The Nasdaq-100 is one of the world’s most widely followed technology indexes and underpins more than 200 investment products managing about $800 billion in assets, as per a CNN report.
Funds tracking the index will be required to buy SpaceX shares to replicate the benchmark, giving investors in Nasdaq-100-linked funds automatic exposure to the stock.
SpaceX’s rapid inclusion follows changes to Nasdaq’s index methodology announced in May, which reduced the waiting period for newly listed companies to become eligible for the Nasdaq-100 from at least three months to just 15 days after an IPO. The company began trading on the Nasdaq and Nasdaq Texas exchanges on June 12.
The move makes SpaceX one of the fastest entrants into the index and reflects Nasdaq’s revised approach to accommodating mega-sized IPOs. The company has already been added to benchmark indexes managed by FTSE Russell and MSCI.
However, SpaceX will not be eligible for inclusion in the S&P 500 for at least a year because S&P Dow Jones Indices has not changed its eligibility rules. Investors seeking to avoid exposure to SpaceX can instead opt for S&P 500 funds, which do not include the company, although they do hold Tesla, Elon Musk’s electric vehicle maker.
The Nasdaq-100 tracks the 100 largest non-financial companies listed on the Nasdaq exchange and is heavily weighted towards technology and growth stocks.
The rapid index inclusion has also raised questions about valuation and market volatility. Some analysts have expressed caution over SpaceX’s valuation, while others expect significant price swings as passive funds buy shares before a large portion of insider-held stock becomes available for trading.
Also Read: SpaceX to join Nasdaq 100 on July 7, may spur passive fund inflows
