SpaceX has cooled off since its splashy June IPO, trading mostly between $133 and $150 for the past four weeks, hugging its $135 offer price. Shares were down about 1% early Tuesday.
Here is the quirk: Nasdaq Inc. sets a company's index weight using a market value that is based on whichever is smaller - the firm's total share count or three times the portion of shares that float freely. Float excludes insider holdings and shares still under lockup. Because SpaceX's float remains constrained, this formula caps its weight at 1.25% in the Nasdaq 100.
That leaves an odd mismatch. By market cap, SpaceX ranks sixth in the index at north of $2 trillion, yet by weight it sits 19th. The next reweighting will be unveiled Friday after the close and will take effect on Sept. 21.
The float is starting to open up. More than a billion SpaceX shares have already come off lockup, lifting the freely tradable portion to nearly 30% of the share base, up from below 10% right after the IPO. As additional tranches untie over the next year, float should climb further, which can support a higher index weight.
The first expiration in August arrived alongside SpaceX's inaugural earnings release. Fears of a flood of selling did not play out, nor did a second unlock a week later. Insiders mostly stayed put, which shored up confidence and helped steady the price.
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Looking ahead, more than another billion shares are set to become eligible to trade by the end of October, with a further 1.3 billion opening up after the company's third quarter report in mid November. As River Wealth Advisors CEO Ed O'Gorman put it, "The bigger event, the event that will really tell the tale, doesn't happen until the lockup is triggered by the November earnings release, where there's going to be a large number of shares hitting the market."
A revised projection Tuesday from JPMorgan Securities, led by Min Moon, pegs SpaceX's post rebalance weight at 1.51%. If it lands there, they estimate about $12.4 billion of net buying from index funds and ETFs that follow the benchmark. Nasdaq says around $1.7 trillion tracked the Nasdaq 100 at the end of the second quarter, including the Invesco QQQ Trust Series 1 ETF, better known as QQQ.
Traders are bracing for mechanical flows. "The market price is going to get shoved around here by, to some degree, forced buying," O'Gorman said. Interactive Brokers chief strategist Steve Sosnick added, "Either some of the newly unlocked shares would sell into the presumed buying that might occur, or the stock could rally because it could get a big pickup from the demand from indexers."
This approach is not unique to Nasdaq. S&P Dow Jones Indices also bases weights in some benchmarks on float adjusted market value. When Berkshire Hathaway trimmed its Apple stake two years back, Apple's float rose, and Piper Sandler analysts at the time estimated that would spark about $40 billion of passive inflows.
SpaceX joined the Russell 1000 in June. Entry to the S&P 500 will take longer, since that index only considers companies that have been publicly traded for a minimum of 12 months, which puts SpaceX's earliest eligibility at mid 2027.
With few near term, company specific drivers on deck, the index reshuffle could be the near term catalyst that nudges the stock out of its range. The bigger focal point comes in mid November, when another large wave of shares may hit the market after third quarter earnings. For everyday investors, the takeaway is simple: mechanical index rules and staged unlocks can move prices in ways that have little to do with the business itself, so the calendar around Sept. 21 and mid November will matter for how this story trades.
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