Nasdaq (NDAQ) Bearish Setup: Time for a Put Play?

Nasdaq operates as a global technology company, providing platforms for corporate clients, investment managers, banks, brokers, and exchange operators. Its core business is structured around three segments: Capital Access Platforms, Financial Technology, and Market Services. Capital Access Platforms offers data, listing services, and workflow solutions, including 'Nasdaq TotalView' and 'Nasdaq Basic'. The Financial Technology segment delivers solutions for financial crime management ('Nasdaq Verafin'), regulatory technology ('AxiomSL'), and capital markets technology ('Calypso'). Market Services encompasses equity derivative trading and clearing, cash equity trading, and fixed income, currency, and commodities trading. Nasdaq differentiates itself through robust technology, proprietary data, analytics, and capital markets expertise. The company focuses on enhancing liquidity, transparency, and integrity within the global financial ecosystem, serving diverse clients from banks to listed companies.

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NDAQ's technical outlook is bearish. The recent price action shows a clear downtrend, with the price falling from a high of $97.63 in early August to $85.89 as of November 3, 2025. The stock is trading below its 21-day EMA ($87.99) and 50-day SMA ($90.29), confirming the downtrend. Momentum indicators support this bearish view. The MACD is negative (-1.04), and the MACD histogram is also negative, indicating further downward momentum. The RSI at 41.84 suggests the stock is approaching oversold territory but still has room to decline. The Stochastic oscillator (9.39) is also very low, reinforcing the oversold condition and the potential for a short-term bounce, but the overall trend is down. The ADX at 14.75 suggests the downtrend is not particularly strong, but the consistent selling pressure indicates further weakness. The recent close is near the lower Bollinger Band, which could provide some support, but a break below this level could lead to further declines. Considering these factors, the outlook for NDAQ over the next 1-3 months is bearish.

Nasdaq's MD&A reveals a generally positive trajectory, although with some nuances. For the three months ended September 30, 2025, 'Revenues less transaction-based expenses' increased by 14.8% to $1,315 million compared to $1,146 million in 2024. The Financial Technology segment stood out with a 23.3% revenue increase, while Market Services experienced a 7.4% decrease. For the nine months ended September 30, 2025, 'Net cash provided by operating activities' increased by $396 million to $1,630 million. The company highlights that the increase was 'primarily driven by an increase in net income, partially offset by changes in working capital'. Management also mentions the impact of macroeconomic factors, stating that 'higher overall U.S. trading volumes in the first nine months of 2025, as compared to the same period in 2024, has led to an increase in our U.S. Equity Derivative Trading and U.S. Cash Equity Trading revenues'. The company also repurchased an aggregate principal amount of $69 million of its 2026 Notes and repaid in full the 2025 Notes for an aggregate of $400 million. Overall, the company seems to be performing well, with increased revenues and cash from operations, but market conditions and strategic initiatives are key factors influencing future performance.

Nasdaq's Q2 2025 earnings call reflects a moderately bullish sentiment, underscored by strong financial performance and positive growth across key divisions. The company reported a 12% increase in net revenue, reaching $1.3 billion, with Solutions revenue growing by 10% to $991 million. ARR also saw a healthy 9% increase, totaling $2.9 billion. Adena Friedman highlighted the 'excellent overall financial performance,' emphasizing the strength of Nasdaq's diversified platform. The Capital Access Platforms, Financial Technology, and Market Services divisions all demonstrated robust revenue growth. Specifically, Financial Technology saw a notable 19% growth in Financial Crime Management Technology. While macroeconomic uncertainty persists, management expressed optimism, particularly regarding the IPO landscape, noting the 'strong performance of recent listings' and the highest level of new issuances since H1 2021. The company is also focused on innovation, particularly in Agentic AI, to drive efficiency and enhance product capabilities. Despite an increase in expense guidance due to FX impacts, management maintains its organic expense expectations and is on track with its efficiency program. The overall tone suggests confidence in Nasdaq's ability to deliver sustainable growth and long-term shareholder value.

NDAQ's financial performance presents a mixed picture. Revenue increased from $1.674B in Q1 2024 to $1.958B in Q3 2025, indicating positive top-line growth. However, the gross profit ratio has fluctuated, starting at 0.418 in Q1 2024, dipping to 0.385 in Q3 2024, and reaching a high of 0.803 in Q3 2025, suggesting volatility in profitability. Operating cash flow, while not available for all quarters, was $746M in Q2 2025 and $300M in Q3 2023, indicating cash generation from operations. Total debt has remained relatively stable, starting at $10.402B in Q1 2024 and decreasing slightly to $9.631B in Q2 2025. Overall, while revenue is growing and the company is generating cash, the fluctuations in gross profit ratio and the lack of consistent cash flow data make it difficult to assess the overall financial health definitively. The consistent level of debt suggests stable leverage.

The company presents a moderately bullish investment profile based on its financial data. Revenue has shown positive growth, indicating increasing market demand or successful market penetration. The gross margin is healthy, suggesting efficient cost management in production or service delivery. A strong return on equity (ROE) signals effective utilization of shareholder investments to generate profit. The price-to-earnings (P/E) ratio suggests the stock is trading at a premium, but this could be justified by the company's growth prospects and profitability. A manageable debt-to-equity ratio indicates a reasonable level of financial leverage. The current ratio, being greater than 1, demonstrates the company's ability to cover short-term liabilities with its current assets, further solidifying its financial health. Overall, the combination of revenue growth, healthy profitability metrics, and a solid balance sheet makes the company an attractive investment for the next 12 months, although the elevated P/E ratio warrants careful monitoring.