Nasdaq Stock Drops After Announcement of Secondary Offering—Key Levels to Watch

Shares in stock exchange operator and market technology company Nasdaq (NDAQ) fell in extended trading Tuesday after the company announced that minority shareholder Borse Dubai plans to commence a secondary offering of its stock.

Borse Dubai will offer 26,956,522 shares of Nasdaq’s common stock at a price of $59 per share, representing a 5.5% discount to the stock’s Tuesday closing price of $62.46. The offering also provides the underwriters, which include Morgan Stanley (MS) and Goldman Sachs (GS), with a 30-day option to purchase up to an additional 4,043,478 shares. In addition, Borse Dubai will receive all proceeds from the offering, which is expected to close on Friday.

At the completion of the offer, the United Arab Emirates-based exchange will hold roughly between 10.1% and 10.8% of Nasdaq’s outstanding shares depending on the underwriters takeup and is expected to be the second largest shareholder of the company’s stock. In addition, Borse plans to enter an 18-month lock-up agreement for its remaining shares and have the right to appoint a nominee to Nasdaq’s board of directors, providing its ownership remains at or above 10% in the company.

Borse Dubai Chairman and CEO Essa Kazim said the secondary offering aims to bolster the company’s financial position. “Today’s offering is being conducted to enhance the capital structure and liquidity within the Borse Dubai Group,” he said.

Nasdaq shares have continued trending higher since the 50-day moving average crossed above the 200-day moving average to flash a golden cross buy signal in mid-December last year. The stock’s recent advance has occurred on increasing trading volumes, indicating growing interest from market participants. 

During pullbacks, investors should keep a close eye on the $58.50 level, where the price may find buying support from a multi-month trendline and the 50-day moving average. Longer term, monitor the December 2022 swing high at $69.22 as a potential resistance area on the chart.

Nasdaq shares fell 2.6% to $60.83 in after-hours trading.

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As of the date this article was written, the author does not own any of the above securities.