The $26 trillion Nasdaq 100 index is poised for potential changes in its composition, with Palantir Technologies (PLTR) leading a group of companies that might secure a spot in this prestigious index during its annual reconstitution, scheduled to be announced on December 13. According to Dow Jones Market Data, (via Barron’s) other contenders include MicroStrategy (MSTR), Equinix (EQIX), CME Group (CME), Interactive Brokers (IBKR), and Coinbase Global (COIN), listed in order of market value. This anticipation follows Palantir’s strategic move from the New York Stock Exchange to the Nasdaq on November 26, specifically aiming to leverage its potential inclusion in the Nasdaq 100.
The Nasdaq 100 serves as the foundation for the Invesco QQQ Trust (QQQ), an ETF with a substantial $292 billion in assets, underscoring the index’s significance in the investment world. Though not as vast as S&P 500-based products, the impact of Nasdaq 100 inclusions can be profound, often leading to stock price rallies as index funds and ETF managers adjust their portfolios to reflect the new composition.
Unlike the S&P 500 (^GSPC), where additions are chosen through a selective process considering multiple factors like market value, profitability, and industry group, the Nasdaq 100’s changes are more straightforward, primarily driven by market capitalization. This year’s candidates for inclusion all possess significant market caps, with Palantir currently valued at $162 billion and Coinbase at $77.4 billion.
However, this potential influx also hints at an exit for some current members. Companies like Moderna (MRNA), Super Micro Computer (SMCI), Biogen (BIIB), and CDW Corp. (CDW) with market values ranging from $16.4 billion to $23.9 billion, appear vulnerable to exclusion. Their relatively small contribution to the index’s total value makes them candidates for removal during the reconstitution, which is based on stock prices from the last trading day of November, November 29 this year.
This annual reshuffling of the Nasdaq 100 not only reflects the dynamic nature of the tech sector but also has tangible effects on the market. For companies like Palantir, inclusion could be a validation of its growth trajectory and its increasing relevance in the AI and data analytics space. For investors, these changes are a reminder of the index’s role in shaping investment strategies, influencing stock performance, and providing insights into the evolving landscape of technology and finance.
Price Action: Palantir shares are currently experiencing a 2.59% decline, trading at $69.12, while MicroStrategy is up 2.80%, at $382.00, at press time.
Despite PLTR’s dip today, the stock has seen impressive growth this year, climbing over 300% due to factors like advances in AI technology and its inclusion in the Nas. However, some analysts have warned investors of potential risks and urged caution, citing the possibility of short-term profit-taking before year-end and concerns about its high valuation.
Meanwhile, MSTR continues to perform strongly, up 505% since year-to-date, reflecting investor optimism about the company’s prospects. Both PLTR and MSTR remain closely watched by investors and analysts as they navigate the dynamic tech landscape.
Reference: Barron’s
Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!
Leave a Reply