Why BlackRock's Stock Price Dropped 33.5% in the First Half

What Happened

Asset management firm BlackRock (BLK 0.62%) watched its stock price tumble 33.5% in the first half of 2022, according to data from S&P Global Market Intelligence. 

The worldʻs largest money manager trailed the S&P 500, which was down 21.6% year to date through June 30, and the Dow Jones Industrial Average, which fell 15.3% in the first half of the year.

So what

With the broader stock market in bear market territory during the first half of 2022, a company that plies its trade in the market is not going to fare very well. As an asset manager, BlackRock manages money for institutional investors, and runs a portfolio of mutual funds and the iShares family of exchange-traded funds (ETFs).

The higher the assets BlackRock has under management, the more fees, generally speaking, it is going to generate as some of the fees are based on asset totals. In the first half of the year, BlackRock saw its assets under management (AUM) drop from $10 trillion at the end of 2021 to $9.6 trillion at the end of the first quarter. While the company hasn't reported second-quarter AUM yet, it was an even worse quarter than the first, so the AUM totals will likely be even lower.

Also, the down market led to lower fund flows, or money flowing into its funds. In the fourth quarter of last year, BlackRock had $212 billion flow into its funds, with $104 billion going into its ETFs. In the first quarter, it had $86 billion flow into its funds -- a huge drop off. Only $56 billion flowed into its ETFs, and about $10 billion came into its mutual funds. The numbers probably will look similar in Q2.

Now what

BlackRock is the worldʻs largest money manager, and it is far and away the leader in ETFs, which have been the fastest growing segment of the market over the past decade. Over the next decade through 2030, ETFs are expected to quadruple from current levels to $50 trillion worldwide. That puts BlackRock, as the leader in the space, in a great place to continue to grow.

In the shorter term, BlackRock's performance will largely be tied to the performance of the stock market. With rising interest rates and a recession certainly a possibility, don't expect the bulls to come roaring back any time soon. Credit Suisse (CS) recently lowered its end-of-year target for the S&P 500 to 4,300, while Oppenheimer analysts dialed back their target to 4,800. Still, with the S&P currently around 3,900, that leaves room for some growth. So, the second half should be better than the first for BlackRock.