Space Exploration Technologies (NASDAQ: SPCX) recently went public, and the stock, which also goes by just SpaceX, will soon be added to many index funds.
That may not sit well with risk-averse investors who don’t want exposure to the extremely expensive stock, which trades at more than 100 times its revenue and which is already among the most valuable companies in the world, despite incurring massive losses
There’s ample incentive to avoid exposure to SpaceX, as the stock may not only prove volatile but also carry significant downside risk given its extremely high valuation. For investors who want to steer clear of SpaceX, funds that track the S&P 500 may be the way to go right now. SpaceX isn’t getting added to the S&P 500 anytime soon The Nasdaq loosened rules for adding stocks to the Nasdaq-100 index, and SpaceX is set to be included in there as early as next week.
But the S&P 500 isn’t bending its rules for SpaceX. Not only will it have to wait at least a year, but it will also need to be profitable — which is likely to be a considerable barrier for the space company, which incurred $4.3 billion in losses during just the first three months of the year. Meanwhile, as the company ramps up spending to pursue growth opportunities in space and artificial intelligence, its losses may become much larger in the future.