April was the cruelest month since the start of the pandemic and BlackRock (BLK 0.56%) felt that pain as its stock price dropped 18.3% in the month, according to S&P Global Market Intelligence.
The world's largest money management firm trailed the S&P 500, which was down 8.8% in April -- its worst month since March 2020. The Nasdaq was even worse, down 13.3% for the month. Year to date, BlackRock is down 31% as of May 6.
BlackRock is the world's largest money manager with about $9.6 trillion in assets under management (AUM). The AUM dropped from $10 trillion -- an all-time high -- at the end of 2021 and that can be attributed to the fact that that market was down roughly 5% in the first quarter. However, AUM was up about 6% year over year.
With the sequential drop in assets, revenue was also down from the previous quarter.
But given the difficult market environment, BlackRock beat analysts' earnings estimates and had a pretty solid quarter, all things considered. Revenue jumped 7% year over year to $4.6 billion while net income climbed 20% to $1.4 billion. Operating margin increased to a robust 37.5%, up from 35.1% a year ago. And in a bad market, BlackRock had $114 billion in long-term net inflows, led by its exchange-traded funds (ETFs), which had $56 billion in inflows in the quarter.
But the stock price dropped after the earnings release on April 13, as the market had an even worse month in April -- and May is not much better so far.
BlackRock, like all money managers, typically doesn't perform as well when the market is down. Over the past decade-plus, when the stock market has struggled, so has BlackRock. Rising interest rates, which were raised 50 basis points this week, are not typically good either for money managers as rising rates make borrowing more expensive, which in turn slows down growth companies. But BlackRock CEO Larry Fink is optimistic that the firm can navigate the downturn.
"I would say rising rates is an opportunity, not a problem," he said on the earnings call.
BlackRock will be fine in the long run as the largest money manager and leader in ETFs and will bounce back strong when the market does. When that will happen is not certain right now, but for now, the stock is a hold.