Rivian, Warner Bros Discovery to be added to Nasdaq 100

RIVIAN Automotive and Warner Bros Discovery will be joining the Nasdaq 100 Index as part of its annual rebalancing, which adjusts the tech-heavy benchmark’s composition for changes in market capitalisation. 

CoStar Group, GlobalFoundries, Baker Hughes, and Diamondback Energy will also be added to the index, according to a press release from Nasdaq. VeriSign, Skyworks Solutions, Splunk, Baidu, Match Group., DocuSign and NetEase will be removed from the Nasdaq 100. 

The changes will be effective before the start of trading on Dec 19.  

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

“This is just a process that the index goes through to clean out the dogs that have underperformed dramatically. If their market cap was really low, they may have been deemed not appropriate for the index any more and new names were brought in.” 

The Nasdaq 100, which currently has 102 members, comprises the largest non-financial companies listed on the Nasdaq stock exchange. There is no minimum market capitalization requirement to be eligible for inclusion, but stocks must have an average daily trading volume of at least 200,000 shares, among other criteria, to be listed. 

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Joining the index can benefit a company by providing increased equity trading liquidity, a lower cost of capital and heightened visibility from investors. Many large index funds, like the US$154 billion Invesco QQQ Trust Series 1 exchange-traded fund, track the Nasdaq 100 and must own all of its members’ shares. And actively managed funds that are benchmarked against it have to buy the stocks as well.

The Nasdaq 100 is down 29 per cent this year as growth companies have taken a heavy beating in the stock market rout. By comparison, the S&P 500 Index has lost 17 per cent, while the Dow Jones Industrial Average has declined 8 per cent. BLOOMBERG