SpaceX joined the Nasdaq-100 Index on Tuesday, automatically exposing millions of investors to the rocket and satellite company through the mutual funds and ETFs that track the benchmark.
The Nasdaq-100 underpins a universe of more than 200 investment products collectively holding around $800 billion, all of which are obligated to hold SpaceX now that it is a benchmark constituent
J.P. Morgan estimated the inclusion could generate $4.3 billion in passive inflows, according to Reuters. The Invesco QQQ ETF, among the largest funds tracking the index, is one of the products now required to hold SpaceX.
Despite SpaceX’s market capitalization exceeding $2 trillion, its initial weight in the index will be well below what that valuation might suggest. Because only a thin slice of SpaceX’s total share count was released in the offering, the publicly tradeable pool is a small fraction of the company’s overall equity, and Nasdaq anchors index weights to that freely circulating supply. To prevent a distorted impact from the limited float, Nasdaq is scaling SpaceX’s effective market capitalization to three times its float-adjusted figure, a calculation that lands the company closer to $300 billion in index terms rather than its headline valuation of more than $2 trillion, according to The Wall Street Journal.