SpaceX to Join Nasdaq 100, Poised for Passive Investment Surge

SpaceX is set to be included in the Nasdaq 100 index starting July 7, a move expected to trigger substantial passive investment inflows. The exchange operator confirmed the inclusion on Friday, signaling a significant step for Elon Musk's rocket and artificial intelligence company.

Inclusion in the Nasdaq 100 typically leads to a rise in a company's stock price as exchange-traded funds (ETFs) that track the index purchase its shares to maintain performance replication. This move comes as Nasdaq, alongside other index providers like FTSE Russell and MSCI, has eased its listing requirements. These adjustments include criteria on profitability, post-IPO trading days, and available shares, aimed at making U.S. listings more appealing.

SpaceX, which went public on June 12, has experienced fluctuating financial results, reporting a net loss of $4.9 billion last year. The company's inclusion is anticipated to attract approximately $4.3 billion in passive inflows, according to J.P. Morgan estimates. However, market strategists hold differing views. Michael Field of Morningstar noted the high demand driving the fast-tracked index integration but expressed skepticism, stating, "We think the stock is overvalued."

Meanwhile, S&P Global has indicated it will not alter its requirements for SpaceX's inclusion in its major indices, including the S&P 500, and will wait at least a year before considering it. The article also notes that major Large Language Model (LLM) developers like OpenAI and Anthropic are expected to pursue IPOs soon, likely targeting valuations exceeding $1 trillion.

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Clearly, there's a lot of demand, that's why they fast-tracked the integration into the index. 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.