Millions of ordinary investors are poised to indirectly own shares in SpaceX, the rocket maker and artificial intelligence company, as it is set to be added to the Nasdaq 100 index next week. The company's inclusion, effective before trading begins on Tuesday, means that many tracker funds, designed to mirror stock market indices, will be compelled to buy SpaceX shares to rebalance their portfolios.
The Nasdaq 100 comprises the largest companies listed on the tech-focused U.S. stock exchange, including industry giants like Nvidia, Apple, and Microsoft. SpaceX's shares experienced an initial surge following their debut on June 12, reaching a record high of $225 four days later. This valuation briefly made Elon Musk the world's first trillionaire, with a significant portion of his wealth tied to SpaceX stock.
However, the stock experienced a sharp decline shortly after, and as of Friday, it was trading at $162, still 20% above its initial flotation price. This performance marks a potential recovery for Musk, whose reputation was impacted by his association with Donald Trump's administration.
Recent reports indicate positive developments for other Musk ventures, with Tesla announcing record deliveries of 480,126 cars in the second quarter, reversing a two-year decline. This recovery was attributed to improved demand in Europe, following a slump the previous year linked to controversy surrounding Musk's political activities.
Speculation is also mounting regarding a potential merger between Tesla and SpaceX, which could create a vast conglomerate encompassing satellite networks through Starlink and social media via X (formerly Twitter). SpaceX's artificial intelligence division, xAI, is also considered a key growth area, despite trailing rivals like OpenAI and Anthropic, both of which are also planning stock market listings this year. Interest in xAI intensified following reports that SpaceX had presented investors with a prototype smartphone powered by its AI technology, said to be thinner than an iPhone. This development follows Musk's reported frustration with Apple's control over its app store and his consideration of launching a competing smartphone.
The inclusion of SpaceX in the Nasdaq 100 means that funds tracking this index will acquire exposure to the company. Other major index providers, such as FTSE Russell and MSCI, have also revised their rules to allow for faster inclusion of large initial public offerings (IPOs) into their U.S. and global index series. Some passive investment funds from Vanguard, which follow CRSP indexes, have also fast-tracked SpaceX's inclusion. Conversely, S&P Dow Jones has stated it will not amend its rules, meaning SpaceX will not be included in the S&P 500, which requires companies to have traded publicly for 12 months and be profitable under U.S. Generally Accepted Accounting Principles.
Experts suggest that initial weightings for SpaceX in affected portfolios will be small due to constrained free float, but are expected to grow as lock-up periods expire over the subsequent six months, contingent on the share price performance. Investors seeking to determine if their specific index funds will hold SpaceX shares are advised to check the index their fund tracks and its investment policy, or to contact their investment platform for clarification.