SpaceX May Be Worth Billions More Than You Think in 2026
Why the world’s most valuable private space company (SpaceX)still refuses to go public.
There are two things people are thinking about the SpaceX IPO. Will it get added to their index funds? And if given the opportunity, should they invest directly in the IPO?
Many of the major indices have recently made changes to their rules, which have left a lot of people confused about what’s actually going to happen when SpaceX goes public.
If keeping up with all these changes has you a little confused about what this all could mean for your portfolio, this story is for you.
The SpaceX IPO is expected to be by far the largest IPO in history, measured by the amount of capital the company raises, and only Saudi Aramco comes close in terms of total market cap at the time of IPO.
To pull this off the way SpaceX wants to, the company needs to convince many investors to buy its shares.
They’ve been pushing for two things: rule changes that will allow near immediate inclusion in major stock market indices, and heavy retail investor participation in the IPO.
They’ve said they want to allocate around 30% to retail investors, while a typical IPO allocates 5 to 10% to retail.
The company has been largely successful with these initiatives, with many index providers changing their rules and retail brokerages promoting direct investment in the SpaceX IPO to their customers, resulting in what looks like it will be an oversubscribed IPO, meaning more people want to buy shares than there are shares available.
Each of these issues to understand the implications for you.
One of the biggest stories in finance recently has been major indices changing the rules leading up to the SpaceX IPO and other large IPOs that are expected to follow.
Every index needs rules for how to deal with new companies entering the market through IPOs and market changes in general.
This is not a new problem. Indices have rules to limit when new stocks can enter and to filter out stocks with certain characteristics.
For example, companies with a low free float, that’s a low proportion of total shares that are freely available for trading, would often be excluded from indexes.
Many indices also have, or had, something like a waiting period before new IPOs could get included.
Stock market indices are supposed to be rules-based representations of parts of the stock market, or in some cases, the whole stock market.
Their rules-based nature has earned index funds, which simply track the stocks in an index, the title of passive.
Passive makes it seem like there aren’t any decisions that need to be made.
But stock markets themselves change, and indices can change their rules, which calls into question how passive they really are.
SpaceX really wants to get added to stock indices sooner rather than later, likely because index funds mechanically buy the stocks in the index, supporting the stock’s price.
Stocks that qualify for immediate index inclusion following their IPO tend to see a jump in their price leading up to index inclusion.
To be clear, index providers changing the rules is not a bad thing. It’s not nefarious necessarily.
The job of an index is to represent the stock market.
If the market has changed, for example, with larger-than-ever-before companies going public, it might make sense to update the rules.
That started happening in February when NASDAQ, which runs the NASDAQ 100 index, opened up a consultation about potentially changing the rules for IPO inclusion.
Footsie Russell followed suit, and then S&P did the same.
These index providers together dictate how trillions of dollars of index fund assets are invested.
So any even small potential change has sweeping implications for financial markets in general and index fund investors in particular.
NASDAQ did adopt changes in the end, as did Footsie Russell. I’ll explain what changed and what it means for investors in a minute.
In a move that surprised everyone, S&P opted not to make changes to the S&P 500 and some of its other flagship indices, meaning that SpaceX won’t be eligible for inclusion until it’s been trading for 12 months.
Let’s go through some major indices and think about the implications of these changes.
The index is designed to track the 100 largest non-financial companies listed on the NASDAQ exchange.
It’s not common for a newly listed company to meet those criteria, but SpaceX will.
NASDAQ’s proposal explained that new constituents can be added at reconstitution, which happens once a year in December for that index, or as replacements, which leads to large newly listed companies often being delayed from index inclusion, creating a gap between investor expectations and index market representation.
NASDAQ also had a 3-month seasoning period, meaning that, at a minimum, a company had to be trading for 3 months to be included.
Basically, if the index is supposed to represent 100 of the most innovative large-cap companies listed on the NASDAQ stock market, it should probably include a company like SpaceX sooner rather than later.
But the existing inclusion mechanisms before the changes would have required a potentially long delay.
The proposed solution, which has now been adopted, was to allow inclusion after the 15th day of trading for stocks that rank in the top 40 by total market cap.
