SpaceX to Join Nasdaq 100 Index Amid Fears of a SPCX Price Slump

Investors brace for SpaceX’s entry into the Nasdaq 100

SpaceX will join the Nasdaq 100 on July 7, two weeks after completing the largest IPO in history. The move comes on the heels of the tech-heavy index unveiling a new “fast-track” eligibility criteria for mega IPOs. 

Per the updated rules, stocks that meet the requirement can be added on their 15th trading day. Before the markets open, investors in Invesco QQQ ETF and Invesco Nasdaq 100 ETF will have exposure to SPCX. 

Both the Invesco QQQ ETF and its twin, the Invesco Nasdaq 100 ETF, will purchase a significant amount of SPCX, triggering around $4.3 billion in passive buying, according to JP Morgan’s estimates.

SpaceX’s addition to the index will be a one-time event, with the Nasdaq 100 rules preventing adding IPO shares in bits. Ahead of the addition, speculation is rife that SpaceX will have a 1% weighting in the index, given the Nasdaq 100's use of free float market capitalization.

Last week, SpaceX joined the Russell 1000 index, a benchmark US stock market index that tracks the performance of the largest publicly traded companies in the US.

However, SpaceX has yet to join the S&P 500, with the index committee opting not to relax its eligibility requirement. To make the cut, SpaceX has to be profitable over four quarters and have at least 12 months of trading history.

Everything hangs in the balance for SpaceX

While joining the Nasdaq 100 is a historically bullish signal, investors are still watching the horizon with bated breath. There are fears that investor optimism for SPCX reached its zenith in the days that followed the IPO in mid-June, with a decline being the only logical move for the stock price.

SPCX soared to $225 before falling headlong to $147, accentuating fears of a prolonged decline.

Meanwhile, analysts are pointing to recent high-profile additions to the Nasdaq 100 and their dismal price performance as reasons for SPCX’s imminent decline. Strategy (MSTR) and Palantir (PLTR) joined the index with major fanfare but recorded steep losses in the weeks that followed.

PLTR’s stock declined from its all-time high by  25% while MSTR fell by 80% from its peak. Strategy, the largest corporate Bitcoin (BTC) holder, is facing a torrid patch, selling its BTC holdings to fulfill stakeholders' obligations.

Ahead of joining the index, SpaceX President Gwynne Shotwell disclosed that she and her husband would donate a portion of their SPCX holdings to Trump Accounts. Over 2 million American children will benefit from the donation, but the exact mechanics for the distribution remain unknown.