Caesars, Penn National Miss Out on Nasdaq-100 Promotion

Posted on: December 11, 2021, 04:15h. 

Last updated on: December 11, 2021, 04:56h.

Todd Shriber @etfgodfather Read More
Expertise: Financial, Gaming Business, Mergers and Acquisitions.

Caesars Entertainment (NASDAQ:CZR) is among the well-known gaming equities that didn’t make the cut to enter the widely observed Nasdaq-100 Index (NDX).

Nasdaq-100
The Nasdaq market site in Times Square. Four gaming stocks missed out on Nasdaq-100 inclusion. (Image: USA Today)

The Nasdaq-100, which is home to the 100 largets non-financial stocks trading on that exchange, underwent its annual reconstitution on Friday, adding six stocks while removing another six. Those alterations will go into effect on Friday, Dec. 17.

The additions include Airbnb (NASDAQ:ABNB) and electric vehicle maker Lucid Group (NASDAQ:LCID) as well as four technology stocks.

As of Dec. 10, the Nasdaq-100 allocates 17 percent of its weight to the consumer discretionary sector — the group in which gaming equities reside. However, the index had no gaming exposure prior to the annual rebalance, and that remains the case.

Of the six companies being removed from the benchmark, only Fox Corp. (NASDAQ:FOXA) has a gaming footprint. The media giant owns the FOX Bet brand and has rights to acquire 18.6 percent of FanDuel.

Maybe Next Year for Caesars, Penn

Several gaming equities are members of the NASDAQ Next Generation 100 Index — the training ground for the Nasdaq-100.

That group includes Caesars and Penn National Gaming (NASDAQ:PENN). Earlier this year, both casino operators got the nod to join to the S&P 500, stoking speculation that a Nasdaq-100 promotion could be in offing. Caesars stock attempted to hold up its end of the bargain, as it’s up nearly 20 percent year-to-date, bringing its market value $19.78 billion.

Penn, however, slumped 43.31, and is now the smallest consumer discretionary component in the NASDAQ Next Generation 100 Index.

Joining the Nasdaq-100 could have been a potential boost for shares of Caesars and Penn, because active fund managers and index funds that benchmark to that gauge are forced to buy newly added stocks. On a global basis, dozens of active and passive funds representing hundreds of billions of dollars in assets under management track the index. In the US alone, eight exchange traded funds follow the Nasdaq-100.

DraftKings, Wynn Miss Out, Too

Caesars and Penn National aren’t the only gaming stocks that missed out on the move to the Nasdaq-100. DraftKings (NASDAQ:DKNG) and Wynn Resorts (NASDAQ:WYNN) – formerly a member of the gauge – also didn’t get approval to join the index.

Those two stocks combine for about 1.4 percent of the aforementioned NASDAQ Next Generation 100 Index.

While the Nasdaq is the listing venue for an assortment of other gaming equities beyond the four mentioned here, those names aren’t yet large enough for consideration for the next generation index. That indicates they’re a long way from becoming viable contenders for Nasdaq-100 inclusion.