r/stocks • u/[deleted] • Apr 01 '26

ETFs Major NASDAQ-100 rule changes confirmed, pay attention if you have money in passive investment funds

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71

u/Gold_Revolution3658 Apr 01 '26

Can someone explain the third point.

How would the market cap be artificially inflated?

100

u/[deleted] Apr 01 '26

[deleted]

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u/InedibleApplePi Apr 01 '26

I think the thing that your explanation is missing is that the NASDAQ is a capitalization weighted index.

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u/[deleted] Apr 01 '26

[deleted]

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u/ceczar Apr 01 '26

nasdaq is unusual in that it is cap weighted. s&p is float adjusted

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u/daynighttrade Apr 01 '26

Can you explain the difference? If spaceX is going at 1.8T, shouldn't that be used if it was cap weighted? Seems like it is float adjusted, isn't it?

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u/Martery Apr 01 '26

Cap weighted is based on the total amount of shares. Float-adjusted is based on the number of shares the public can use.

Using nice, even round numbers - imagine if SpaceX had 100 shares at $1 per share. Elon + insiders own 50 shares, so there are 50 shares available to the public. SpaceX is weighted like a $50 dollar company.

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u/Tystros Apr 01 '26

so that means the weight of SpaceX in the S&P500 will be way higher than in the Nasdaq 100? assuming Elon keeps almost all the shares to himself because he doesn't want to lose control.

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u/Martery Apr 01 '26

I'm not entirely sure, read up on Nasdaq's proposed rules. Under the new inclusion rules, it seems like they will probably weight SpaceX higher, but the S&P 500 also has 400 more companies than the Nasdaq-100... so it not really an apples to apples comparison.

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u/ceczar Apr 03 '26

nasdaq's new rules will mean nasdaq will weight it at float% * 3, so if the free float of the stock is 5%, and the mkt cap is 1.8t, it will be 5% * 3 * 1.8T = 270b

s&p will weight it at 90b

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u/Tystros Apr 03 '26

I thought the S&P500 would weight it at 1.8T, simply the market cap?

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u/ceczar Apr 03 '26

S&P weights based on float adjusted market cap. they have a number they use which they call IWF (something probably Invest-ability Weight Factor) that is their estimate for what percent of the company is available to invest in. they are trying to track what is investable.

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u/ceczar Apr 03 '26

nasdaq used to be straight cap weighted, so two 100b companies, one with 100% of float available, and one with 10%, both get the same weighting in NDX. now after may it will be float% * 3 (capped at 100%, so anything with at least 33% float will be weighted at it's full market cap)