Why Nasdaq’s new private capital indexes matter for stock investors

Nasdaq (NDAQ) has launched its Nasdaq Private Capital Indexes, a new benchmarking suite built on data from more than 14,000 private market funds representing over US$11.4b in global assets under management.

The launch of the private capital indexes comes as Nasdaq’s 1‑month share price return of 20.59% and year to date share price return of 17.78% show pressure building after a weaker run, even though its 5 year total shareholder return of 76.69% still reflects solid long term compounding.

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With Nasdaq shares down over the past month and year to date, yet still carrying a 5 year total return of 76.69%, the question is simple: is this a reset that leaves upside on the table, or is the market already pricing in future growth?

Most Popular Narrative: 26.6% Undervalued

Nasdaq’s most followed narrative pegs fair value at $108.33 versus a last close of $79.47, which is a wide gap for investors to weigh.

Analysts are assuming Nasdaq's revenue will decrease by 9.2% annually over the next 3 years.

Analysts assume that profit margins will increase from 18.6% today to 33.5% in 3 years time.

Want to understand why a lower top line can still support a higher valuation story? This narrative leans heavily on rising profitability and a rich future earnings multiple. Curious which specific earnings and margin paths have been pencilled in to justify that $108.33 fair value against today’s price? The full narrative lays out those assumptions in black and white.

Result: Fair Value of $108.33 (UNDERVALUED)

However, there is still a risk that weaker client decision making on large tech deals, or tougher competition in listings and fintech, could undermine this upbeat narrative.

Another View: SWS DCF Model Flips the Story

The narrative and analyst targets suggest Nasdaq could be undervalued, but our DCF model points the other way. On those cash flow assumptions, fair value sits at $34.60 versus the current $79.47, which screens as expensive and raises a simple question: how much optimism is baked in?

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Nasdaq for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 53 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own Nasdaq Narrative

If this setup does not quite fit how you see Nasdaq, or you would rather shape the assumptions yourself, you can build a custom view in minutes: Do it your way.

A great starting point for your Nasdaq research is our analysis highlighting 4 key rewards and 1 important warning sign that could impact your investment decision.

Looking for more investment ideas?

If Nasdaq has sparked your interest, do not stop here. The market is full of other stories that could fit your goals just as well.

• Target reliable income by scanning for companies with 13 dividend fortresses that might suit a long term, cash focused approach.
• Hunt for value by reviewing 53 high quality undervalued stocks that combine quality fundamentals with prices that look appealing.
• Prioritise sleep at night potential by checking 85 resilient stocks with low risk scores designed for investors who want fewer surprises.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.