The Nasdaq 100 index is getting an update. Before the market opens next week on December 24, 2012, four former high-fliers will be removed from this index. Companies removed from an index typically fall ahead of the change, and could see heavy volumes right beforehand. Some of the most notable companies being removed from the Nasdaq 100 are:
1) Electronic Arts Inc. (EA)
2) Green Mountain Coffee Roasters Inc. (GMCR)
3) Research In Motion Limited (RIMM)
4) Netflix, Inc. (NFLX)
The substantial drop in the share price of EA and Netflix this year in 2012 hurt the market capitalization for these companies. Investors soured on game-makers like EA. Interest in social networking games and games for mobile devices helped push shares higher in the previous year. After chronic problems demonstrated by Zynga (ZNGA) throughout the year, investors simply lost interest. Netflix is up substantially from its 52-week low, but it was not enough to prevent its removal from the index. The company closed recently at around $95, and faces substantial pressure from Amazon (AMZN) Prime service offerings. RIM is up around 124% from its 1-year low. The smartphone maker will be reporting earnings this week.
The companies will be replaced by companies with market capitalizations between $9.3B and $23.14B:
1) Discovery Communications, Inc. (DISCA)
2) Equinix, Inc. (EQIX)
3) Liberty Media Corporation (LMCA)
4) Western Digital Corporation (WDC)Observations: Expect the volatility for the above-mentioned companies to rise, along with higher average trading volumes. Much of the “easy-money” was made for the companies being added to the index. In the long-run, the valuation of the companies should not be impacted. Greater liquidity for the companies added should be expected.
Select the service that is right for you!COMPARE ALL SERVICES
Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV