Nasdaq-100 shakeup

Palantir, Axon, and MicroStrategy join the index, while Moderna, Illumina, and Super Micro Computer exit

According to ORTEX’s latest analysis, the upcoming December 2024 Nasdaq-100 reconstitution and rebalance will likely result in significant portfolio adjustments for index-tracking funds. With the Nasdaq set to announce changes on December 13, and the effective reconstitution date on December 23, the shifts may prompt billions in passive flows among key technology and growth-oriented names. ORTEX data points to three potential additions – Palantir Technologies, Axon Enterprise, and MicroStrategy – offset by the removals of Moderna, Illumina, and Super Micro Computer.

Index Rebalance Timing and Event
The Nasdaq-100’s annual review and reconstitution is poised to reshape the benchmark’s composition. According to the ORTEX dataset, the announcement date is scheduled for December 13, 2024, with trading changes likely starting December 20. Effective reconstitution is slated for December 23, meaning index funds and ETFs tracking the Nasdaq-100 will be compelled to adjust holdings to match the new membership and weightings.

Additions
ORTEX projects three high-conviction additions to the Nasdaq-100:

  • Palantir Technologies Inc. (PLTR): With a market cap of roughly $161.5 billion, Palantir’s inclusion could drive an estimated buying impact of about $6.96 billion worth of shares. This translates to over 98 million shares being purchased, roughly 1.35 times the stock’s average daily volume (ADV).
  • Axon Enterprise, Inc. (AXON): Valued at around $48.6 billion, Axon’s addition may spark roughly $2.19 billion in net buying, or more than 3.4 million shares. The anticipated purchase volume is about 4.85 times its ADV, signaling a potentially notable liquidity event.
  • MicroStrategy Incorporated (MSTR): With a market capitalization near $81.6 billion, MSTR’s projected inclusion might prompt $3.34 billion in buying, or about 8.85 million shares. This estimate is around 0.36 times its ADV, suggesting a relatively manageable liquidity impact.

Deletions
Three large-cap names currently residing in the Nasdaq-100 may exit the index:

  • Moderna, Inc. (MRNA): With a $15.97 billion market cap, its removal could lead to an estimated $719 million in selling, or over 17.3 million shares offloaded.
  • Super Micro Computer, Inc. (SMCI): Valued at $23.74 billion, SMCI may see roughly $1.07 billion in selling, equating to about 26.35 million shares. Though substantial, this is only about 0.39 times its ADV, potentially easing liquidity pressures.
  • Illumina, Inc. (ILMN): At $23.56 billion, Illumina’s probable removal translates to about $1.06 billion in net selling, or around 7.14 million shares. This volume is approximately 3.76 times its ADV, indicating a more significant liquidity event on the downside.

Market Implications for Trackers
For ETFs and other vehicles tracking the Nasdaq-100, adhering to the new composition will entail sizable rotations. While ORTEX provides estimates in dollar value and share volume, actual market impacts may vary based on final weights, announcements, and prevailing market conditions. The data suggests that liquidity considerations will differ markedly between additions and deletions, with certain names facing heavier trading volumes relative to their daily norms.

 

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