Sell EBAY, Zoom, JD +3 more before 18 Dec ? Quickly !
I have some good and some bad news to share.
Let’s get through some basic facts, then the bad news before coming round to the good ones, ok?
What is the Nasdaq 100?
The Nasdaq 100 is one of the world’s preeminent large cap growth indexes.
It’s a coveted spot for the top securities listed on The Nasdaq Stock Market — The Nasdaq-100 Index.
The index includes 100 of the largest (a) domestic and (b) international non-financial companies listed on the exchange (based on market capitalization) and has a market cap of $7.5 Trillion as of year-end 2018.
The index acts as benchmarks for financial products such as options, futures, and funds.
For example:
The Nasdaq-100 Index® is the basis of the $Invesco QQQ Trust-ETF(QQQ)$ that aims to provide investment results that, before expenses, correspond with the Nasdaq-100 Index® performance.
In addition, options, futures and structured products based on the Nasdaq-100 Index® and the Invesco QQQ Trust trade on various exchanges.
What is happening ?
The Nasdaq-100® is reconstituted annually in December,
The renowned rules-based index undergoes an evaluation, during which securities may get added while others may get removed.
It timed it rebalance to coincide with the quadruple witch expiration Friday of the quarter.
The rebalance goes into effect after the close of trading on the third Friday of each December.
For 2023, Nasdaq 100 will begin trading relying on the newly rebalanced list of 100 stocks on Mon, 18 Dec 2023.
2023 List of affected stocks.
The number of Nasdaq stocks “affected” by the reshuffle exercise varies on a yearly basis.
For 2023, there will be a total of twelve Nasdaq listed stocks involved in the exercise. (see below)
Nasdaq 100 - whose in and whose out?
6 Outgoing stocks:
(1) eBay Inc. (EBAY)
The online auction & e-commerce platform, once upon a time, a giant, has seen its growth slow in recent years.
It was included in the Nasdaq 100 index in September 1998.
After a privileged 25 years, it’s the end of an era for eBay.
This were due to changes in eBay’s (i) market capitalization and (ii) trading volume, two of the factors considered when determining which companies are included in the index.
(2) Lucid (LCID):
Lucid was formed following its merger with a SPAC (special purpose acquisition company) in 2021.
This electric vehicle maker, known for its luxury sedans. At its peak, it’s share was $55 per share.
It has slid lower (very much lower - see below) due to (a) production challenges and (b) a competitive market.
Lucid has lost -44% in its share price
With a history of broken promises, investors are right to ponder whether Lucid will be able to make good on its commitments amidst a cooling demand for electric vehicles in the US.
The Nasdaq 100 is not sticking around to find out, they are removing it from the index altogether.
(3) Zoom Video Communications (ZM).
This video conferencing platform experienced explosive growth during the pandemic but has since seen its growth slow.
(4) $JD.com(JD)$.
This Chinese e-commerce giant faces increasing competition from domestic rivals and a challenging regulatory environment.
(5) Align Technology (ALGN).
With its innovative Invisalign clear aligners, this company has revolutionized the orthodontic industry, though its growth may be slowing.
This solar inverter manufacturer has benefited from the renewable energy boom, but its share price has plunged by -59.12 % for the past one year.
Enphase Energy peaked on 02 Dec 2022 at $336.00 per share.
At the turn of 2023, its stock price began to decline as the Fed continued with its credit tightening monetary policy.
More importantly, its stock price dips was due mainly to its “disappointing” quarterly earnings that have been on the decline, both with the US and abroad. (see above)
6 Incoming stocks.
(1) CDW Corp (CDW).
A provider of technology products and services for business, government, education, and healthcare.
(2) Coca-Cola Europacific Partners (CCEP).
One of the largest Coca-Cola bottlers, serving customers across Europe and the Pacific.
A widely recognized food delivery service connecting people with their favorite restaurants.
DoorDash has several positive attributes that makes it a strong candidate for inclusion in the Nasdaq-100 index on December 18, 2023.
Financial Performance:
Profitability: DoorDash achieved profitability in 2022 and continues to increase its profitability margins. This financial stability is a positive indicator for long-term investors.
Market Share Leadership: DoorDash holds a 56% share in the US online food delivery market and is the largest by far.
Market and Innovation:
Large Addressable Market: The food delivery market is expected to continue growing significantly in the coming years, offering DoorDash ample opportunity for future expansion.
Diversification: DoorDash is expanding beyond food delivery into other areas like grocery delivery and convenience store delivery. This diversification reduces risk and opens new revenue streams.
Governance and Visibility:
Strong Leadership: DoorDash has a strong management team with extensive experience in the technology and delivery industries.
Increased Institutional Investor Interest: DoorDash has attracted significant interest from institutional investors, further bolstering its credibility and stability.
Positive Public Perception: DoorDash enjoys a positive public perception due to its role in providing convenience and supporting restaurants during the pandemic.
Financial Viability and Index Requirements:
Market Capitalization: DoorDash's market capitalization has consistently exceeded the minimum market capitalization requirement for inclusion in the Nasdaq-100 index.
