Nasdaq, Inc. Stock Is Off Its Highs, Despite Strong Results - Short Put Plays Work Here

Core Viewpoint - Nasdaq, Inc. reported strong free cash flow (FCF) and margins for Q4, yet its stock has declined by 14% since the announcement, presenting an opportunity to short out-of-the-money put options with a one-month expiry [1]. Financial Performance - Nasdaq's revenue increased by 13% in 2025, with annualized recurring revenue (ARR) rising by 10% in Q4 [4]. - The company's FCF reached nearly $2.2 billion in 2025, representing 42.3% of its net revenue of $5.2 billion, indicating strong cash-flow profitability [4]. - In comparison, the previous year, Nasdaq generated $1.732 billion in FCF, which was 37.3% of its $4.649 billion in net revenue, showing improved margins and operating leverage [5]. Future Projections - For Q4, Nasdaq's FCF was $537 million, accounting for 38.6% of its $1.392 billion in net revenue [6]. - Analysts forecast net revenue to rise to $5.7 billion in 2026, a 9.6% increase, and to $6.17 billion in 2027, an 18.65% increase [6]. - Assuming a 40% conversion of revenue to FCF, the estimated FCF for 2026 would be approximately $2.288 billion, a 4.1% increase from 2025 [8]. Market Valuation - If the market values Nasdaq stock at a 4.25% FCF yield, the estimated market value would be $53.84 billion based on the projected FCF [9]. - Currently, Nasdaq has a market cap of $48.17 billion, suggesting a potential gain of 14% from the current stock price of $84.17, leading to a target price of $95.95 [9]. - This target price is lower than the average target price of $108.33 set by 17 analysts [9].