Shopify Inc. is taking steps to potentially become part of significant stock indexes, attracting a surge of investor interest in the Canadian e-commerce platform. The company, based in Ottawa, plans to move its US-listed shares from the New York Stock Exchange to the Nasdaq Global Select Market starting March 31. This shift could open the door for inclusion in the tech-heavy Nasdaq 100 Index, which monitors the performance of the largest non-financial companies listed on Nasdaq.

Matthew Maley, Chief Market Strategist at Miller Tabak + Co, mentioned that being part of this index could result in increased buying power for a stock, pointing out the recent inflows into funds tracking the Nasdaq 100. Despite its larger market capitalization compared to all but 24 Nasdaq-listed stocks, Shopify's shares have surged by 16% since announcing the move to Nasdaq. Even after the switch, Shopify will retain a dual listing on the Toronto Stock Exchange.

While company size and exchange listing are key factors in Nasdaq 100 inclusion, the decision on whether Shopify will be added remains uncertain. Both Nasdaq and Shopify representatives have not provided comments on the potential index addition. Being part of benchmarks is gaining significance for companies due to the rise of passively-managed investment funds, such as mutual funds and ETFs, which must purchase shares of index member companies.

A report by Bloomberg Intelligence shows that passive funds own about 21% of shares in the average US publicly-listed company, a threefold increase from 2013. Nasdaq 100 linked products manage billions of dollars. Newcomers to the Nasdaq 100 over the past five years experienced an average 3.7% gain between the announcement and index addition, with half of the stocks erasing these gains in the subsequent 25 days.

Mark Luschini, chief investment strategist at Janney Montgomery Scott, noted that the benefit for well-known companies included in the index might be less substantial compared to those seeking inclusion.