Market Update 21/11/22 – The 6 stocks to join Nasdaq 100

 

 

The Nasdaq 100 is a list of the 102 most actively traded companies listed on the Nasdaq stock exchange. The index includes companies from various industries except for the financial industry. The non-financial sectors include retail, technology, healthcare, commodities, and more. Currently, Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), and Tesla (TSLA) are the highest weights of the Nasdaq 100. 

 

It is time to shuffle the lineup of the Nasdaq 100 as the annual rebalancing takes place on December 19, 2022. Listed stocks must have an average daily trading volume of at least 200,000 shares, among other criteria, to qualify for inclusion. There is no minimum market capitalization requirement. 

 

As announced the last Friday, December 9, 2022 – The 6 stocks that will join in Nasdaq 100 lineup are Rivian (RIVN), CoStar Group (CSGP), Warner Bros. Discovery (WBD), GlobalFoundries (GFS), Baker Hughes (BKR) and Diamondback Energy (FANG). According to Bloomberg, the index will adjust the tech-heavy composition for changes in market capitalization. 

 

In order to keep the balance in check, the remaining 7 stocks will be subtracted after the addition of the 6 stocks. Those stocks that will be removed are VeriSign (VRSN), Skyworks Solutions (SWKS), Splunk (SPLK), Baidu (BIDU), Match Group (MTCH), DocuSign (DOCU), and NetEase (NTSE).



“The Nasdaq 100 will continue to be dominated by mega tech”, – according to Patrick Mohr, the global index and microstructure analyst at Instinet

Here is a sneak peek of the additional 6 stocks

1. Rivian Automotive, Inc

 



 R1T pickup truck, R1S SUV, an electric delivery van (EDV), and an electric delivery truck (EDT) for Amazon makeup Rivian, which became public in 2021. Previously, Amazon had an order of 100,000 EDVs to be fulfilled by 2030. The company currently has an annual production capacity of 150,000 vehicles at its main plant in Illinois. Rivian plans to increase its annual capacity to 200,000 vehicles next year by expanding its Illinois plant. In 2026, Rivian will start making its R2 vehicle family at its $5 billion Georgia plant.

2. CoStar Group Inc

 

 

The front end of online real estate marketplaces, information, and analytics of the property markets with Q3 2022 revenue of $557M rose with more projections unveiled to unfold in the next projection. Apartments.com, Homes.com, and other online services are founded by the CoStar group which provides clients with unmatched insight into current market conditions, commercial property values, and current availability.

 

“We delivered outstanding results across all of our business lines, with Apartments.com leading the way,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group.

3. Warner Bros. Discovery Inc

 

 

 

Warner Bros. Discovery might be the one that experienced the most dropped among the 6 additional stocks to be listed in Nasdaq 100 with a 56.51% slip YTD as its consumer-reliant segments suffer from macroeconomic headwinds. It might had be a harsh time for the stock, but considering its potential with valuable content library and streaming services, the project might serve with long-term capability. 

 

Warner Bros. Discovery also serves as home to the world’s most popular film and TV franchises, including Game of Thrones, Harry Potter, and DC Comics. Its latest spin-off of the game of throne- House of the Dragon recorded an average view of  29M per episode in the U.S. and became the most-viewed HBO title ever abroad. 

 

Along with Warner Bros. Discovery’s upcoming plans to merge HBO Max and Discovery+. The company also has a long release schedule of DC films coming throughout 2023, including the highly anticipated  Harry Potter-themed Hogwarts Legacy video game in February. Warner Bros. Discovery definitely has excellent prospects.

4. Baker Hughes Company

 

 

The big name behind a significant presence in the oil industry, along with its building equipment for liquefied natural gas (LNG) facilities, gas and steam turbines for electric generation, and compression equipment for pipelines. Baker Hudges also provides various aftermarket sales and services for oil and gas, electric, and nuclear power customers. 

 

After recording a $269M profit in Q3 2022, Baker Hughes continues its strive by partnering with Technip Energies to develop next-generation modular LNG systems so that plug-and-play facilities can be brought online quickly.

5. GlobalFoundries Inc




GlobalFoundries’ top-line trajectory of semiconductor products from smart mobile devices, communications infrastructure & data center, home, and industrial IoT, to automotive end markets, has been very impressive. Till the end of Q2 2022, its product demands had outpaced the company supply’s ability by 10%. With 2022 net income (ending September 30, 2022) of $0.823B, the company had much more in store to deliver. 


With Qualcomm Technologies (Qualcomm Incorporated’s subsidiary), GlobalFoundries had a revised agreement in which it would supply wafers valued at more than $4 billion through 2028. In addition, the company also partners with STMicroelectronics to create and operate a 300mm semiconductor manufacturing facility in France.

6. Diamondback Energy

 

 

 

Another energy company to be added, Diamondback Energy had been riding on the wave of high oil prices this year. The West Texas oil company is an independent oil and natural gas company that engages in the acquisition, development, exploration,, and exploitation of unconventional, onshore oil and natural gas reserves.

 

Microtrends reports that Diamondback Energy’s net income for the year ended September 30, 2022, was  $4.375B. A 905.75% increase from 2021. 

 

Diamondback Energy announced on November 8, 2022, to acquire Midland Basin operator FireBird Energy with $1.6B in pursuit of the eastern area of the Permian Basin in West Texas. The acquisition is to fulfill the 2023 average production, as it is estimated to be at about 25,000 boe/d, including 19,000 b/d of oil.

Bottom Line

 

 

Joining the Nasdaq 100 index can be beneficial. It is because it can help in increasing equity trading liquidity and heightened visibility to investors. For example, large index funds that track Nasdaq 100 will later purchase the newly added stocks. This indicates any managed funds that  are benchmarked against Nasdaq 100 will have to buy the stocks. Stock prices and demand for the company will be boosted as a result. 

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