SpaceX will be added to the
tech-heavy Nasdaq 100 index on July 7, exchange operator Nasdaq
confirmed on Friday, paving the way for a surge in passive
investments in Elon Musk’s rocket and AI giant.
Inclusion in the index typically boosts the stock price, as
exchange-traded funds looking to replicate the index’s
performance buy shares of the newly included firm.
To make it more attractive for companies seeking US
listings, Nasdaq, along with other index providers FTSE Russell
and MSCI, relaxed its entry requirements,
including profitability, the number of days after a company goes
public and the number of shares available for trading.
SpaceX, which made its Nasdaq debut on June 12, has swung
between sharp losses and small profits over the past three
years. Last year, the company reported a net loss of $4.9
billion.
Large Language Model (LLM) makers OpenAI and Anthropic are
also expected to file for their initial public offerings this
year or next year and likely target valuations of more than $1
trillion.
Investors buy mutual funds and ETFs, such as Invesco’s QQQ
and QQQM, that track the Nasdaq 100, to get
broader exposure.
J.P. Morgan estimated that SpaceX’s inclusion in the Nasdaq
100 could draw $4.3 billion in passive inflows.
“Clearly, there’s a lot of demand, that’s why they
fast-tracked the integration into the index,” Michael Field,
chief equity market strategist at Morningstar, said. “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.”
S&P Global said this month that it was not
changing the requirements for SpaceX to enter its major indices,
including Wall Street’s benchmark S&P 500 index,
and will wait for at least 12 months before even considering it.