Crossed Wires: The SpaceX IPO — rigging the index

Even if you have been hiding under a rock, the upcoming SpaceX listing is unlikely to have escaped your notice. Massive numbers attend the deal, some as high as a valuation of $2-trillion for a company that has yet to make a profit ($2-trillion is a number that makes little sense in almost any context, never mind the value of a single company).

Arguments have erupted as to whether the shares will be worth the price — Elon Musk, the founder, CEO and chief engineer of SpaceX, has birthed entirely new and successful industries from scratch (true), but he often overpromises and underdelivers (also true), he has built massive value for his investors and his innovations benefit many global citizens (true), but he is untrustworthy, mercurial and unpredictable (also true).

Okay then, we can pick our side and argue with each other about the man. But when it comes to this listing — the largest in history — all agree that it is a spectacle without precedent. And so, a discussion of the wonky subject of stock market indices seems a little pallid next to this blowout event.

But it is not.

I’ll start here. On 10 March 2026, Nasdaq — where the SpaceX listing is to take place on 12 June — announced that it was changing its rules to allow SpaceX to be included in the Nasdaq-100 index within just 15 trading days of listing, rather than the customary period of up to a year. This was, for anyone who was looking, hasty and ill-considered. Or, to be generous, suspiciously fast.

Indices, like the Nasdaq-100, the S&P 500, or the Dow Jones Industrial Index, are the load-bearing walls of public stock ownership. They are a basket of stocks on a particular exchange that are supposed to be representative of the entire market. Indices are diversified, carefully curated, and therefore considered low risk.

Not controversial. But massively influential. Why? Because many pension funds, index funds, ETFs and other large pools of managed money are required by law or policy to hold the equities in an index.

How carefully curated are they? Well, for a start, the components of the indices are almost always big companies — stable, well-run, dripping with gravitas and historical reliability. Widely traded, with deep liquidity. And, among other things, they must have been profitable for some extended period.

SpaceX is wildly unprofitable and, until 12 June, untraded. The company reported losses of $4.9-billion in 2025 and a further $4.3-billion in the first quarter of 2026 alone. And yet the rules have been changed to allow SpaceX into many of the leading indices. Which means pension funds, index funds and their ilk are going to have to buy SpaceX. Which means a protected share price and deep liquidity — from day one.

People are a little pissed off at what seems like SpaceX jumping the queue.

The queue

The rules being waived here were not arbitrary bureaucratic obstacles. They were lessons, hard-won from decades of market failures. The S&P 500’s profitability screen, for instance — requiring four consecutive quarters of positive earnings — was designed to ensure that the index represented the genuine productive economy, not speculative aspiration. The seasoning periods — waiting months or even a year before index inclusion — existed to allow real price discovery before trillions of dollars in passive capital were mechanically compelled to buy. Thousands of companies have spent years, sometimes decades, patiently satisfying these requirements before earning their place in a major index.

Reuters reported in March 2026, citing two people familiar with the confidential discussions, that SpaceX had made early Nasdaq-100 inclusion a necessary condition for its choice of exchange. The size of the deal made it mouth-watering for Nasdaq. Any dissenting voices about fast index entry would quickly have been shut down. And so Nasdaq changed its rules, and SpaceX chose Nasdaq. FTSE Russell followed almost immediately, announcing fast-track entry for qualifying IPOs after just five trading days. S&P and Dow Jones Indices floated proposals to eliminate their profitability requirement for megacap entrants.

The sequencing is worth noting. Index providers do not typically rewrite foundational rules in a matter of weeks. The fact that multiple providers moved simultaneously, in the months immediately preceding SpaceX’s planned IPO, is not a coincidence anyone is seriously trying to argue.

Who benefits?

Index inclusion is not a neutral event. Every fund tracking the Nasdaq-100 — products like QQQ, which alone manages over $300-billion — must buy any new constituent in exact proportion to its weight, with no discretion whatsoever. Fund managers cannot decide they think SpaceX is overvalued, that it is losing too much money, or that its founder is too politically controversial. They must buy.

Conservative estimates put the total mechanical buying pressure across major index trackers at between $15-billion and $30-billion. Some scenarios push the figure considerably higher. This is capital from pension funds, retirement accounts, and the savings of ordinary investors being directed at SpaceX, whether those investors consent or not.

The float problem compounds this. SpaceX plans to make available only 3-5% of its total shares in the IPO. That means the enormous mechanical demand generated by index inclusion will be chasing a tiny pool of available stock — routing a firehose of institutional capital through what one market analyst called a garden hose of actual liquidity. And guess what happens when there is more demand than supply? The result will be artificial price support and a valuation premium that has nothing to do with fundamental business performance.

The beneficiaries of this arrangement are not difficult to identify. SpaceX insiders — early venture investors, employees holding pre-IPO shares, and above all, Musk himself — gain both an elevated exit valuation and deep, immediate liquidity. Without guaranteed index inclusion, the IPO would face far more uncertain demand. With it, billions of dollars in passive buying are pre-ordained.

Nasdaq itself is not a disinterested party. It earns listing fees, benefits from the trading volumes that index rebalancing generates, and gains a marquee name that strengthens its competitive position against the NYSE for future mega-IPOs. The rule changes serve Nasdaq’s commercial interests as directly as they serve SpaceX’s.

The voices of dissent have been sharp. Michael Burry, who became famous for predicting the 2008 subprime collapse, flagged commentary from Wall Street veteran George Noble, who described the index manoeuvres as shameless manipulation.

“The rules are being rewritten to benefit IPO issuers and early-stage insiders,” Noble wrote, “and your capital is the tool being used to enrich them.”

James Mackintosh at the Wall Street Journal called the proposals egregious. Ross Gerber of Gerber Kawasaki Wealth warned that fast-track index inclusion of this kind had historically not served ordinary investors well.

Market analyst David Woods was direct: “Every single one of those criteria matters. This isn’t bureaucratic red tape. It is the product of decades of hard lessons about what makes an index durable, reliable, and trustworthy for the trillions of dollars benchmarked against it.”

The counterargument

There is a legitimate case on the other side. Indices are meant to represent the market. A company with a $2-trillion valuation — larger than all but a handful of entities on Earth — cannot be excluded from a market benchmark without that benchmark ceasing to represent what it claims to. The S&P Dow Jones Indices (the joint venture that manages both the S&P 500 and the Dow Jones indices) opened a formal consultation on 30 April, acknowledging precisely this — that adherence to existing rules could reduce the benchmark’s effectiveness as a representation of the market.

SpaceX is also genuinely not a speculative micro-cap borrowing the credibility of index membership. It has transformed the global launch industry, built the world’s largest satellite internet constellation, and is developing the most powerful rocket ever constructed. Its losses reflect deliberate, long-term, capital-intensive investment in infrastructure on a global scale. Not a fly-by-night, if you will excuse the cheesy pun.

And yet. The question is not whether SpaceX eventually deserves to be in an index. It almost certainly does. The question is whether the right response to that future reality is to dismantle the protective architecture that passive investors have relied upon for decades — without serious public debate, under commercial pressure from a single issuer, which is, in this case, a single man.

The companies that spent years meeting profitability thresholds, nurturing their balance sheets, building their legacies — only to watch those requirements evaporate for a well-connected mega-cap — have legitimate cause for grievance. So do the investors whose retirement savings are about to become a guaranteed backstop for the largest IPO in history, whether they like it or not.

What is most troubling is not the outcome but the process. The consultations with stakeholders (including the Securities and Exchange Commission) that preceded these changes were real but brief, and their conclusions were foregone. Nasdaq moved from proposal to adoption in weeks.

The scale and impact of this decision warranted a more serious debate. It never happened, because big money talks loudly enough so that no one else is heard. DM

Steven Boykey Sidley is a professor of practice at JBS, University of Johannesburg, a partner at Bridge Capital and a columnist-at-large at Daily Maverick. His new book, It’s Mine: How the Crypto Industry is Redefining Ownership, is published by Maverick451 in South Africa and Legend Times Group in the UK/EU, available now.