Andrew Bary
Palantir Technologies leads the list of a half dozen companies that could be added to the $26 trillion Nasdaq 100 index at its annual reconstitution due to be announced on Dec. 13.
The AI-driven software company has the largest market value among Nasdaq-listed companies that aren't in the Nasdaq 100, which consists of the 100 largest nonfinancial companies in the Nasdaq index.
Other candidates for inclusion at the reconstitution, in order of market value, are MicroStrategy, Equinix, CME Group, Interactive Brokers, and Coinbase Global, according to Dow Jones Market Data.
Palantir moved to the Nasdaq from the New York Stock Exchange on Nov. 26, citing its potential for inclusion in the Nasdaq 100 index. The company was valued at $152 billion on Friday, Coinbase, the smallest of the six potential entrants, had a market capitalization of $74.2 billion on Friday.
The Nasdaq 100 is the basis for the popular Invesco QQQ Trust (ticker: QQQ) that has $292 billion in assets and is one of the largest exchange-traded funds.
While ETFs and index products based on the Nasdaq 100 are nowhere near as large as those based on the S&P 500, they are significant. Companies added to the Nasdaq 100 can rally on news of inclusion as indexers and ETF managers buy the stocks.
Changes to the Nasdaq 100 tend to be mechanical based on market value. S&P 500 additions, meanwhile, are based on a selective and secretive process by the index committee at S&P Dow Jones Indices that includes several criteria, including market value, profitability, and industry group.
The Nasdaq 100 companies with the lowest market values, and thus vulnerable to deletion at the reconstitution, are led by Moderna, Super Micro Computer, Biogen, CDW, and MongoDB. These companies, ranked from lowest to highest, range in market value from $16.6 billion to $23.8 billion. They're vulnerable, in part, because they have market values of less than 0.1% of the index's value.
The annual Nasdaq 100 reconstitution is a process in which Nasdaq-listed companies are ranked by market value based on stock prices on the last trading day of November, which is Nov. 29 this year. Any changes to the index are due to be announced on Dec. 13 this year, or the second Friday of December.
There were seven companies added and seven dropped during the December reconstitution last year. CDW, Coca-Cola Europacific Partners, DoorDash, MongoDB, Roper Technologies, Splunk, and Take-Two Interactive Software were added.
Companies can also be added and dropped from the Nasdaq 100 during the year and outside the reconstitution event. AppLovin, for example, joined the index in mid-November, replacing Dollar Tree. At that time, AppLovin was the largest Nasdaq company not in the Nasdaq 100.
Write to Andrew Bary at andrew.bary@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
December 02, 2024 16:32 ET (21:32 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.