No Market for Nasdaq
Enviado: 6/2/2003 11:52It really does seem like insult upon injury. After watching the Nasdaq Composite--an index of all stocks listed on the Nasdaq--suffer through the two most miserable years of its existence, Nasdaq officials are now watching the stock of the Nasdaq Stock Market itself drift aimlessly downward. And that as the index has rebounded sharply (see "Split Personality").
Their original plan, like many hatched in the halcyon days of the late '90s, was to take the stock market public in a splashy IPO. But the plan hit a snag: the bubble burst, and with stocks going down, it wasn't exactly the best time to try and sell the idea of investing in the stock of the stock market itself.
Because of a series of sales to private investors in 2000 and 2001, however, some 33.2 million shares were eligible to be sold beginning on June 28, 2002--splashy IPO or not. On July 1, they began selling over-the-counter for $15 a share (OTC: NDAQ.OB).
Nasdaq officials weren't too excited about the stock's prospects. In a letter dated June 20, Nasdaq's chairman, Hardwick Simmons, wrote, "it is not clear that a market will develop for our common stock or whether that market will reflect the true market value of Nasdaq's common stock." He was right about the market. Daily trading volume of the shares has averaged a mere 12,550. By contrast, so-called QQQ shares, which track the Nasdaq 100 Trust, and which many investors use as a proxy for Nasdaq Composite performance, average more than 94 million shares a day (AMEX: QQQ).
That said, a share is a share, and the market value that's been determined in the absence of the buzz created by an IPO--whether it's "true" or not--is plain to see. As of mid-December, the shares sold for $10.50--30 percent below their debut price. Meanwhile, the Nasdaq Composite had edged up half a percent.
Investors are clearly concerned about Nasdaq's ever-declining market share, both in number of trades and volume--share that's being siphoned off by competing electronic networks like Instinet. In third quarter 2002, Nasdaq's share of trades was just 28.6 percent, down from 39.3 percent for the same period a year ago; share of volume was 23.2 percent, down from 29.2 percent. The recently launched SuperMontage, a new trading platform, is intended to help bring some of that market share back. To date, it hasn't done so. Nasdaq has also been back-pedaling on its ambitious international expansion plans, leaving investors to rightly wonder just where any future growth might come from.
In the meantime, Nasdaq stock is trading for just 14 times 2003 earnings estimates. If SuperMontage is a success, that will look like a bargain in hindsight. If not, they might as well not bother with the IPO anyway.
Their original plan, like many hatched in the halcyon days of the late '90s, was to take the stock market public in a splashy IPO. But the plan hit a snag: the bubble burst, and with stocks going down, it wasn't exactly the best time to try and sell the idea of investing in the stock of the stock market itself.
Because of a series of sales to private investors in 2000 and 2001, however, some 33.2 million shares were eligible to be sold beginning on June 28, 2002--splashy IPO or not. On July 1, they began selling over-the-counter for $15 a share (OTC: NDAQ.OB).
Nasdaq officials weren't too excited about the stock's prospects. In a letter dated June 20, Nasdaq's chairman, Hardwick Simmons, wrote, "it is not clear that a market will develop for our common stock or whether that market will reflect the true market value of Nasdaq's common stock." He was right about the market. Daily trading volume of the shares has averaged a mere 12,550. By contrast, so-called QQQ shares, which track the Nasdaq 100 Trust, and which many investors use as a proxy for Nasdaq Composite performance, average more than 94 million shares a day (AMEX: QQQ).
That said, a share is a share, and the market value that's been determined in the absence of the buzz created by an IPO--whether it's "true" or not--is plain to see. As of mid-December, the shares sold for $10.50--30 percent below their debut price. Meanwhile, the Nasdaq Composite had edged up half a percent.
Investors are clearly concerned about Nasdaq's ever-declining market share, both in number of trades and volume--share that's being siphoned off by competing electronic networks like Instinet. In third quarter 2002, Nasdaq's share of trades was just 28.6 percent, down from 39.3 percent for the same period a year ago; share of volume was 23.2 percent, down from 29.2 percent. The recently launched SuperMontage, a new trading platform, is intended to help bring some of that market share back. To date, it hasn't done so. Nasdaq has also been back-pedaling on its ambitious international expansion plans, leaving investors to rightly wonder just where any future growth might come from.
In the meantime, Nasdaq stock is trading for just 14 times 2003 earnings estimates. If SuperMontage is a success, that will look like a bargain in hindsight. If not, they might as well not bother with the IPO anyway.