SpaceX’s Nasdaq-100 weight set to more than double in rebalance

SPACEX is set to get a larger weighting in the Nasdaq 100 later in September, a change that could trigger billions of dollars of buying by passive funds tied to the benchmark.

Its weighting is expected to rise to about 2.82 per cent from roughly 1.28 per cent, based on pro forma data from Nasdaq’s Global Index Watch circulated late on Friday (Sep 11). The final weighting will be determined later in September. Wall Street expects the change to result in billions in new buying by index funds and exchange-traded funds that track the benchmark. 

SpaceX’s relatively small weighting dates to its addition to the gauge in July. Most of its shares were still locked up and unavailable for public trading, limiting the weighting it received even after Nasdaq changed its rules to allow newly listed large-cap companies to enter sooner and eliminated a requirement that at least 10 per cent of their shares be publicly tradable.

As those lock-ups expire, more SpaceX shares are becoming available for trading. That increases the company’s free float, which can, in turn, increase its weighting in the Nasdaq 100.

More adjustments may follow. Additional SpaceX shares are scheduled to come out of lock-up, potentially lifting its index weighting again.

SpaceX’s first lock-up expiration came in August, alongside its first earnings release as a public company, prompting concern that a surge in newly tradable shares could overwhelm demand. The sell-off did not materialise, including after a second lock-up expired a week later. Insiders largely held onto their stakes and the stock held up.

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The Nasdaq 100 tracks the largest non-financial companies listed on the Nasdaq stock market. There is no minimum market capitalisation for inclusion, though companies must have average daily trading volume of at least 200,000 shares and meet other requirements.

A higher weighting matters because passive funds tied to the benchmark must adjust their holdings accordingly. They include the US$481 billion Invesco QQQ Trust Series 1, known as QQQ. Roughly US$1.7 trillion in assets tracked the Nasdaq 100 as of the end of the second quarter, according to Nasdaq.