Earlier today the NASDAQ announced that Facebook Inc. (NASDAQ:FB) did not make the grade for being included in the NASDAQ 100 Index, just yet. The company will be added to the NASDAQ Q-50 Index on September 24. It has also been mentioned that Facebook could be added to the Dow Jones Internet Composite Index very soon.
Although Facebook did not make the cut for the NASDAQ 100, the company was added to the next best thing, the NASDAQ Q-50 Index, which is designed to track the performance of the fifty securities that are next in line to replace the NASDAQ 100 securities. Another hot IPO company that made the Q-50 Index is Groupon Inc (NASDAQ:GRPN). Groupon has seen its stock price erode over 80% since it opened over $26 during its November 2011 IPO.
Is the fact that the company is now in the Q-50 Index a buying opportunity, or just another ‘head fake’? It has been said that if the company can get into the NASDAQ 100 Index, it would mean more Facebook Inc. (NASDAQ:FB) share owners, as ETFs must own the index stocks to maintain their benchmarks.
The fact that Facebook was not immediately welcomed into the NASDAQ 100 might be good news for investors, such as George Soros and tiger cub Chase Coleman and the other thirteen hedge funds that had at least 1% of their 13F portfolios invested in Facebook Inc. (NASDAQ:FB) as of the second quarter. Many companies gaining listing privileges on the NASDAQ 100 have not lived up to expectations, and so has Facebook avoided suicide?
Facebook is up almost 2% on the day. Whether investors like it or not, they will soon have even less of a say as to whether they want to own Facebook Inc. (NASDAQ:FB). The NASDAQ 100 powers the PowerShares QQQ Trust, Series 1 (ETF) (NASDAQ:QQQ), and is a notable part of many ETFs and mutual funds. Notable recent additions to the NASDAQ 100 have been Kraft Foods Inc. (NASDAQ:KFT), added in June, and Texas Instruments Incorporated (NASDAQ:TXN), added in April. Since their additions, Kraft’s stock is even at a 0% and Texas Instruments is down 12%. On the other hand, Viacom, Inc. (NASDAQ:VIAB) joined the NASDAQ 100 in May and is up almost 7%.
Although the market cap of Facebook Inc. (NASDAQ:FB) has been more than cut in half since its IPO, this will likely not stop its ultimate addition into the NASDAQ 100. Whether we like the stock as a long-term investment or not, it is likely to see positive feedback once it is ultimately welcomed. Facebook currently trades at a trailing P/E of 75, but the company’s forward P/E is less than half this mark at 35.