Key insights
- SpaceX's upcoming IPO, expected to be one of the largest ever, will significantly impact major US equity indices. While the S&P 500 will not alter its inclusion rules to fast-track SpaceX, the Nasdaq-100 has made changes facilitating its inclusion shortly after the IPO. This means investors in Nasdaq-100 ETFs will gain automatic exposure to SpaceX, potentially influencing sector weights and overall index performance due to SpaceX's massive valuation.
With SpaceX's initial public offering (IPO) expected on June 12, the company has been dominating investment headlines. As it stands, it's planning to raise around $75 billion by selling 555,555,555 shares at $135 each.
With an expected valuation of over $1.77 trillion, SpaceX will instantly become one of the most valuable public companies in the world. So, with major indexes favoring larger companies, how will the S&P 500 (^GSPC 2.64%) Nasdaq-100 be affected?
For a bit, the S&P 500 Dow Jones Indices -- which manages the S&P 500 -- was considering altering its rules to fast-track SpaceX into the index. This was unsurprisingly met with significant backlash, and on June 4, it announced it wouldn't change the criteria after all.
SpaceX will need to check three boxes before joining the S&P 500:
Nasdaq, on the other hand, did make changes that will make it much easier for SpaceX to be included in the Nasdaq-100 index (roughly the largest 100 non-financial companies on the Nasdaq exchange) as soon as 15 days after the IPO occurs. This means that if you currently own shares of a Nasdaq-100 exchange-traded fund (like the Invesco Nasdaq-100 ETF (QQQM 4.79%) or Invesco QQQ ETF (QQQ 4.80%) ), you'll automatically gain exposure to SpaceX whenever it's added to the index.