Trading Volume: DoorDash's average daily trading volume also meets the minimum required volume for inclusion in the index.
Liquidity: DoorDash has a high degree of liquidity, making it suitable for inclusion in a passively managed index.
DoorDash stock performance for the past 1 year is nothing short of amazing.
It has gained +74.94% to end at $101.50 per share.
Having said that, there have been many reported incidences and lawsuits against the unethical practices that DoorDash has undertaken against its fleet of drivers and food merchants.
Its lack of morality certainly leaves a bitter aftertaste against a backdrop of superb financial figures.
(4) $MongoDB Inc.(MDB)$.
The company has developed a proprietary, document-oriented database system it called MongoDB.
It specializes in database solutions, offering an innovative platform for application data management.
Below are its positive attributes, making it a candidate to be included in the Nasdaq 100.
Financial Performance:
Consistent Revenue Growth: MongoDB has consistently achieved double-digit revenue growth, exceeding analyst expectations and demonstrating its market traction.
Subscription-Based Revenue Model: MongoDB's recurring subscription model provides stable and predictable revenue streams, which investors value.
Profitability and Growing Margins: MongoDB is on the path to sustained profitability, with its margins gradually increasing.
Market and Innovation:
Market Leader in NoSQL Databases: MongoDB is the leading provider of NoSQL databases, a rapidly growing market segment.
Cloud-Native Platform: MongoDB's platform is designed for cloud environments, which aligns with the increasing adoption of cloud computing.
Innovation and Differentiation: MongoDB continuously invests in research and development, offering innovative features and functionalities that set it apart from competitors.
Business Model and Scalability:
Strong Land-and-Expand Strategy: MongoDB's land-and-expand strategy focuses on acquiring new customers and then expanding their usage, driving revenue growth.
Global Market Presence: MongoDB operates in a global market, reducing its dependence on any single region.
Scalable Technology: MongoDB's technology is designed to scale efficiently, allowing the company to accommodate future growth.
Governance and Visibility:
Experienced Management Team: MongoDB has a seasoned management team with proven experience in the technology industry.
Strong Investor Confidence: MongoDB enjoys strong investor confidence, evident in its recent stock price increase and positive analyst ratings.
Positive Brand Reputation: MongoDB has built a strong brand reputation for reliability, performance, and ease of use.
Financial Viability and Index Requirements:
Market Capitalization: MongoDB's market capitalization has been steadily increasing and now exceeds the minimum requirement for inclusion in the Nasdaq-100 index.
Trading Volume: MongoDB's average daily trading volume has also been rising and meets the minimum required volume for index inclusion.
Liquidity: MongoDB has a high degree of liquidity, making it suitable for inclusion in a passively managed index.
MongDB stock performance for the past 1 year is equally amazing, just like the other 5 US stocks that are being included in the Nasdaq 100 index.
It has gained +94.60% to end at $395.39 per share.
During US stock market Quantitative Easing (QE) period, it peaked at $569.77 per share.
The interesting history bits about MongDB was its clandestine past with US’s Central Intelligence Agency (CIA).
Before it changed its name to MongoDB Inc., it was known as 10gen.
And 10gen, has received funding from the US government through the CIA-sponsored venture capital arm In-Q-Tel.
As a result, this has been a source of concern in India.
(5) Roper Technologies (ROP).
A diversified technology company that develops software, engineered products, and solutions for various sectors.
(6) Splunk (SPLK).
A software company focusing on the analysis and visualization of machine-generated big data.
Review of 6 incoming stocks and 6 outgoing ones?
Below are my views: (mine and mine only)
Focus on growth & innovation: The inclusion of companies like DoorDash and MongoDB suggests an emphasis on (a) high-growth, (b) innovative companies in the technology and emerging sectors.
Shift towards cloud-based solutions: The inclusion of cloud-centric company like MongoDB shows the growing importance of cloud technology across various sectors. This should give individual investors like us of a potential shift in investment focus towards companies that can capitalize on the increasing demand for cloud-based solutions.
Reduced market capitalization or trading volume: Companies that fall below the minimum market capitalization or trading volume requirements for the index might be excluded, regardless of their performance. Should this be an investor’s yardstick as well when selecting investible stock?
We should carefully analyze the companies being considered for inclusion and exclusion to understand the potential shifts in market trends and adjust our investment strategies accordingly.
Do you think you will seriously consider selling the outgoing stocks?
Do you think you will seriously consider adding the incoming stocks to your portfolio?
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Disclaimer: Investing carries risk. This is not financial advice. The above content should not be regarded as an offer, recommendation, or solicitation on acquiring or disposing of any financial products, any associated discussions, comments, or posts by author or other users should not be considered as such either. It is solely for general information purpose only, which does not consider your own investment objectives, financial situations or needs. TTM assumes no responsibility or warranty for the accuracy and completeness of the information, investors should do their own research and may seek professional advice before investing.
Is it still possible for ZM to go up again?
My 2nd pick post for today. Pls enjoy and help to Repost after reading ok. Tks.
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