SpaceX is set to see its weighting in the Nasdaq 100 index increase to 2.82% from approximately 1.28% following a rebalance scheduled for later in September. This change, based on pro forma data from Nasdaq’s Global Index Watch, is anticipated to prompt billions of dollars in buying from passive funds linked to the benchmark. The final weighting will be officially determined later this month.
This increased weighting for SpaceX is largely attributed to the expiration of share lock-ups. When SpaceX was added to the Nasdaq 100 in July, its weighting was kept relatively small because most of its shares were locked up and unavailable for public trading. Nasdaq had previously amended its rules to allow newly listed large-cap companies to be included sooner and removed a requirement for at least 10% of shares to be publicly tradable. As lock-ups expire, more SpaceX shares become available for trading, increasing the company's free float and, consequently, its index weighting.
Wall Street analysts project that this rebalance could lead to between $15.5 billion and $22 billion in new buying by index funds and exchange-traded funds that track the Nasdaq 100. This is significantly higher than the roughly $4 billion in forced buying associated with its initial inclusion in July. Insiders largely retained their stakes after the initial lock-up expirations in August, which helped prevent a significant sell-off in the stock.
The Nasdaq 100 tracks the largest non-financial companies listed on the Nasdaq stock market and does not have a minimum market capitalization for inclusion, but companies must meet other criteria, including an average daily trading volume of at least 200,000 shares. A higher weighting in the index is crucial because passive funds, such as the Invesco QQQ Trust Series 1 (QQQ) with $481 billion in assets, must adjust their holdings to align with the new proportions. As of the end of the second quarter, approximately $1.7 trillion in assets tracked the Nasdaq 100.
