Friday could be one of the most action-packed trading sessions yet for SpaceX, as investment funds that follow Russell indexes gear up to pour billions of dollars into Elon Musk’s rocket and internet company as part of a scheduled index update.
SpaceX made its stock market debut earlier this month with a high-profile initial public offering, and the ride since then has been anything but smooth. Shares rocketed 67% to an intraday peak of $225.64 on June 16, only to fall back to a closing price of $153 by Thursday.
Even after that pullback, the stock sits well above its IPO price of $135. Investors continue to wrestle with how to put a value on a company that posted a $4.9 billion loss last year, yet has strong supporters who believe it will come to dominate satellite internet, artificial intelligence, and commercial space launch — markets they see as central to global infrastructure over the next decade.
FTSE Russell announced it will officially add SpaceX to its Russell U.S. indexes after the close of trading on Friday, as part of its twice-yearly index reconstitution process. That means passively managed funds — such as exchange-traded funds that mirror Russell indexes like the iShares Russell 1000 ETF — will be required to add SpaceX shares to their portfolios. Fund managers are expected to make their purchases in a tight window near the end of the trading day, hoping to avoid what is known as “tracking error” — a performance gap that can occur when a fund buys in at a price different from the index’s closing price.
One complicating factor: while SpaceX carries a market capitalization of roughly $2 trillion — putting it in the same league as Amazon — only around $100 billion worth of shares are actually available for public trading. The rest are held by Musk, company insiders, and employees. According to an estimate from Jefferies, passive funds will need to acquire close to $3 billion in SpaceX shares to properly align with the Russell indexes they track. That limited supply could create a squeeze as the closing auction approaches on Friday, though options market activity has remained relatively quiet. Options contracts expiring Friday are priced to reflect an expected price swing of about 3.6% in either direction, according to data from Trade Alert.
Looking further ahead, SpaceX is also expected to be added to the Nasdaq 100 index in July — a move that would compel major index funds, including the Invesco QQQ ETF, to purchase its shares as well.
Despite its recent losses on the market, SpaceX is currently trading at 107 times its projected 2025 sales — a staggering valuation by any measure. For context, AI chip giant Nvidia recently traded at 21 times its sales.
SpaceX will not, however, be joining the S&P 500. S&P Global said this month it would not adjust its index eligibility rules to make room for large IPOs like SpaceX’s. Under the existing rules, a company must show a profit in its most recent quarter and across its four most recent quarters combined — a bar SpaceX currently cannot clear.
The last time a major Musk company joined a major index, it made headlines: Tesla’s addition to the S&P 500 in 2020 triggered a closing-day surge that pushed its shares up 6%.
