- SpaceX is reported to be entering the Nasdaq-100 index.
- The stock surged 50% in its first three trading days before giving back gains over the next three days.
- Despite a $2 trillion market value (sixth-largest US public stock), SpaceX's weighting in the Nasdaq 100 is small because less than 5% of its shares are available for trading.
- Owning $100 of the Nasdaq 100 currently gives about $1 worth of SpaceX shares; weighting could increase as lock-ups expire.
- The Nasdaq updated eligibility rules to allow stocks to join the index just 15 days after an IPO, down from three months, to accommodate SpaceX's record IPO.
- The Nasdaq 100 is a tech-heavy index tracking the 100 largest non-financial stocks, with over 200 investment products and $800 billion in assets tracking it.
- Key technical levels: a $172–$180 ceiling, record closing high just above $200, and a bearish signal below $150.
- SpaceX shares are up almost 20% from the IPO target of $135 but down 21% from their peak; analysts expect continued volatility.
- Investors can avoid SpaceX by buying the S&P 500 or international funds; ETFs that aim to double SpaceX's gains are available.
SpaceX's entry into the Nasdaq-100 index on Tuesday is a landmark event, occurring just 15 days after its IPO. This inclusion is expected to generate up to $8 billion in passive investment demand, significantly impacting the stock's trading dynamics.15
However, SpaceX's initial weighting in the index will be limited due to the small percentage of shares available for trading—less than 5% at the time of its IPO. As a result, investors holding $100 worth of the Nasdaq-100 will only own about $1 of SpaceX shares.4
The Nasdaq-100's updated eligibility rules now allow stocks to join the index just 15 days post-IPO, a change that reflects SpaceX's status as the largest IPO in history. Peter Haynes, head of index and market structure research at TD Securities, noted, “All the different index providers needed to look at their rules and make sure they were fit for purpose.”
Despite the initial limitations, analysts predict that SpaceX's weighting could increase as more shares become available following lock-up periods. JPMorgan estimates a passive demand of $4.3 billion tied to the inclusion, while BNP Paribas suggests it could be closer to $8 billion.
Investors should brace for continued price volatility as more shares hit the market in the coming months. “There are going to be a lot of shares hitting the market in the next six months,” said analyst Hurt, indicating that the price fluctuations are likely just beginning.
“JPMorgan has estimated $4.3 billion in passive demand tied to SpaceX's Nasdaq-100 inclusion, with BNP Paribas seeing up to $8 billion. Despite a $2 trillion market cap, the stock carries a tiny index weighting because less than 5% of shares are available for trading.”
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