Passive funds could drive large inflows after the index change. Investors will watch whether SpaceX’s valuation justifies such rapid adoption.
On Friday, Nasdaq confirmed that SpaceX will be included in the Nasdaq 100 index starting July 7, paving the way for growth in passive investments in Elon Musk’s company, a giant in rocket-building and artificial intelligence.
Such index inclusion typically lifts the stock price, as index-tracking ETFs buy shares of the newly added member.
Economic implications and investor expectations
To make entry into the U.S. market more attractive, Nasdaq, together with FTSE Russell and MSCI, relaxed the entry requirements, including profitability, the length of time since the IPO, and the volume of shares available for trading.
SpaceX, which debuted on Nasdaq on June 12, has over the past three years swung between significant losses and modest profits. Last year the company posted a net loss of $4.9 billion.
Developers of large language models OpenAI and Anthropic are also expected to file for IPOs this year or next and are valued at more than a trillion dollars.
Investors are buying mutual funds and ETFs that track the Nasdaq 100, such as QQQ and QQQM, to gain broader access to the market.
According to J.P. Morgan, adding SpaceX to the Nasdaq 100 could bring about $4.3 billion of passive inflows.
Clearly, demand is strong; that’s why they accelerated the integration into the index. This will be welcome to many. Some fund managers disagree more, including skeptics, among them us. We believe the stock is overvalued.
– Michael Field
This month, S&P Global said it would not change the entry requirements for SpaceX into its main indices, including the S&P 500, and would consider the matter for at least 12 months.
Analysts note that including SpaceX in the Nasdaq 100 could attract significant streams of passive investment, but the company’s valuation and its mid- and long-term prospects remain key for investors.
