SpaceX Joins Nasdaq 100, Fueling Billions in Passive Investment
SpaceX will join the Nasdaq 100 index on July 7, according to Nasdaq. As a result, the move is expected to trigger billions of dollars in passive investment into the aerospace and AI company.
Typically, inclusion in the index encourages exchange-traded funds (ETFs) that track the Nasdaq 100 to purchase shares of newly added companies. Consequently, the increased demand often supports stock prices.
Moreover, Nasdaq recently eased several index entry requirements. The updated rules reduced restrictions related to profitability, the waiting period after an initial public offering, and the number of publicly traded shares. Therefore, the changes aim to attract more companies seeking U.S. listings.
Financial performance and future IPO outlook
SpaceX debuted on the Nasdaq on June 12. Although the company has alternated between significant losses and modest profits over the past three years, it reported a net loss of $4.9 billion last year.
Meanwhile, large language model developers OpenAI and Anthropic are also expected to pursue initial public offerings within the next two years. Both companies could target valuations exceeding $1 trillion.
Investors commonly use mutual funds and ETFs, including those tracking the Nasdaq 100, to gain diversified market exposure. Furthermore, J.P. Morgan estimates that SpaceX’s addition to the index could generate approximately $4.3 billion in passive investment inflows.
Analysts remain divided on valuation
“Clearly, there’s a lot of demand, that’s why they fast-tracked the integration into the index,” Michael Field, chief equity market strategist at Morningstar, said. “A lot of people will be happy with it. Some fund managers less so, the skeptics amongst them, us included. We think the stock is overvalued.”
However, S&P Global has not changed its eligibility requirements for the company’s inclusion in its major indices, including the S&P 500. Instead, the index provider said it will wait at least 12 months before considering the company for inclusion.
