Facebook founder Mark Zuckerberg, who has seen his company’s shares get beaten down to less than half their IPO value, may soon get some relief.
And ironically, that help will be coming from Nasdaq, the exchange that botched Facebook’s initial public offering back in May.
Nasdaq is expected to add Facebook shares to the Nasdaq-100 index, which includes its biggest non-financial companies.
The move, which could happen as early as late December after Nasdaq in October re-calibrates the index, should add some stability to Facebook shares.
“It’s fair to say that there will be an additional level of liquidity in [Facebook] because of its inclusion in the [Nasdaq-100],” said Adam Sussman, partner at The Tabb Group.
In fact, Nasdaq’s move to add the social-network giant to its key index on an accelerated basis was a negotiating point in the exchange’s battle with the New York Stock Exchange to win the coveted Facebook listing, according to one source.
Back then, Zuckerberg’s team couldn’t have guessed how useful that perk would turn out to be. Facebook debuted on May 18 at $38, but hit a low of $17.55 on Sept. 4.
Typically, a new firm must trade for at least a year before it’s eligible for inclusion in the Nasdaq-100. However the tech-laden exchange amended the rules to shorten the 12-month period for the once-hot company.
Market players speculated that Facebook’s inclusion in the Nasdaq-100 may lift the battered stock because it could stir up demand from exchange-traded funds that are required to purchase the shares to mimic the performance of the index.
Specifically, inclusion into an index like the Nasdaq-100 could result in ETF managers increasing demand for Facebook shares, Sussman added.
However, he noted that it could also make it easier to bet against shares of the social media giant.
During the past year, six companies have been added and deleted from the index, with Kraft Foods, added on July 23, seeing a slight bump in its price during the past few months.
Faceboook shares closed yesterday at $18.96, up 38 cents.