SpaceX is poised for a significant increase in its Nasdaq 100 Index weighting during the quarterly rebalancing later this month, which could lead to a substantial wave of new buying. This anticipated boost stems from a combination of a lesser-known Nasdaq 100 construction rule and a staggered series of lockup periods for SpaceX shareholders, which has previously limited the number of available shares. Despite having a market value exceeding $2 trillion, ranking it sixth in the index, SpaceX currently holds only a 1.25% weight, placing it 19th, due to its relatively small free float.
The Nasdaq 100 calculates a company's index weight using the smaller of its total share count or three times its freely floating shares. Since SpaceX's float has been constrained, this formula capped its weight. However, as lockup periods expire, the freely tradable portion of shares has increased from under 10% post-IPO to nearly 30%, with over a billion shares already off lockup. This expanded float allows for a higher index weight. JPMorgan Securities analysts, led by Min Moon, project SpaceX's weight could rise to 1.51%, potentially generating $12.4 billion in passive demand from index funds and ETFs that track the Nasdaq 100, which managed approximately $1.7 trillion at the end of Q2.
The rebalancing, expected to be unveiled after market close on Friday and take effect on September 21, is seen as a near-term catalyst for SpaceX's stock, which has recently traded in a tight range between $133 and $150, close to its $135 IPO price. While the initial August lockup expirations did not lead to a flood of selling, more than another billion shares are set to become eligible to trade by the end of October, with a further 1.3 billion opening up after the company's Q3 report in mid-November. This larger unlock in November is considered a more significant event for the stock's future trajectory compared to the current rebalancing-driven mechanical buying. The index adjustment reflects mechanical rules rather than a judgment on the company's valuation, as increased float allows the index to align its exposure with newly tradable shares.
