The SpaceX IPO is all over the news right now, and one of the bits I find fascinating (and scary) is the idea that extraordinary changes have been made to some of the stock indexes that will affect not just investors in individual stocks, but also investors in affected index funds. These changes mean that those who invest in index funds to avoid some of the swings inherent in investing in individual stocks may find themselves automatically investing in SpaceX (and other stocks coming to the market soon) much sooner than they might think.
Normally, when a company has its IPO, index providers like Nasdaq have a “seasoning” requirement. Typically, that means that company won’t get included in a Nasdaq index like the Nasdaq 100 for a period of time, say three months. Other indexes, like the S&P 500 usually require a year. The idea is that new stocks can be subject to quite a bit of volatility, and the seasoning period allows it to stabilize in the market before it gets included in an index, and funds tracking that index generally must buy it or otherwise replicate its exposure.
SpaceX is not going to have to wait that long due to rule changes, led by Nasdaq, but also being adopted by other index providers. SpaceX will be eligible for the Nasdaq 100 only 15 trading days after its IPO, due to new “Fast Entry” rules created for it. There are other rules besides the seasoning one, like “free float” requirements, that are also being changed. Here’s a post with more detail on the changes.
The SpaceX IPO Will Be the Theft of the Century
An S-1 full of fantasies, insiders who will pocket millions, index companies that have changed the rules: it’s all a recipe for regular people to have their pockets picked.
Bess Levin makes a related point in Intelligencer:
Anyway, being force-fed shares of SpaceX, Anthropic, and OpenAI may be a bitter pill to swallow for the many Americans who are not at all excited about artificial intelligence. In April, a Gallup poll showed just 18 percent of people ages 14 to 29 feel hopeful about AI, down from 27 percent in 2025. The same month, an Economist/YouGov survey showed more than 70 percent of Americans believe AI is developing too quickly with 79 percent of people 65 and older agreeing. Also in April, a Texas man threw a Molotov cocktail at OpenAI CEO Sam Altman’s house and later showed up at an OpenAI office and threatened to “burn down the building.”
Good Luck Trying to Opt Out of the AI Stock-Market Bonanza
With SpaceX, Anthropic, and OpenAI set to go public, millions of Americans could soon own shares of AI companies whether they want to or not.
Bloomberg’s Matt Levine raises a related question in his latest newsletter, “Why is there not a no-AI index fund?”
I recommend taking the time to read up on this, as it’s not just relevant to SpaceX, but other AI-related and megacap IPOs coming soon. If you think that being diversified by holding index funds will insulate you from wild swings from AI stocks in the short term, you should start here, but read further. Here are some other related links I found interesting:
- SpaceX’s IPO Is the Final Frontier for Index Funds
- SpaceX sets $135 price for blockbuster IPO, upending Wall Street convention
- Gen Z’s AI Adoption Steady, but Skepticism Climbs
If you’re interested in a podcast, The Verge has a good episode of Decoder that discusses this topic.
Elon Musk is steamrolling Wall Street to become a trillionaire
The SpaceX IPO filing tells us a lot about what happened to the platform formerly known as Twitter.
People who read this blog will know that I’m far from an AI skeptic: I am using AI constantly, and am leading a software engineering organization that is using AI extensively to develop its products. However, two things can be true at once: AI can be a transformative and valuable tool, but it can also be used to exploit the unsuspecting. The hype here seems clear, especially when looking at the SpaceX IPO, and I have no doubt that there are people who will be looking to capitalize on the hype, to the detriment of the wider market.
