What is Nasdaq?
Nasdaq
Picture your one tech-obsessed friend, the one who learned to code before she could text. That’s kind of like Nasdaq. The company is known for attracting technology companies to list their shares in an initial public offering (IPO) and is often used by investors as a proxy for the overall tech industry’s stock performance. That’s because over half of the stocks listed on the Nasdaq Composite Index, which includes more than 2,500 stocks as of December 2022, are technology-related. This group includes Apple, Alphabet (Google), Amazon, Nvidia and Tesla, among others. The index is weighted so that larger stocks, which have higher market value, carry more weight than smaller ones.
The NASDAQ is an electronic stock exchange founded in 1971 that handles stock trading globally and is monitored by the Securities and Exchange Commission. As the first stock exchange to allow online trading, Nasdaq was an early pioneer in modern finance. The company also innovated automated trading systems and embraced cloud computing, using the technology to store required regulatory documentation and trading data.
Today, Nasdaq owns and operates 18 markets around the world, primarily equities but including options, fixed income, derivatives and commodities. The company’s cutting-edge technology is used by over 130 organizations in more than 50 countries. The Nasdaq stock market is the world’s second-largest, after the New York Stock Exchange (NYSE).
What is Nasdaq?
As of 2020, the Nasdaq Stock Market has a total market capitalization of $22 trillion. Of the 2,500-plus stocks that make up the Nasdaq Composite Index, about half are technology-related, with companies such as Google, Apple, Microsoft and Amazon making up much of the index’s value. However, the index has other sectors well represented as well, with consumer discretionary and healthcare stocks accounting for about 17 percent and 10 percent of the total.
Companies that want to be listed on the NASDAQ must meet certain financial, governance and liquidity standards. They must also pay listing fees based on their market capitalization and agree to be regulated by the Securities and Exchange Commission. If a company fails to meet these requirements, it can be delisted, which can lead to the loss of investor confidence and reduced valuation for its shares.
Nasdaq’s commitment to innovation extends beyond its trading platform to encompass the companies listed on its exchange. Unlike traditional exchanges, Nasdaq has become synonymous with technology and growth-oriented firms, attracting a diverse range of companies spanning the tech, healthcare, biotech, and other innovative sectors. This focus on innovation has made Nasdaq the preferred listing destination for many high-growth companies seeking access to capital and visibility in the global marketplace.
Nasdaq offers three different tiers of the market based on a stock’s market capitalization: Capital Market, Global Market and the Global Select Market. The Capital Market features small-cap stocks and has the least stringent listing requirements, while the Global Market and Global Select Market feature mid-cap and large-cap stocks, respectively. The company also lists American depositary receipts, or ADRs — interests in foreign stocks — and tracking stocks, which represent the value of a division or subsidiary. It also lists some limited partnerships and exchange-traded funds (ETFs).