So for NASDAQ indices, we can expect stocks like SpaceX, which satisfy the inclusion criteria for the index, to be added much sooner than the previous rules would have allowed.
The other issue for NASDAQ was the 10% free float requirement.
If below 10% of the company’s shares were freely trading on the stock market, they would not be eligible.
SpaceX is expected to have an initial free float of 4%.
NASDAQ proposed and adopted removing the 10% free float requirement, which is interesting since it was only added in June 2024.
The other quirk, unlike most indices, the NASDAQ 100 is weighted by total market cap, including unlisted shares held by insiders, not free float, which is what most indices do.
This means that while most indices would weight SpaceX by its $75 billion free float, the NASDAQ 100 would weight it based on its roughly $1.88 trillion total market cap.
They’ve recognized the issue here for low float stocks in particular, which may not have the liquidity to support index inclusion at the total market cap.
So, for low float stocks, instead of using either the total market cap like they normally do, or the free float as most other indices do, NASDAQ is using a cap of three times the free float for stocks with a low float.
Combined, these methodology changes mean that large companies like SpaceX with a low float can be added sooner, and once they’re included, held at a lower weight than the previous methodology, but a higher weight than most other float-weighted indices.
Whether that’s a good thing or not for index fund returns remains to be seen, but it’s almost certainly a good thing for SpaceX.
A lot of people have been worried about these fast inclusion changes from indices like NASDAQ, but other major indices, such as CRISPR and MSIE, have had fast inclusion rules for years.
Crisp they run the Crisp Total Market Index behind Vanguard’s VTI, ETF, which allows fast-track inclusion entry after only five trading days for eligible IPOs.
Crisp did, however, make a change to their free float requirement for fast-track entry.
It used to be 10%, but was changed to 10% or 0.005% of the float-adjusted capitalization of the index eligible universe, which was $3.3 billion in March 2026.
This quiet change, I mean, there wasn’t a consultation, there wasn’t a big announcement, allowed the index to include companies like SpaceX, which would have previously been excluded due to its low free float.
There’s been a lot of skepticism around changes like this. Crisp, which was recently bought by Morning Star, did a white paper explaining the logic behind their decisions and the implications of the changes.
Crisp explains that the updated FastTrack rules allow mega-cap IPOs with a low float percentage, but a high dollar float, to enter the index shortly after they go public.
They say that this change allows Crisp market indexes to reflect an opportunity set for a passive investor without introducing additional transaction costs.
And they also say that while float is an important indicator for a typical IPO, it’s less informative for a very large company.
They also make the point that while companies like SpaceX will be eligible for inclusion in their indices, their weight will be small due to the low free float.
Again, this is a float-weighted index, unlike the NASDAQ 100.
SpaceX, for example, is estimated to make up 12 basis points, or 0.12%, of the Crispi US Total Market Index.
Again, tracked by VTI and lots of other funds.
The big thing to watch for with these IPOs is an increasing free float over time as restrictions are lifted on insiders. This is common for IPOs.
It’s worth calling out another quirk of the SpaceX IPO here. Rather than a traditional 180-day lockup period for insiders, SpaceX has provisions for the early release of shares in stages.
20% of the restricted shares can be sold after the second trading day following the earnings release.
An additional 10% release becomes available if the stock is trading at least 30% above its offering price for at least 5 -10 consecutive trading days ending on and including the first earnings release date.
An additional block of 7% are scheduled to become available 70, 90, 120, and 135 days after the listing.
And another 28% becomes available after their Q3 earnings report.
Then, after 180 days, any remaining lockup shares will be released.
Their analysis concludes that Crisp indexes are designed to capture the opportunity set available to investors, not to select or exclude companies based on assessments of future viability.
Crisp has always had the leading index methodology, that’s their words, with its fast-track IPO methodology enabling newly listed companies to enter the investor opportunity set within 5 days.
That’s a true statement, but there is evidence that traders have been using Crisp’s methodology to buy up shares leading up to index inclusion, pushing the prices higher, followed by a drop after they’re included in the index, which is effectively a cost on index fund investors.
MCI has not made changes, but they already had rules in place for the fast-track inclusion of large IPOs specifically.
I think they’re actually throwing a bit of shade at other index providers for making changes to accommodate the upcoming high-profile IPOs.
