What the SpaceX IPO means for your portfolio

SpaceX listed on Nasdaq at $135 a share, raising over $75bn and valuing the company at around $1.75trn. By the end of day one, it was valued above $2trn, with the stock opening at $150 and closing at $160.95 (up 19%).

 

Its demand was reportedly around $150bn whilst the available offering was only around half of that. That makes it the largest IPO in history.

 

To set them further apart, ~30% of shares were set aside for retail investors (people like you and me) unlike the usual 10% for IPOs of this size.

 

 

When you invest in an Index Fund or ETF, you're not purchasing a single stock. Instead, you've invested into a fund that automatically holds a basket of companies based on a particular index.

 

The most common ones you'll hear about are the S&P 500, the Nasdaq-100, the FTSE 100, the FTSE All-World, and MSCI World. Each one follows a different rule book for which companies make the cut.

 

For most indices, the bigger a company gets, the more likely it is to be included. Once a company is publicly listed and meets certain criteria (size, profitability, how many shares are actually available to trade), it can be added to the index. When that happens, every fund that tracks that index has to buy the company's shares to mirror the index properly.

 

That's why the SpaceX listing matters. Before now, it was a private company, so no public index could hold it. From the moment it listed, it became eligible and the rules vary depending on which index we're talking about.

 

 

The S&P 500 is the one major index that has NOT relaxed its rules for SpaceX.

 

Earlier this month, S&P Dow Jones Indices announced it would keep its existing eligibility criteria in place. To join the S&P 500, one of the requirements is that a company must be publicly listed for at least 12 months.

 

SpaceX won't be eligible until at least mid-2027, and even then only if it's profitable by that point. So if your investment of choice is an S&P 500 tracker (like the Vanguard S&P 500 ETF or iShares Core S&P 500), you won't have SpaceX exposure for a while.