What Happened: Walgreens, which was ousted from the Dow Jones Industrial Average in February, is now facing the possibility of being dropped from the Nasdaq 100 index. The most likely candidate for its replacement is Super Micro Computer, as reported in Barron’s feature on Thursday.
Walgreens’ shares plummeted by 22.2% to $12.19 on Thursday after the company announced the closure of several pharmacies and revised its financial guidance for the current fiscal year to around $2.87 a share, below the consensus of $3.21.
With a market value of approximately $10.5 billion, Walgreens is at risk of being removed from the Nasdaq 100, which requires its members to have a market value of at least 0.1% of the total market value, currently around $23 trillion. Walgreens is currently at about 0.05% and has the smallest market capitalization in the index.
According to the NDX rules, a company can be dropped if it fails to maintain a 0.1% weighting at two consecutive month-ends and a suitable replacement can be found. Walgreens did not meet this requirement at the end of May and is unlikely to do so at the end of June.
Super Micro Computer, a leading server manufacturer for AI, has seen its stock triple this year. With a market value of around $52 billion, it is the most discussed potential addition to the NDX.
Why It Matters: Walgreens’ potential removal from the Nasdaq 100 is the latest in a series of challenges for the company. The stock has been on a downward trajectory since its peak of nearly $100 in 2015. The company was previously seen as a retail growth story similar to Costco and had a high price/earnings ratio due to its perceived strong position in the pharmacy business.
However, the recent announcement of pharmacy closures and a revised financial outlook have further dampened investor confidence. The potential removal from the Nasdaq 100 could have significant implications for the company’s stock and its position in the market.
These developments also highlight the broader trends in the tech sector, which has been trailing behind communication services in recent months.
Price Action: Walgreens Boots Alliance Inc stock closed at $12.19, down 22.16% on Thursday. In after-hours trading, it decreased further 1.23%. Year to date, the stock has fallen 54.26%. Super Micro Computer stock closed at $890.36, up 7.12% on the same day. In after-hours trading, it increased 0.52%. Year to date, the stock has surged 211.91%, according to data from Benzinga Pro.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
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