SpaceX to Gain Weight in Nasdaq 100 Following Index Rebalance
SpaceX is poised to receive an increased weighting in the Nasdaq 100 later this month, a modification that may catalyse billions of dollars in purchases by passive funds linked to the benchmark. Its weighting is anticipated to increase to approximately 2.82% from around 1.28%, according to pro forma data from Nasdaq’s Global Index Watch released late Friday. The final weighting will be established later this month. Wall Street anticipates that the alteration will lead to billions in additional purchases by index funds and exchange-traded funds that follow the benchmark.
SpaceX’s relatively modest representation can be traced back to its inclusion in the index in July. Most of its shares remained locked up and unavailable for public trading, which constrained the weighting it received despite Nasdaq’s alteration of its rules to permit newly listed large-cap companies to enter sooner and the removal of the requirement that at least 10% of their shares be publicly tradable. As the lockup periods conclude, an increasing number of SpaceX shares are entering the market for trading. That enhances the company’s free float, which may subsequently elevate its weighting in the Nasdaq 100.
Further modifications may be forthcoming. Additional SpaceX shares are set to be released from lockup, which may increase its index weighting once more. SpaceX’s initial lockup expiration occurred in August, coinciding with its inaugural earnings release as a publicly traded entity, raising apprehensions that an influx of newly tradable shares might surpass demand. The anticipated selloff did not occur, even following the expiration of a second lockup a week later. Insiders predominantly retained their holdings, and the stock demonstrated resilience.
The Nasdaq 100 monitors the largest non-financial corporations listed on the Nasdaq Stock Market. There is no minimum market capitalisation for inclusion; however, companies must maintain an average daily trading volume of at least 200,000 shares and fulfilll additional criteria. A higher weighting is significant as passive funds linked to the benchmark are required to modify their holdings in response. They include the $481 billion Invesco QQQ Trust Series 1, known as QQQ. As of the conclusion of the second quarter, approximately $1.7 trillion in assets were associated with the Nasdaq 100, as reported by Nasdaq.
