Business

Facebook to enter Nasdaq 100 index

Mark Zuckerberg’s Facebook is about to join a new social club — one eschewing hoodies — that could provide a big boost to his tech company’s shares.

The Menlo Park, Calif.-based social network giant is slated to enter the coveted Nasdaq 100 index on Wednesday.

The index, which includes the exchange’s biggest non-financial companies, will remove Infosys and add Facebook’s name to the likes of tech giants like Apple, Google, Cisco and Dell, which dominate the index.

Analysts speculate that Facebook’s inclusion could give it a lift after being pummeled since its initial public offering just six short months ago at $38, which was followed by a precipitous drop.

Facebook’s weight in the index is thought to be about 2 percent; Apple, by comparison, is almost 16 percent weighted in the index.

“A lot of money managers and [exchange-traded funds] will be mandated to buy Facebook,” said Laura Martin, a tech analyst at Needham & Co. “Through inclusion in the index, you’re creating a lot of incentive to buy Facebook,” she added.

The social-media company’s shares are down 27 percent since it priced the day before its initial public offering in May.

To be sure, the company is up 54 percent from its low of $17.73 just three months ago, after closing on Friday at $27.49, up nearly 2 percent.

Typically, a new firm must trade for at least a year before it’s eligible for inclusion in the Nasdaq 100. But Nasdaq tweaked the rules to shorten the so-called seasoning period just before it, rather than the rival New York Stock Exchange, was awarded the coveted Facebook IPO.

It’s not clear how big of a boost, if any, Facebook’s shares might see once the stock has been incorporated into the Nasdaq 100.

During the past year, 12 companies have been added or deleted from the index, and the impact of inclusion has been relatively mixed.

Kraft Food Group, which debuted on the index in July, has seen relatively flat performance.

Ironically, if Facebook does garner a boost from its Nasdaq inclusion, it will be the indirect beneficiary of the same exchange that botched its IPO six months ago.