Their indices will include large IPOs after 10 trading days, as long as the full market cap is at least 1.8 times the market-specific intermarket size segment cutoff, or approximately 26 billion USD for the US market as of May 14th, 2026.
And the float-adjusted market cap is at least 1.8 times 1/2 of the cutoff, or approximately USD 13 billion for the US market as of May 14th, 2026.
SpaceX passes both of those tests.
But Russell made several changes back in February. The largest of these changes was to include a fast entry rule for top 500-sized securities in an effort to maintain better market representation.
Under the new rule for the Footsie Russell US indices, eligible IPOs would be added after the close of the fifth trading day following the initial listing, provided they meet the minimum size requirement for the Footsie Russell US equity indices.
That requirement is an investable market capitalization greater than the total market capitalization breakpoint for the Russell Top 500 as of the previous reconstitution.
In other words, it needs to be a top 500 company by market cap at the time it goes public.
If a company has less than 5% of its shares freely tradable, that’s the float issue because insiders are locked up; it can still qualify as long as those lockups expire within 12 months of being added to the index, which would bring the float above the minimum.
S&P 500, who have gone in a completely different direction than all the other indices, at least for their flagship index, the S&P 500, and a couple of others.
Three major changes were proposed to the S&P’s inclusion methodology, including
- Reducing the IPO seasoning period from one year to 6 months,
- Waiving their investable weight factor, which is basically a multiplier to account for how much of a company’s shares are available to trade.
That’s the float issue again for mega-cap companies like SpaceX.
- And including a financial viability exception for mega cap companies, allowing these companies to be included in the index without net positive income.
To all three of these changes, S&P gave a resounding no.
This means that SpaceX could only enter the S&P 500 around mid-2027 at the absolute earliest, which assumes it becomes profitable before then.
S&P’s Total Market Index does have fast-track inclusion. It already did, and they did adopt changes to eliminate the 10% free float requirement for companies ranked in the top 100 by total market cap.
So we should expect to see SpaceX in this index.
XTO and ITOT, the US equity ETFs in the iShares Core Equity ETF portfolio, track this index.
Okay, we just covered a lot of indices, rules, and rule changes.
Here’s a quick breakdown of the relevant criteria and whether each index is likely to include SpaceX based on its published rules.
The implications of these changes are meaningful, but it’s important to keep their significance in perspective.
Index funds tracking the indices with fast-track inclusion will be required to buy SpaceX shares shortly after its IPO.
That buying is automatic and mandatory for index funds. Their job is to track the index.
Index fund managers don’t get to decide whether SpaceX belongs in the portfolio.
If you’re holding a broad market index fund, you could very well find yourself owning a piece of SpaceX, whether you choose to or not, at whatever price the market sets, in the first 5, 10, or 15 days of trading, depending on the index we’re talking about.
But most indices will only weight the stock based on its free float, or in the case of the NASDAQ 100, three times its free float.
For context, 45% of VEQT, the Vanguard All Equity ETF Portfolio, is invested in VUN, which tracks the Crispi US Total Market Index.
If SpaceX makes up 0.12% of that index 5 days after the IPO, it will make up 0.05% of VEQT.
The other key feature of this IPO is the retail allocation.
SpaceX is looking to raise an enormous amount of capital directly from retail investors.
And rather than the traditional book-building to figure out their IPO price, they’re reportedly taking the unusual stance of setting their IPO price ahead of time.
Elon Musk has a long-running relationship with retail investors who have been very willing to buy shares in his companies at high valuations based on a belief in his vision.
It’s kind of like buying an Elon Musk lottery ticket.
By allocating 30% of the IPO directly to probably Elon-loving retail investors, SpaceX can probably target a higher IPO price.
Fidelity lowered its typical minimum of $100,000 and up for retail investors to participate in IPOs to $2,000 for the SpaceX IPO.
People have sent me marketing emails from other discount brokers promoting participation in the IPO.
WealthSimple here in Canada is also offering IPO access.
Buying at the IPO price has historically worked out well.
There’s a well-documented IPO pop, where the value of the company’s shares sees a big price jump from the IPO price to the price investors on the public market are willing to pay for the shares.
