Apple (AAPL) Loses One Facebook (FB), NASDAQ Gains One

May 17, 2012 12:50 PM EDT
In addition to negative hedge fund comments, some of Thursday's weakness in Apple (Nasdaq: AAPL) is being attributed to speculation that when Facebook (Nasdaq: FB) comes to the market, the re-balancing of the NASDAQ 100 Index could force some selling of Apple stock and buying of Facebook.

Facebook could have a weighting in the NASDAQ 100 (Nasdaq: QQQ) of 3-4 percent, based on its expected valuation.

However, under current rules, Facebook would not be eligible for NASDAQ 100 listing until at least September of 2012.

Below are the Initial Eligibility Criteria to be added to the index:

  • the security‚Äôs U.S. listing must be exclusively on the NASDAQ Global Select Market or the NASDAQ Global Market (unless the security was dually listed on another U.S. market prior to January 1, 2004 and has continuously maintained such listing);

  • be issued by a non-financial company;

  • may not be issued by an issuer currently in bankruptcy proceedings;

  • have an average daily trading volume of at least 200,000 shares;

  • if the issuer of the security is organized under the laws of a jurisdiction outside the U.S., then such security must have listed options on a recognized options market in the U.S. or be eligible for listed-options trading on a recognized options market in the U.S.;

  • only one class of security per issuer is allowed;

  • the issuer of the security may not have entered into a definitive agreement or other arrangement which would likely result in the security no longer being Index eligible;

  • the issuer of the security may not have annual financial statements with an audit opinion that is currently withdrawn; and

  • the security must have "seasoned" on NASDAQ, NYSE or NYSE Amex (generally, a company is considered to be seasoned if it has been listed on a market for at least three full months (excluding the first month of initial listing).
The "seasoned" criterion appears to be the only one that would stand in Facebook's way.

When asked if Facebook would be added to the Nasdaq 100 and what would be its weighting, Nasdaq's Wayne Lee, "We don't have any guidance with respect to individual securities at this time."

A question on if the exchange would wave Nasdaq 100 eligibility rules for Facebook has not yet been answered.

So while it it could be months before Facebook steals some of Apple's thunder in the index, investors are already voting with their feet. Apple has lost about $100 billion in market cap over the last month. Ironically, this is around the expected market cap of Facebook.

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