It has hardly been two weeks since Area Exploration Applied sciences Corp. (Nasdaq: SPCX), higher often known as SpaceX, went public, however the Elon Musk-led firm is already poised to realize one other vital inventory market milestone.
Subsequent month, will probably be added to the Nasdaq 100. Right here’s what meaning for the corporate—and for you.
What’s occurred?
On June 26, simply 15 days after SpaceX made its inventory market debut on June 12, Nasdaq announced that the area and AI firm will probably be added to the establishment’s carefully watched Nasdaq-100 Index.
And that 15-day timing? It’s quick, however it’s not precisely a shock.
In Could, Nasdaq changed its rules for inclusion within the Nasdaq-100. Beforehand, a newly public firm would take months or extra earlier than becoming a member of. However beneath the brand new guidelines, the inclusion window was diminished to simply 15 days from its IPO if the corporate ranks among the many high 40 Nasdaq-100 firms by market cap.
Whereas Nasdaq by no means particularly talked about SpaceX when asserting its new Nasdaq-100 timeline guidelines, many within the investing sphere really feel the corporate did so to court Elon Musk and get him to checklist SpaceX’s shares on Nasdaq slightly than the rival New York Inventory Trade (NYSE).
What’s the Nasdaq-100?
The Nasdaq-100 is an index of “100 essentially sound and progressive” firms which might be traded on the Nasdaq, according to the inventory alternate itself.
These firms cowl a variety of industries, together with tech, healthcare, utilities, and client items. However one notable exclusion is monetary companies companies, as these firms don’t match beneath the “progressive” banner.
Nasdaq periodically provides firms to the Nasdaq-100, the newest was Sandisk Company (Nasdaq: SNDK), which joined the index on April 20 beneath the previous guidelines.
However when one firm joins, one other should depart, as a result of the Nasdaq-100 is restricted to 100 firms. When Sandisk joined, Atlassian Company (Nasdaq: TEAM) was ejected from the Nasdaq-100.
Provided that the Nasdaq-100 focuses on progressive firms, it’s no shock that a lot of its constituents are additionally the biggest tech firms on the planet. They embrace include: Apple, Adobe, Amazon, Alphabet, Intel, Microsoft, Netflix, and, sure, Elon Musk’s different public firm, Tesla.
What’s the good thing about being included on the Nasdaq-100?
The primary profit is status. If your organization is included within the Nasdaq-100, you get bragging rights and might name your self a “Nasdaq-100 firm.” And for the reason that Nasdaq-100 tracks probably the most “progressive” firms on the Nasdaq, you get the most effective “progressive” stamps of approval there may be.
However the primary profit is monetary. Many mutual funds and exchange-traded funds (ETFs) are designed to reflect the Nasdaq-100. Widespread ETFs that mirror the Nasdaq-100 embrace Invesco QQQ Belief (QQQ) and iShares Nasdaq 100 ETF.
And almost all the most important brokerage companies supply mutual funds that mirror the Nasdaq-100, together with Constancy, Schwab, and Vanguard.
When an organization is added to the Nasdaq-100, these ETFs and mutual funds want to purchase that firm’s shares—within the ratio that the corporate accounts for throughout the index—and embrace them of their ETFs and mutual funds.
Retail traders, in flip, purchase shares in these ETFs and mutual funds with a purpose to diversify their portfolios—permitting them to personal inventory in each Nasdaq-100 with out having to purchase particular person shares in 100 firms.
So when an organization is added to the Nasdaq-100, the day earlier than it formally is included, each mutual fund and ETF that tracks the index wants to purchase shares. And when an organization’s shares are purchased in massive numbers, that firm’s inventory value tends to rise—thus, the monetary profit to being included within the Nasdaq-100.
Now for the unhealthy information (for retail traders)
Below Nasdaq’s previous guidelines, firms typically needed to wait many months earlier than they have been even eligible to be included within the Nasdaq-100.
This prolonged timeframe was in place to scale back the potential for volatility within the index. Whereas many firms see their share costs spike after an IPO, that share value can fluctuate wildly as soon as the preliminary pleasure for the inventory wears off, or lockout durations expire.
However beneath the brand new guidelines that permit an organization be part of the Nasdaq-100 after solely 15 days put up IPO, that volatility buffer is misplaced. And that’s unhealthy information for retail traders and people with pensions.
Many 401(okay) managers and pension funds spend money on Nasdaq-100 mutual funds and ETFs, and if SpaceX tanks six months from now, it may deliver down the worth of individuals’s retirement accounts.
SpaceX is the primary firm to be included within the Nasdaq-100 beneath the brand new guidelines.
SpaceX Nasdaq-100 timeline
SpaceX isn’t a part of the Nasdaq-100 but, however will probably be quickly. Right here’s the timeline of SpaceX’s journey to the Nasdaq-100:
- Could 1, 2026: Nasdaq’s new Nasdaq-100 inclusion guidelines go into impact, permitting an organization to hitch the Nasdaq-100 after simply 15 buying and selling days if it meets different necessities.
- June 12, 2026: SpaceX begins buying and selling on the Nasdaq, kicking off the 15-day clock.
- June 26, 2026: Nasdaq confirms SpaceX has met the entire necessities to hitch the Nasdaq-100.
- July 6, 2026: That is the day, after market shut, that ETFs and mutual funds must purchase SpaceX shares to incorporate of their funds.
- July 7, 2026: SpaceX joins the Nasdaq-100, and in the event you personal ETFs like QQQ or mutual funds that monitor the Nasdaq-100, you now personal a stake in SpaceX, for higher or worse.
