Jul. 4 at 11:16 AM
$SPCX $ASTS $RKLB $SPCE $LUNR @Xochi_Research_Group Your thesis that
"NASDAQ-100 inclusion is bearish because index funds will short the stock," would not be an accurate statement.
If you mean:
"NASDAQ-100 inclusion could increase the supply of lendable shares, making it easier for other investors to short the stock,"
Whether this results in a bearish outcome is questionable since:
• Index funds (such as ETFs and mutual funds) are designed to replicate the performance of an index, so they buy and hold the constituent stocks in the appropriate weights.
• Shorting a stock in the index would create tracking error, causing the fund to deviate from the index it is supposed to follow.
• There must still be demand from investors who want to short the stock.
• Not every institution lends its shares.
• Increased institutional ownership can improve liquidity and attract long-term investors, which may offset or outweigh any effect from increased share lending.
