Nasdaq is preparing to raise SpaceX's weighting in the Nasdaq 100 index later this month, a move that could trigger billions of dollars in buying from passive funds that track the index, according to IThome.
Based on preliminary estimates from Nasdaq Global Index Watch, SpaceX's weight is expected to climb from about 1.28% to 2.82%, with the final weight to be confirmed later this month. Wall Street analysts anticipate that index funds and exchange-traded funds (ETFs) tracking the index will add tens of billions of dollars in purchases as a result.
SpaceX's current low weighting stems from its inclusion in the index only in July. At that time, a large portion of its shares were still under lock-up and not publicly tradable. Even after Nasdaq amended its rules to allow newly listed large-cap companies to be added earlier and removed the requirement that at least 10% of shares be publicly traded, SpaceX's weight remained constrained.
As lock-up periods expire, more SpaceX shares become available for trading, increasing the company's free float and thereby boosting its weight in the index. Further adjustments are likely, as additional tranches of SpaceX shares will unlock in the coming months, potentially pushing its weight even higher.
Market Reaction and Passive Fund Impact
SpaceX's first share unlock occurred in August, coinciding with its first earnings report as a public company. At the time, there were concerns that a flood of new shares would overwhelm market demand and trigger a sell-off. However, that did not happen, and the same held true for the second unlock a week later, as most insiders chose to hold onto their shares, keeping the stock price stable.
The weight increase is significant because passive funds tracking the Nasdaq 100 must adjust their holdings accordingly. This includes the Invesco QQQ Trust Series 1 (QQQ), which manages $481 billion (about 3.24 trillion yuan). According to Nasdaq data, assets tracking the Nasdaq 100 totaled approximately $1.7 trillion (about 11.44 trillion yuan) as of the end of the second quarter.
The Nasdaq 100 consists of the largest non-financial companies listed on the Nasdaq exchange. There is no minimum market cap requirement for inclusion, but companies must have an average daily trading volume of at least 200,000 shares, among other conditions.
