Nasdaq-100 Rebalancing Is Here: Who's In, Who's Out, and What It Means for Investors

 

The big day is almost here—today at 4:00 PM EST (5:00 AM on December 14 in Singapore), the Nasdaq will announce the results of its Nasdaq-100 rebalancing. This could trigger some significant market moves, so if you're holding stocks in the Nasdaq-100 or keeping an eye on certain companies, it's time to pay attention.

 

Inclusion in the Nasdaq-100 is more than just a prestigious title—it's a game-changer for stock prices. Why? Because ETFs, like the mega-popular Invesco QQQ Trust ($322 billion in assets), track the index, and these funds will buy up shares of newly added companies. On the flip side, stocks of companies that get removed may face selling pressure due to the same tracking funds adjusting their portfolios. It's a basic case of supply and demand.

 

Here are some companies that could be hot candidates for inclusion:

 

Palantir Technologies (PLTR): Market cap: $146B. 2024 total return: +322%. Palantir's stock has been on fire this year, and after its recent switch to the Nasdaq, it's in prime position to join the 100-club.

MicroStrategy (MSTR): Market cap: $79B. 2024 total return: +551%. With Bitcoin soaring and MicroStrategy doubling down on its crypto holdings, this company has been making waves. It could be the next big winner.

Axon Enterprises (AXON): Market cap: $49B. 2024 total return: +149%. Axon continues to impress analysts, thanks to its strong growth prospects in the public safety tech sector.

 

Here's a quick look at the potential additions to the Nasdaq-100:

 

There are also several companies that could be removed from the Nasdaq-100. Here's a look at those most at risk:

 

Moderna (MRNA): Market cap: $16.6B. 2024 total return: -57%. Moderna, once a pandemic darling, is struggling as demand for COVID-19 vaccines drops, and its stock price has been sinking.

Super Micro Computer (SMCI): Market cap: $19.1B. 2024 total return: +35%. Despite a strong start to the year, Super Micro has faced significant volatility, with concerns about its accounting practices adding to the uncertainty.

Illumina (ILMN): Market cap: $22.9B. 2024 total return: +9%. The biotech giant may be feeling the heat from increasing competition in its space.

 

Here's a quick look at the companies that could be removed:

 

The Nasdaq-100 rebalancing could lead to some serious market moves. Companies being added could see a surge in buying, with billions of dollars flowing into their stocks. On the other hand, those being removed may experience downward pressure as ETFs and institutional investors adjust their holdings.

 

For investors, anticipation and preparation are key. If you're holding shares of companies like Palantir, MicroStrategy, or Axon, it may be time to get more bullish—assuming they make the cut. On the flip side, if you're invested in companies like Moderna or Super Micro, it could be worth reassessing your positions in light of the potential exclusions.

 

Let's not forget that this rebalancing could set off a ripple effect throughout the market. ETFs, index funds, and institutional investors will react to these changes, potentially causing increased volatility in the days following the announcement.

 

Which companies do you think have the best chance of making the cut—or getting the boot?

How are you adjusting your investment strategy ahead of the Nasdaq-100 rebalancing?