablecoin issuer Circle Internet Group Inc., which has surged 560% since its IPO.
