SpaceX, the innovative aerospace company led by Elon Musk, will have to wait longer to join the prestigious S&P 500 index. The S&P Dow Jones Indices recently confirmed that it will not relax its entry requirements for large initial public offerings (IPOs), a decision that affects SpaceX’s potential inclusion and the associated passive fund inflows.
Current S&P 500 Criteria
To be considered for the S&P 500, a company must meet several criteria: it must have been publicly traded for at least 12 months, show profitability according to U.S. accounting standards, and maintain a free float of at least 10%. SpaceX, which is set to debut on the public market on June 12, does not currently meet these requirements. The company reported a net loss of $4.94 billion in 2025, despite a 33% increase in revenue to $18.67 billion, and its free float is estimated to be only 3%-4%.
Implications for SpaceX
SpaceX’s market debut is highly anticipated, with a targeted valuation of $1.75 trillion. However, the S&P’s decision means that SpaceX will not be eligible for inclusion in the index until at least June 2027, provided it becomes profitable and increases its free float. Other index providers, such as Nasdaq and FTSE Russell, have adjusted their requirements, potentially allowing SpaceX a faster route into their indices.
Impact on Investors
J.P. Morgan estimated that SpaceX could have attracted about $10 billion in passive inflows upon S&P inclusion, assuming a $2 trillion market cap and a 5% float. The absence of SpaceX in the S&P 500 means that retail investors holding S&P 500 ETFs will not automatically become shareholders in the company, a point highlighted by Jay Woods, chief strategist at Freedom Capital Markets. Woods emphasized that the S&P 500 is designed to reward companies with proven profitability and market stability.
Future Outlook
While the Nasdaq and FTSE Russell have adapted their methodologies to accommodate large IPOs more quickly, the S&P 500 remains a dominant benchmark for U.S. equities, with over $20 trillion in assets tracking the index. Despite the changes by other index providers, experts like Peter Andersen of Andersen Capital Management believe that the omission of SpaceX is not sufficient to drive a shift in institutional benchmarks away from the S&P 500.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
