SpaceX (NASDAQ:SPCX) priced its IPO (1) at $135 a share on June 12 and promptly went on a tear. Within four trading days, it climbed roughly two-thirds, touching $225 and a valuation near $3 trillion. Then it gave most of that back, sliding more than 30% to around $153, where it trades now — still roughly a $2 trillion company.
None of that round trip had any bearing on what happened next in millions of retirement accounts. On June 18, just five trading days after the listing, SpaceX entered the CRSP US Total Market Index — the benchmark behind the Vanguard Total Stock Market Index Fund (NYSEARCA:VTI), one of the most widely held funds in America and many other index funds.
That’s the part worth understanding, because it’s about to happen two more times.
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SpaceX is already entering index funds
SpaceX’s entry into your index funds is a sequence already in motion, unfolding over weeks:
June 18 — CRSP. SpaceX joined the index behind VTI and Vanguard’s growth funds, with an estimated $4–7 billion in passive buying.
June 29 — FTSE Russell. SpaceX is added to the Russell 1000 (2) after the June 26 close, going live for trading on Monday, June 29. Funds like the iShares Russell 1000 ETF (NYSEARCA:IWB) pick it up automatically — an estimated $6–9 billion in buying.
Late June — MSCI. SpaceX enters MSCI’s US indexes on roughly the same schedule, another estimated $3–5 billion.
July 7 — Nasdaq-100. Nasdaq has confirmed (3) that SpaceX will join its flagship index, the one behind the Invesco QQQ ETF (NASDAQ:QQQ) and the more than $800 billion Nasdaq-100 index.
If you hold a broad index fund or a Nasdaq-100 fund, in other words, you either already own a sliver of SpaceX or you will within days, without having bought a share.
Why index rules changed for SpaceX
This wave didn’t slip through the old rules. The rules changed to let it through.
Index funds track their benchmarks, and several major benchmarks revised their eligibility criteria this spring. The common thread was float — the share of a company’s stock that actually trades publicly. SpaceX is listed with only about 4% (4) of its shares available; the rest stays locked with insiders and Elon Musk, whose dual-class stock keeps his control intact. Under the old rules, that thin a float would have kept a company of its size out.
