James Flintoft, head of investment solutions at AJ Bell, examines what SpaceX’s blockbuster market debut means for passive investors and portfolios built around different index providers.
James Flintoft, head of investment solutions at AJ Bell, comments:
“SpaceX began trading on the Nasdaq stock exchange last Friday priced at $135 per share and targeting a valuation of $1.75 trillion. It became the largest IPO in history, surpassing Saudi Aramco’s $29 billion raise in 2019 – and immediately placed SpaceX among the 10 most valuable listed companies in the world, with its share price performance since seeing it overtake Amazon and Microsoft.
“The company raised over $85 billion in the offering and now has a valuation comfortably above $2 trillion.”
“But despite the scale of the listing, around 8% of total shares are currently tradeable (source: Bloomberg). Lockups for the stock stagger over the months that follow, with the first tranches releasing after SpaceX’s first quarterly earnings report which is expected later this summer, then at 70, 90, 105, 120 and 135 days. Elon Musk himself faces a 366-day restriction.
Which indices will SpaceX join first – and why?
“The first practically important question for investors using index or passive strategies in their portfolios is not whether SpaceX is a good investment – it is will you hold it, where and when?
“The answer depends entirely on which index underpins each fund, because the major providers have taken diverging approaches.
“For example, while SpaceX’s shares listed on the Nasdaq stock exchange, they will take slightly longer to join the Nasdaq-100 index.
“Effective 1 May 2026, Nasdaq revised its methodology to allow newly listed companies ranking among the top 40 by market capitalisation to enter the Nasdaq-100 within just 15 trading days of listing. “
“Previously, the waiting period was around three months. SpaceX, at its near $2.7 trillion valuation at the time of writing, comfortably meets the threshold.
“FTSE Russell separately amended its rules to accommodate fast entry for large newly listed companies into both the Russell US Equity Indexes and the FTSE Global Equity Index Series. Russell 1000 inclusion is expected approximately five trading days after listing. This is the index underlying many global equity and US equity tracker products available on UK platforms.
“Meanwhile, MSCI confirmed on 9 June that it will apply its existing rules for early inclusion of large IPOs in its Global Standard Indexes. SpaceX is expected to clear MSCI’s size and free-float thresholds without difficulty. Passively managed funds tracking MSCI indices hold around $5.8 trillion in assets globally – meaning structural buy orders from those products will flow within weeks of listing.
“The Center for Research in Security Prices (CRSP), whose indices underpin Vanguard’s index funds available in the US, has comparable early-entry provisions and is expected to follow a similar timeline.
S&P 500: the notable exception
“S&P Dow Jones Indices confirmed on 4 June that it will not change its criteria, specifically that a company must have traded publicly for 12 months before eligibility and be profitable under Generally Accepted Accounting Principles (GAAP) in the US.
“SpaceX fails both tests. It reported a net loss of $4.94 billion in 2025 – a reversal from $791 million profit in 2024, largely attributable to integrating xAI – despite revenues rising 33% to $18.67 billion. The S&P 500 remains closed to SpaceX until at least mid-2027, and only then if it meets profitability criteria. Analysts note that SpaceX also posted a $4.3 billion loss in Q1 2026 alone.”
“S&P did relax fast-entry rules for a smaller number of its products – specifically the S&P Total Market Index and Dow Jones US Total Stock Market Index – but these are far less widely held than the flagship S&P 500.
What this means for portfolios
“If your US equity exposure is sourced through S&P 500 trackers – which is the case for the AJ Bell funds and Passive MPS – you will not hold SpaceX at listing, nor for some considerable time thereafter. This is not an oversight or a gap, it is simply how the index is constructed, and that construction exists for sound reasons including ensuring financial viability.
“If your portfolios include Nasdaq-100 trackers, FTSE Russell-based products, MSCI World or MSCI All Country funds, those products will acquire exposure within weeks of listing. The initial weighting will be measured in basis points given the constrained free float, but as lockup tranches release over the following six months, the weighting will grow – depending on how the share price performs.
How AJ Bell portfolios are positioned for AI exposure
“Some investors may ask whether a portfolio without SpaceX is ‘missing out’ on artificial intelligence, given the prominent role that xAI, Grok and Starlink play in the company’s investment narrative.
“However, AJ Bell portfolios already have significant AI participation through established routes, with layers of diversification in other markets that help navigate what is increasingly becoming a bumpy ride:
- S&P 500 constituents: Nvidia, Alphabet, Microsoft, Meta and Amazon are among the largest holdings in any S&P 500 tracker and represent the core infrastructure and applications layer of AI.
- Emerging markets ex-China: Taiwan (TSMC – the world’s dominant advanced chip manufacturer) and South Korea (Samsung and SK Hynix – leading memory and HBM suppliers) provide exposure to AI hardware at the foundational level. This allocation has meaningfully outperformed year to date.
- Second-order AI themes: the real-world impact of AI is flowing through US Healthcare (diagnostics, drug discovery and administrative efficiency), US Utilities (data centre power demand) and US Energy (infrastructure build-out and longer-term demand for fossil fuels). These are deliberate, forward-looking allocations rather than retrospective ones.
“For the AJ Bell funds and Passive MPS built on S&P 500 foundations, nothing changes immediately. The AI exposure story remains well-served through existing holdings. For clients in broader global trackers or Nasdaq-focused products, SpaceX will appear in fund holding reports within the coming weeks – a small weighting initially, growing as lockups expire.
“The more interesting long-term question is whether SpaceX’s eventual S&P 500 inclusion will prompt a reappraisal of how AI-heavy mega cap IPOs are absorbed into the index ecosystem. S&P’s decision to hold firm on its criteria has been described by index methodology commentators as a meaningful guardrail in the process.”
“In the end, SpaceX’s arrival on public markets is less a question of whether it deserves attention and more a test of how different index frameworks respond to companies of this scale and profile. For AJ Bell portfolios, the key point is that exposure to the themes driving investor excitement – particularly AI, digital infrastructure and enabling technologies – is already present through diversified existing holdings. SpaceX may become part of the opportunity in time, but its absence at launch from portfolios reflects disciplined index construction rather than a missed investment case.”