One note for people who hear that and think they’ll get in on the IPO and immediately flip the shares.
Most brokers have anti-flipping rules.
For example, Wealth Simple wants you to hold the shares for 90 days, or you lose access to future IPOs.
Fidelity wants you to hold for 15 days or risk the same fate.
It’s usually very difficult for retail investors to get access to the IPO price, which makes this all seem compelling.
But that’s been changing as access to retail investors has increased, and not in a good way.
The 2025 paper, Retail IPO Access: High Hopes, Low Returns, looked at 24 IPOs that included retail investor allotments through Robinhood and SoFi, which are both involved with the retail distribution for the SpaceX IPO.
They found that on average, these retail IPO stocks declined by over 60% from their offer price after one year, underperforming regular non-retail IPOs that happened around the same time by 20 percentage points.
The authors find two potential explanations for this underperformance.
#1: Adverse selection.
The issuers and underwriters participate in retail IPOs at their own discretion.
They choose which shares they’re going to push on retail investors.
And evidence suggests that they’re more likely to do so when pricing is more aggressive relative to earnings, when they have high prices.
Meaning that the less informed retail investors are more easily able to get a bigger cut of what turns out to be a bad deal. Adverse selection.
This creates something known as the winner’s curse.
The winner who receives a large allocation has paradoxically won something they probably didn’t want.
This explanation is somewhat incomplete, though, because although retail investors were more likely to be offered aggressively priced deals, the typical retail allocation was only 2% of shares in this analysis, which is too small a share to suggest that retail was simply being used as a dumping ground for deals institutions didn’t want.
If the goal was just to dump bad deals on retail investors, why would they give them such a small slice?
Adverse selection helps explain which deals end up in front of retail investors, but it doesn’t fully explain the price dynamics that follow.
For that, we need to look at the second explanation that the paper offers.
#2: Attention-driven trading.
The brokers offering retail IPOs sent push notifications and emails about upcoming IPOs to their millions of users about 9 days before the IPO on average. And again, I’m hearing the same thing is happening now.
I don’t personally have a discount broker account, but apparently this is happening.
Google search interest for retail IPO tickers in this study saw a sharp spike in the 6-10 days before trading, matching the notification timing almost exactly, while comparable IPOs that were not part of these programs pushed on retail investors showed no equivalent surge in interest.
When trading opened, Robin Hood users placed roughly 11 to 13 times more fractional trades in retail IPO stocks than in comparable IPOs on the first day of trading.
This buying frenzy temporarily inflated prices, but as that attention faded and buying pressure dissipated, prices fell.
Crucially, when the authors controlled for first-day retail trading volume in their models, the underperformance gap became statistically indistinguishable from zero, suggesting this attention mechanism accounts for a significant portion of why these stocks performed so poorly after the IPO.
The combined result is a pattern cleanly summarized by an institutional investor quoted in the paper:
“If a retail investor can get an IPO allocation, they don’t want it.”
Which brings us back to SpaceX.
I can’t tell you whether you should request a SpaceX IPO allocation from your broker, but the historical data on retail IPO access suggests that it might be a bumpy ride.
That said, Elon’s fans have a track record of pumping up Elon’s companies.
There’s really no way to say where this one will go, but caution is warranted.
I am not predicting a price drop, to be clear, so don’t tell me a year from now that this story didn’t age well.
All I’m saying is that it’s worth being careful, which hopefully all of you know.
Most major stock indices will likely include SpaceX shares within days after the IPO, but at allocations that shouldn’t matter too much.
One flagship index that has not changed its rules is the S&P 500, which is also the index with by far the most assets tracking it.
This, combined with SpaceX’s aggressive lockup release plan, will make for some potentially interesting performance divergence between the S&P 500 and other US stock market indices.
In any case, all these changes highlight the fact that indexing isn’t as passive as we like to think.
The funny thing is that while active management has gotten a bad name for good reason, there are actively managed funds that share all the positive attributes of index funds, like low fees and broad diversification, but have the discretion to decide whether to invest in IPOs.
If you are really interested in what you think about SpaceX IPOs, share your thought on comment.
Thank You For Reading 🙂 i hope you enjoy this Article.
