Friday, June 12, is shaping up to be a memorable day in the history of financial markets, since SpaceX Stock will finally be available to the general investing public.
Elon Musk’s company is on the verge of breaking initial public offering (IPO) records, with reports indicating that SpaceX will sell 555.6 million shares publicly to raise $75 billion at a valuation of $1.77 trillion. However, for all the notable footnotes attached to this IPO, SpaceX will miss out on a big one: a quicker-than-usual listing in the S&P 500 (SNPINDEX: ^GSPC).
Did Nvidia miss out in 2009? This rare signal flashes again. In 2009, a “double down” signal appeared for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company that is 1/100th the size of Nvidia. Continue “
Although not specific to SpaceX, S&P Dow Jones Indices surprised some indexing experts and market observers on June 4 when it announced that it would not alter the eligibility criteria for the S&P 500. S&P MidCap 400and S&P SmallCap 600.
Why S&P’s decision is important
Because of the SpaceX hype, there is a lot of excitement about space reserves Today, but some investors prefer to nibble on this asset class rather than feast on individual stocks or exchange-traded funds (ETFs) focused on the space industry.
So it’s no exaggeration to say that some retail investors may have been hoping that ETFs like the Vanguard S&P 500 ETF (NYSEMKT:VOO) and the iShares Core S&P 500 ETF (NYSEMKT: IVV) would include SpaceX stock six months after the IPO instead of the usual 12-month minimum holding period, but that’s not happening. Translation: The earliest possible entry date for SpaceX to join funds like the large Vanguard S&P 500 ETF is June 2027.
Simple math confirms the importance of the decision to make SpaceX “standby.” By one estimate, there are $16 trillion in assets in ETFs and index funds focused on the S&P 500, but none of that capital will be directed into SpaceX stock anytime soon.
Fans of indexing and market lore may be thinking this is another case of S&P “fighting” with Musk. tesla It was publicly traded for 10.5 years before joining the S&P 500 in December 2020. Less than two years later, the stock was kicked out of the environmental, social and governance (ESG) arm of that index, meaning Tesla was persona non grata in ESG ETF tracking the S&P 500 ESG index.
Forget conspiracy theories because S&P didn’t directly mention SpaceX in its June 4 statement. Rather, he used the term “megacap,” implying that the decision not to alter the S&P 500’s inclusion guidelines will also apply to companies like anthropic and Open AI when those companies begin their IPOs.