Shopify's Nasdaq switch may trigger index fund flows and signals a possible US domicile shift
Shopify Inc. will move its US-listed shares from the New York Stock Exchange to the Nasdaq Global Select Market on March 31, a shift that could position the Ottawa-founded company for inclusion in the Nasdaq 100 Index, as reported by BNN Bloomberg.
The index tracks the 100 largest Nasdaq-listed non-financial firms and plays a central role in guiding capital from passive investment vehicles.
Matthew Maley, Chief Market Strategist at Miller Tabak + Co, said, “Being included in that index would equate to more buying power for a stock,” pointing to the inflows seen in funds tracking the Nasdaq 100 in recent years.
Shopify’s share price has climbed 16 percent since the company announced the move last week, outperforming the broader index.
With a market capitalization larger than all but 24 Nasdaq-listed companies, Shopify meets the key size requirement.
The firm will maintain its dual listing on the Toronto Stock Exchange even after transferring to Nasdaq.
Inclusion in the Nasdaq 100 depends primarily on company size and a Nasdaq listing, but there is no guarantee Shopify will qualify.
Representatives from both Nasdaq and Shopify declined to comment on the possibility of an addition.
In a market increasingly driven by passively managed funds, benchmark inclusion has become more consequential. Index-linked products, such as mutual funds and exchange traded funds (ETFs), are required to reflect the composition of the benchmarks they follow.
Bloomberg Intelligence estimated that passive funds hold 21 percent of the shares of the average publicly listed US stock, up from less than 7 percent in 2013.
Products tied to the Nasdaq 100 manage hundreds of billions of dollars.
Bloomberg data showed that, over the past five years, 48 companies added to the Nasdaq 100 saw an average gain of 3.7 percent between announcement and entry. However, half of those stocks gave up those gains within the following 25 days.
Mark Luschini, chief investment strategist at Janney Montgomery Scott, said, “In large part there’s some preheating the inclusion and the benefits to be had by these companies, but in the case of names that are already broadly recognized, the impact is diminished.”
Maley added, “It’s a two-way street. Once the stock has become part of a big index/ETF, the selling can become bigger during a bear market.”
The transfer marks a rare move for a Canadian company. Since 2000, only three Canadian-domiciled firms have joined the Nasdaq 100.
ATI Technologies Inc., later acquired by Advanced Micro Devices Inc. in 2006, and BlackBerry Ltd. were both removed.
Lululemon Athletica Inc., based in Vancouver, remains the only Canadian firm in the index.
Shopify has long competed with Royal Bank of Canada, which trades solely on the Toronto Stock Exchange, for the title of Canada’s largest company by market capitalization.
In a recent filing with the US Securities and Exchange Commission, Shopify submitted a domestic issuer 10-K form, rather than the foreign issuer 40-F it had filed in previous years.
The form listed New York as a “principal executive office,” alongside its Canadian headquarters.
This shift in regulatory filing led some analysts to suggest that Shopify could be preparing for a formal change in domicile, potentially opening the door to membership in the S&P 500.
The company has consistently generated more than 60 percent of its revenue in the US each year since at least 2012, while Canada contributed less than 6 percent of its revenue in 2024.
The change also touches on broader concerns about cross-border trade and investment, especially in the context of US-Canada relations.
As US President Donald Trump pursues tariffs on Canadian goods and raises concerns about Canadian sovereignty, Shopify’s direction highlights the ongoing tension.
Even if Shopify officially shifts its domicile to the US, it could still remain in the S&P/TSX Composite Index.
Shortly after Shopify’s filing referencing its New York office, S&P Dow Jones Indices proposed a change to its eligibility criteria that would allow companies not domiciled in Canada to stay in the Canadian index.
