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How much a stock's price changes over time is a significant driver for most investors. Not only can price performance impact your portfolio, but it can help you compare investment results across sectors and industries as well.
The fear of missing out, or FOMO, also plays a factor in investing, especially with particular tech giants, as well as popular consumer-facing stocks.
What if you'd invested in Nasdaq (NDAQ) ten years ago? It may not have been easy to hold on to NDAQ for all that time, but if you did, how much would your investment be worth today?
Nasdaq's Business In-Depth
With that in mind, let's take a look at Nasdaq's main business drivers.
Founded in 1971 and headquartered in New York, Nasdaq Inc. is a leading provider of trading, clearing, marketplace technology, regulatory, securities listing, information and public and private company services.
The company’s global offerings are diverse and include trading and clearing across multiple asset classes, trade management services, data products, financial indexes, capital formation solutions, corporate solutions, and market technology products and services. Its technology powers markets across the globe, supporting equity derivative trading, clearing and settlement, cash equity trading, fixed income trading, trading surveillance and many other functions.
In the United States., the company operates The Nasdaq Stock Market, while in Europe, it operates exchanges in Sweden, Denmark, Finland, and Iceland as Nasdaq Nordic, and exchanges in Estonia, Latvia and Lithuania as Nasdaq Baltic.
Nasdaq manages, operates and provides products and services in four business segments: Market Services, Corporate Services, Information Services and Market Technology.
Market Services (68.1% of 2020 Revenues) : The segment includes Equity Derivative Trading and Clearing, Cash Equity Trading, FICC and Trade Management Services businesses.
Information Services (16.1%): The segment’s businesses include Market Data, Index and Investment Data & Analytics.
Corporate Services (9.4%) : The segment delivers critical capital market and governance solutions across the lifecycle of public and private companies. Its operations encompass Corporate Solutions and Listing Service.
Market Technology (6.4%): This business is a leading global technology solutions provider and partner to exchanges, clearing organizations, central securities depositories, regulators, banks, brokers, buy-side firms and corporate businesses.
Other Revenues include revenues from the Public Relations Solutions and Digital Media Services businesses, which were sold in April 2018.
While anyone can invest, building a lucrative investment portfolio takes research, patience, and a little bit of risk. If you had invested in Nasdaq ten years ago, you're probably feeling pretty good about your investment today.
According to our calculations, a $1000 investment made in September 2011 would be worth $8,800.09, or a 780.01% gain, as of September 6, 2021. Investors should keep in mind that this return excludes dividends but includes price appreciation.
Compare this to the S&P 500's rally of 286.33% and gold's return of -6.47% over the same time frame.
Analysts are forecasting more upside for NDAQ too.
Shares of Nasdaq have outperformed the industry in a year. The company has been successful in maximizing opportunities as a technology and analytics provider and growing core marketplace businesses. Focus on growth via acquisitions and organic initiatives, which aided its entry into new markets and helped it gain cross-selling opportunities, bodes well. Intense focus on Market Technology and Information Services businesses also helps the company to explore vast opportunities per its developmental strategies. A strong balance sheet and robust cash position help capitalize on growth opportunities. Nasdaq remains committed to deploy capital effectively by investing in organic growth initiatives. However, escalating expenses due to general and administrative costs weigh on margin expansion. Moreover, the company’s high debt level poses risk.
Over the past four weeks, shares have rallied 5.20%, and there have been 6 higher earnings estimate revisions in the past two months for fiscal 2021 compared to none lower. The consensus estimate has moved up as well.
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