Inclusion in the index generally leads to an uptick in stock price, as exchange-traded funds aiming to mirror the index’s performance acquire shares of the newly listed company.
To enhance appeal for firms pursuing US listings, Nasdaq, alongside other index providers like FTSE Russell and MSCI, has eased its entry criteria, such as requirements for profitability, the waiting period after a company goes public, and the volume of shares available for trading.
SpaceX, which made its debut on Nasdaq on June 12, has experienced volatile earnings over the past three years, alternating between substantial losses and minimal profits. Last year, the company recorded a net loss of $4.9 billion.
Manufacturers of Large Language Models (LLMs), OpenAI and Anthropic
are also anticipated to submit initial public offerings this year or next, likely aiming for valuations exceeding $1 trillion.
Investors purchase mutual funds and ETFs, such as Invesco’s QQQ and QQQM, that follow the Nasdaq 100, for broader market participation.
JP Morgan projected that SpaceX’s integration into the Nasdaq 100 could attract $4.3 billion in passive investments.
“Clearly, there’s a lot of demand, that’s why they fast-tracked the integration into the index,” stated Michael Field, chief equity market strategist at Morningstar. “Many will be pleased with it, though some fund managers, particularly skeptics, including ourselves, believe the stock is overvalued.”
Also Read: US tech megacaps slide as SpaceX extends slump, AI expense concerns grow
S&P Global announced this month that it would not adjust the criteria for SpaceX’s entry into its major indices, including the S&P 500, and will wait at least 12 months before considering it.
(Edited by : Gautham Krishna)
