SpaceX is heading for a fourth day of losses as investors grow worried about the company amid a broader sell-off in technology stocks. The stock fell about 3% to $150 in pre-market trading, putting it on track to slip below $2 trillion in market capitalization.
After a record $75 billion IPO last week and an initial rally in the stock, investor sentiment has started to weaken. Concerns are rising that enthusiasm around AI-related investments may have gone too far.
In total, SpaceX has shed more than $600 billion in value after falling for three straight sessions. Monday’s 16% plunge in the stock erased about $400 billion, marking the second-largest one-day loss on record. Only Nvidia Corp.’s roughly $590 billion plunge that happened last year is bigger.
Indian retail investors cannot directly buy SpaceX shares. Their exposure to the such stocks is largely limited to mutual funds.
If you’re wondering whether your mutual fund portfolio has any exposure to SpaceX—and whether decline in the stock prices could affect your investments—here’s a closer look at it.
With SpaceX will soon be a part of the Nasdaq-100, index funds and ETFs that track the benchmark are required to hold the company’s shares. This means investors in Nasdaq-100 index funds will have indirect exposure to SpaceX, alongside some of the world’s largest technology companies.
Here are six Indian mutual fund schemes that track the Nasdaq 100 TRI:
- Aditya Birla Sun Life US Equity Passive FOF: Annualised return of 20.89% since launch.
- Axis NASDAQ 100 US Specific Equity Passive FOF: Annualised return of 36.77% since launch.
- Invesco India – Invesco EQQQ NASDAQ-100 ETF FOF: Annualised return of 27.53% since launch.
- Kotak US Specific Equity Passive FOF: Annualised return of 22.51% since launch.
- Motilal Oswal Nasdaq 100 FOF: Annualised return of 30.07% since launch.
- Navi Nasdaq100 US Specific Equity Passive FOF: Annualised return of 25.52% since launch.
The Nasdaq-100 comprises some of the world’s largest technology and growth-oriented companies, including Apple, Microsoft, Nvidia, Amazon, Alphabet and Meta.
When will SpaceX be added to Nasdaq-100 index?
A company doesn’t enter an index as soon as it lists on a stock exchange. Index providers have rules to determine when a company can be added and how large its position will be.
However, Nasdaq has changed the rules for its Nasdaq-100 index, making it easier for companies like SpaceX to be added.
Earlier, a company needed to have at least 10% of its shares available for public trading to qualify. Nasdaq has now removed this rule and will instead look at the company’s total value, including both listed and unlisted shares. Nasdaq has also reduced the waiting period for new companies. A stock can now join the index after just 15 trading days.
This means that if SpaceX could be added to the Nasdaq-100 much faster. As a result, investors in Nasdaq-100 index funds could get exposure to SpaceX within a few weeks.
How SpaceX share fall will impact your investment?
A stock fall impacts Net Asset Value (NAV) of a NASDAQ 100 Index in proportion to its weight.
For example, Apple accounts for roughly 7% to 11% of the Nasdaq-100, depending on the index’s weighting methodology. As a result, a sharp fall in Apple’s share price can have a noticeable effect (though not significant) on the performance of Nasdaq-100 index funds. SpaceX, on the other hand, will carry a even smaller weight of around 0.53% to 0.6% in the index.
This means that even a significant decline in SpaceX shares is likely to have only a marginal impact on investors holding Nasdaq-100 index funds.