SpaceX’s entry into the S&P 500 will
take longer after S&P Dow Jones Indices declined to relax rules
for megacap IPOs, delaying billions in passive fund inflows from
the potential inclusion.
The decision keeps several barriers intact. To join the S&P
500, a company must trade publicly for at least 12
months, be profitable under U.S. accounting standards and hold a
free float of at least 10%. SpaceX, expected to debut on June
12, meets none.
The company that runs the S&P 500 index said on
Thursday it was not changing the requirements for entry into its
major indices, in contrast to other index providers Nasdaq and
FTSE Russell, which have tweaked their requirements recently.
Here’s what that means for SpaceX as it approaches its
market debut:
WHAT ARE S&P’S CRITERIA AND WHERE DOES SPACEX STAND?
A company needs to trade on public markets for at least 12
months before it is even considered. That means SpaceX would not
be eligible before June 2027 at the earliest for entry into any
S&P indexes.
S&P requires a generally accepted accounting principles
(GAAP) profit in the company’s most recent quarter and across
the trailing four quarters. SpaceX posted a net loss of $4.94
billion in 2025, while revenue rose 33% to $18.67 billion. It
has never been profitable.
The current metrics imply a free-float of 3%-4%, according
to Reuters calculations, far below S&P’s requirement of at least
10%.
SpaceX clears S&P’s rule of $22.7 billion minimum market
capitalization or more, having targeted a valuation of $1.75
trillion in its initial public offering.
WHAT PASSIVE INFLOWS WERE EXPECTED?
J.P.Morgan in a May 11 note estimated that SpaceX would have
drawn about $10 billion of passive inflows on S&P inclusion,
assuming a $2 trillion market cap and a 5% float, and would
carry a weight of roughly 0.15%.
On the same assumptions, Russell 1000 inclusion would
draw about $4 billion and Nasdaq 100 about $4.3 billion.
WHAT ARE SPACEX’S CHANCES OF JOINING S&P 500 NOW?
For the S&P 500, not before June 2027, and only if it also
turns profitable and lifts its float above 10%. The Nasdaq and
FTSE Russell have shortened their trading-history requirements,
opening a faster route into the Nasdaq 100 and Russell indexes.
A Nasdaq listing would place SpaceX in the broad Nasdaq
Composite automatically. Because the Composite is
tech-heavy, the addition could widen performance gaps between
Nasdaq trackers and the S&P 500.
“Every retail investor holding an S&P 500 ETF in their
401(k) would become an involuntary SpaceX shareholder,
regardless of whether they believe in the story, understand the
business, or are comfortable with the risk of a $1.75 trillion
unprofitable company,” said Jay Woods, chief strategist at
Freedom Capital Markets.
“The index wasn’t designed to do that. It was designed to
reward companies that have already earned their place through
profitability, staying power, and the patience of real markets.”
WILL THIS THREATEN S&P 500’S DOMINANCE?
The Nasdaq and FTSE Russell have already changed their
methodologies to fast-track large IPOs into their indexes,
raising the question of whether institutional benchmarking could
shift away from the S&P 500.
“The omission of SpaceX in the S&P 500 is just not a strong
enough incentive to drive institutions to… change their
benchmarks,” said Peter Andersen, founder of Andersen Capital
Management, in Boston. Institutional benchmarks are too
deliberately constructed to be reset over a single absent stock,
Andersen said.
The S&P 500 is widely considered to be the benchmark for
U.S. equities with more than $20 trillion in assets tracking the
index, compared to the Nasdaq 100’s $1.4 trillion.