Goldman: SpaceX's IPO Has Had Far Less Impact on Major US Indices Than Expected

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Goldman: SpaceX’s IPO Has Had Far Less Impact on Major US Indices Than Expected

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Nasdaq Global Indices

SpaceX's IPO has had a much smaller effect on major US equity indices than many investors expected, according to a new Goldman Sachs report. The Nasdaq 100 carries the most exposure, while the S&P 500 has not added the stock. Goldman expects the share count available to trade to keep growing.

Goldman Sachs analysts led by Ben Snider found that SpaceX has had a much smaller impact on equity indices than many investors expected, outside the short-term trading pattern around the IPO. The Nasdaq 100 is where the stock matters most, the report says, while the S&P 500 shows no sign of an impact aside from the days around the IPO date.

The main impact falls on the Nasdaq 100

SpaceX's index weight in the Nasdaq 100 stood at 1.30% at inclusion and is now 2.50%, Goldman's table shows. The index added the stock 15 trading days after the IPO.

Even so, the valuation effect is small. Excluding SpaceX, the Nasdaq 100 P/E would fall to 19.2x from 19.5x, and annualised volatility would be 22.60% instead of 22.90%. The index has returned -10.30% since SpaceX joined, against -10.00% without it.

The S&P 500 sits outside the picture for now. The S&P indexing committee decided not to change its rules to fast-track SpaceX's entry, yet index funds, primarily the Nasdaq-tracking QQQ ETF, have still bought about $32bn of SpaceX shares, or about 1.4% of its market cap at the end of October.

Rebalancing and a rising float still ahead

Goldman calculates that the next rebalancing of the Russell 1000 Growth Index will lift index fund buying by another $10bn-plus.

The supply of shares is also growing. SpaceX's free float has climbed from 5% of its shares to about one-third over the past five months as lock-ups expire. According to Goldman's calculations, about 50% of the company's shares will be tradeable by the summer of 2027.

By then SpaceX will also have met the S&P 500's 12-month "seasoning" rule and become eligible for entry into that index. The requirement for consistently positive earnings might prove trickier to meet if SpaceX keeps raising its AI investments.

Source: Financial Times

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