Facebook joins Nasdaq 100, may boost stock

As a new member of the Nasdaq 100 index, Facebook's comeback may get a boost on Wall Street.

The closely watched index represents the 100 most valuable, non-financial stocks trading on Nasdaq. Facebook shares will be added Dec. 12.

Analysts say being in the Nasdaq 100 is a potential boon for shares of the No. 1 social-networking giant.

The Nasdaq 100 is a Who's Who of big technology companies, such as Apple, Google and Microsoft.

Big chunks of Nasdaq 100 company shares are often bought and held long term by exchange traded funds and major mutual funds that invest mostly or only in key stock indexes.

Inclusion in the index could even be considered a victory for Facebook, which has struggled mightily to appeal to investors since its May 18 initial public offering that was mired in technical problems.

"The company is a lot more seasoned now," says Francis Gaskins of IPO Desktop Premium, a website devoted to IPOs. Being in the Nasdaq 100 "takes away some of the stain of the botched IPO."

Facebook's addition to the the Nasdaq 100 underscores the company's stock price rebound. Shares made their debut at $38 apiece, but quickly fell apart as investors discovered more about the IPO's problems and began to worry about the company's strategy to make money off its massive base of users.

The shares peaked at $43 but then plummeted to just under $17.75 a share in September.

Facebook stock finished up 25 cents, 0.9%, to $27.71 Wednesday, 44% higher than the stock's recent Nov. 9 low of $19.21 apiece.

The stock has rallied in recent weeks, despite concerns about a series of post-IPO lockup expirations that released hundreds of millions of shares for sale on the open market. Many feared the huge supply rush would push Facebook's shares even lower.

Now, investors who build portfolios based on the Nasdaq 100 are likely to take a closer look at the stock, says Joseph Bonner of Argus Research in an e-mail to USA TODAY.

"Inclusion in the Nasdaq 100 should be a positive for (Facebook), since a bunch of index funds and ETFs now have to buy to maintain a match with the benchmark," Bonner says.

The exchange rebalances the Nasdaq 100 index each year as the values of companies in it change. Facebook is joining the Nasdaq 100 early due to the departure of outsourcing firm Infosys, which is moving to the larger New York Stock Exchange.

Including all classes of its stock, Facebook would rank 13th in the index, with a market value of nearly $60 billion, behind eBay but ahead of News Corp.

Including only Facebook's A shares, valued at $30 billion, the company would be the 24th most valuable company in the index.

Apple, even after its $37.05 fall, 6.4%, to $538.79 Wednesday, remains the most valuable stock in the index, with a $516 billion market value.

Investors had largely anticipated Facebook's addition to the index this year, explaining why there wasn't more reaction to the announcement, says Josef Schuster of IPO tracker IPOX Schuster.

Investors are likely far more interested in when Facebook might be added to the broader Standard and Poor's 500 index, which isn't likely anytime soon, Schuster says. "The S&P is much more important."

USA Today