Most volatile NASDAQ stocks: Chinese and SaaS shares dominate volatility index
The tech-heavy Nasdaq 100 index (US Tech 100) has taken a hard hit this year amid a challenging macroeconomic environment.
Central banks, including the US Federal Reserve (Fed), have taken a hawkish stance to combat inflation. As a result, market participants have trimmed their bets in high-flying tech stocks, which have weaker pricing power and some rely on external financing.
Nasdaq 100 (US Tech 100) live price chart
In this article, we share a list of most volatile Nasdaq stocks and provide further details on the reasons behind that volatility.
What is the Nasdaq 100 Index?
The Nasdaq 100 is a stock index compiled and managed by Nasdaq (NDAQ), an American financial services firm that operates several stock exchanges across the world, including the Nasdaq Stock Exchange.
The index comprises the 100 largest American and foreign non-financial corporations listed in the Nasdaq Stock Market. As of 22 November, the number of holdings stood at 102. The Nasdaq 100 is a market-cap weighted index – the weight assigned to each stock is determined by market capitalisation.
The technology sector accounted for 55% of the index, followed by consumer discretionary (18.4%) and healthcare (7.6%), according to Nasdaq data, as of 22 November.
The largest holding within the index was Apple (AAPL) with a 13.9% weighting, followed by Microsoft (MSFT), Amazon (AMZN) and Tesla (TSLA), accounting to 9.8%, 5.9% and 4% of the index, respectively, Investco data, as of 31 October, shored.
Meanwhile, Nasdaq 100 Volatility Index (VOLQ) measures 30-day index volatility, as expressed by options contracts, on the Nasdaq 100 (US Tech 100).
What is your sentiment on US100?
Most volatile Nasdaq stocks
The volatility of an asset price can be determined in different ways. In essence, the purpose of volatility measurement is to illustrate the extent to which the price has fluctuated over a certain period.
One way to measure volatility is by using 52-week price lows and highs. The wider the range, the more volatile the price has been. For example, a stock price that moves from $1 to $20 during a 52-week period can be considered more volatile than the one that fluctuated from $1 to $3 over that same time.
In this article we use volatility ratings provided by MarketScreener. It defines volatility as follows:
The five stocks listed below were ranked as the most volatile Nasdaq stocks, as of 22 November.
Ross Stores (ROST)
Ross Stores (ROST) is the most volatile stock on the Nasdaq 100 index. The firm is an American discount retailer that operated 1,923 in the US, as of January 2022. The company offers in-season merchandise sold by top apparel, footwear and home fashion companies at low prices via bulk-buying.
In the past year, the share price has fluctuated between $69.24 and $115. The stock has risen by 0.87% year-to-date and 3.7% in the past 12 months.
During the third quarter of 2022 the company’s adjusted diluted earnings per share (EPS) and revenues beat analyst expectations. The stock jumped 10% on the report date.
JD.com (JD)
JD.com (JD) is another of volatile Nasdaq stocks. The firm is one of China’s largest e-commerce companies, which operates an Amazon-like website where consumers can buy goods from some of the country’s top brands and vendors.
The company also operates a logistics business JD Logistics, which offers warehousing, fulfilment, and delivery services. Other companies owned and operated by JD include JD Health, JD Property, JD Industry, and Dada Group.
In the past year, the stock price has traded in the range of $33.17 to $91.19. The stock fell 26.42% year-to-date and 41.22% in the past 12 months.
According to a report from Reuters, the company is aiming to win the approval of Beijing authorities to list its shares on the Hong Kong Stock Exchange. The move comes as Chinese firms keep looking for ways to cushion a potential delisting in the US.
In May this year, JD was added to the Holding Foreign Companies Accountable Act (HFCAA) list. Companies within it must submit themselves to audits from US regulatory agencies or face delisting.
Some Chinese equities have been among the most volatile Nasdaq stocks as regulators have adopted hostile measures against large tech corporations within the country to keep their political and economic influence in check.
Pinduoduo (PDD)
Pinduoduo (PDD) is a Chinese social media platform and e-commerce company that serves over 900 million users via its Temu and Pinduoduo apps. The company caters to both North American and Chinese consumers.
In the past year, the stock price has fluctuated between $23.21 and $82.10 a share. The stock has gained 14.51% year-to-date, as of 22 November, and is down 16.05% in the past 12 months.
The mobility restrictions imposed by Chinese authorities amid a spike in the number of Covid-19 cases have favoured online retailers like Pinduoduo and contributed to pushing the price of its shares higher in 2022.
Andy Maynard, the global head of equities for China Renaissance Securities, told Reuters:
Datadog (DDOG)
DataDog (DDOG) is a software-as-a-service (SaaS) company that provides security solutions to cloud-based applications and enterprises. At the end of 2021, the company had 18,800 customers in more than 100 countries.
The stock price traded between $66.45 and $187.70 in the past 12 months. The share price slumped by 59.39% year-to-date and 60% loss in the past year.
In November the SaaS company announced that it will acquire Cloudcraft, a service that allows IT infrastructure managers to create interactive diagrams of their network’s architecture.
Early-stage companies in the tech space have been among the volatile Nasdaq stocks as their valuations have been battered by risk-off investor sentiment.
DocuSign (DOCU)
DocuSign (DOCU) is another software-as-a-service (SaaS) that closes our list of the five most volatile Nasdaq stocks. The company enables businesses and organisations to create digital signatures for documents.
DocuSign’s application is available for both personal computers and mobile devices and can be integrated with more than 400 other applications to facilitate business processes. As of 31 January 2022, the company had 1.1 million customers spread across 180 countries.
DocuSign’s stock price ranged between $39.57 and $257.48 in the last 52 weeks, as of 22 November. The SaaS stock slumped 71.2% year-to-date and 82.3% in the past 12 months.
In late September, DocuSign announced that it will be letting go approximately 9% of its global workforce – nearly 700 employees – as part of an ongoing restructuring plan that the leadership team aims to fully execute by the end of the 2023 fiscal year.
Days before that announcement, the company hired Allan Thygesen as the new CEO to lead the firm during this challenging period. In June 2021, the firm’s founder, Dan Springer, was ousted by the Board of Directors as the company struggled to maintain strong performance after the tailwind provided by the pandemic started to fade.
Bottom line
Remember, volatility involves high risks. Trading high-volatility stocks of Nasdaq 100 is extremely risky. Always conduct your own due diligence before trading, looking at the latest fundamental and technical analysis, a wide range of commentary and the latest news. Remember, past performance does not guarantee future returns. And never trade money you cannot afford to lose.
FAQs
How many stocks make up the Nasdaq 100 index?
As of 22 November, 102 components made up the tech-heavy Nasdaq 100 Index.
How to find volatile stocks?
The most active stocks on Nasdaq can be the ones with the highest volatility ranking. They can be identified using stock screeners. Remember, volatility increases the risk of loss. Always conduct your own due diligence before trading.
Should I invest in Nasdaq stocks?
Whether Nasdaq stocks are an appropriate investment option for you depends on your goals, risk tolerance, portfolio needs and timeframe. You must always conduct your own due diligence before investing.. Past performance does not guarantee future results. And never trade money you cannot afford to lose.
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