Introduction
The Nasdaq stock exchange is the second-largest stock exchange in the world by market capitalization, behind only the New York Stock Exchange (NYSE). Headquartered in New York City, the Nasdaq facilitates the buying and selling of stocks for over 3,300 companies.
History of the Nasdaq Stock Exchange
The Nasdaq was founded in 1971 as the world’s first electronic stock market. It started as a wholly electronic system that did not have a trading floor and enabled brokers to make trades via telephones and computers. The founding companies include the National Association of Securities Dealers (NASD) and the Financial Industry Regulatory Authority (FINRA).
Some key events and milestones in the history of the Nasdaq stock exchange include:
- 1971: The Nasdaq stock market was founded
- 1982: Nasdaq launches the National Market System (NMS) which links markets electronically
- 1985: Microsoft holds its IPO on the Nasdaq
- 1987: The stock market crashes on October 19 but the Nasdaq rebounds quicker due to its electronic systems
- 1996: The Nasdaq Composite index first closes above 1,000
- 2000: Dot-com bubble bursts, losing 78% of its value over 30 months
- 2008: Nasdaq and OMX merge, expanding globally
- 2012: Nasdaq leads all exchanges in IPOs for emerging growth companies under the JOBS Act
- 2021: Nasdaq welcomes 400th listing
Number of Listings
Today, the Nasdaq stock exchange facilitates trading in over 3,300 company stocks. Some of the most prominent Nasdaq-listed technology companies include:
- Apple
- Alphabet (Google)
- Amazon
- Meta (Facebook)
- Microsoft
There are over 400 initial public offerings (IPOs) per year on the Nasdaq, which is more than any other stock exchange globally.
How the Nasdaq Stock Exchange Works
The Nasdaq operates as a dealer market, which means market makers are always ready to buy or sell stocks on a regular and continuous basis. This ensures high liquidity.
Here are some key things to know about how trading occurs:
- Trades are executed electronically via computer
- There is no central trading floor
- Trades can occur from anywhere globally
- Quotes are updated in real-time
- Information is transparent and publicly available
Additionally, the Nasdaq has three different market tiers:
- The Nasdaq Global Select Market
- The Nasdaq Global Market
- The Nasdaq Capital Market
The main differences between these has to do with listing requirements related to the companies’ sizes and stages.
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Nasdaq Indexes and How They Work
Just like the S&P 500 and Dow Jones indexes, the Nasdaq stock exchange also has its own proprietary indexes. Below are explanations of the two primary Nasdaq indexes:
The Nasdaq Composite Index
The Nasdaq Composite Index tracks the performance of all stocks listed on the Nasdaq stock market. This includes over 3,300 companies across major industry groups like technology, retail, health care, financials, and more.
Key Details:
- Launched in 1971
- Weighted by market capitalization
- No minimum market cap requirement
- Contains over 3,300 securities
- Represents about half the market cap of global equity markets
The Nasdaq Composite is one of the three most widely followed indexes, along with the S&P 500 and Dow Jones Industrial Average. It is often used as a broad indicator of technology sector performance.
The Nasdaq-100 Index
The Nasdaq-100 Index includes the 100 largest non-financial companies listed on the Nasdaq stock exchange. It contains many leading technology and internet giants.
Key Details:
| Initial Launch | 1985 |
| Number of Components | 100 |
| Market Cap Minimum | $10 billion |
| Weighting Methodology | Market capitalization |
Some prominent companies in the Nasdaq-100 index include Apple, Microsoft, Amazon, Alphabet (Google), Meta (Facebook), PepsiCo, Adobe Systems, PayPal, and more.
The Nasdaq-100 often outperforms the broader Nasdaq Composite Index since it focuses more on fast-growing technology companies. It is also traded via QQQ exchange-traded fund (ETF).
Recent Nasdaq Company IPOs and Listings
The Nasdaq stock exchange has remained highly attractive for IPOs, notably tech IPOs, over the last decade. Here is a list of some of the more prominent recent Nasdaq IPOs and direct listings:
Recent Major Nasdaq IPOs & Listings
| Company | Industry | IPO Year | IPO Share Price | Current Price |
| Snowflake | Cloud Data | 2020 | $120 | $142 |
| Airbnb | Travel/Rental | 2020 | $68 | $94 |
| DoorDash | Food Delivery | 2020 | $102 | $74 |
| Coinbase | Cryptocurrency | 2021 | $250 | $41 |
| Roblox | Gaming Platform | 2021 | $45 | $29 |
| Rivian | Electric Vehicles | 2021 | $78 | $15 |
Snowflake, Airbnb, DoorDash, Coinbase, Roblox, and Rivian are some of the largest and most prominent technology/growth companies that have debuted on the Nasdaq exchange in recent years. The exchange continues positioning itself as the top destination for tech and growth stocks.
Conclusion
Since its launch in 1971 as the world’s first electronic stock exchange, the Nasdaq stock exchange has evolved to become one of the largest and most influential stock markets globally. It brings together over 3,300 public companies and enables the trading of tech giants like Apple, Google, Amazon and Microsoft.
With cutting edge trading platforms and indexes that investors closely monitor like the Nasdaq Composite and Nasdaq-100, the Nasdaq will continue playing a major role in global equity markets for technology innovators. As emerging growth companies disrupt various industries, they are likely to fuel further expansion of the Nasdaq in the decades ahead as the exchange of choice.
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