It’s challenging to recall an initial public offering (IPO) that has generated more excitement than SpaceX. This company has established itself as a leader in the space economy, with its founder, Elon Musk, being one of the most recognized CEOs globally. As the company prepares to go public, it is expected to achieve an astronomical valuation that has captured the attention of investors everywhere.
Nevertheless, due to the anticipated massive valuation of the stock, not every investor might feel inclined to buy shares immediately after the IPO.
Interestingly, the sheer size of SpaceX’s market capitalization could mean that even those who prefer to avoid SpaceX may find it unavoidable to have exposure to this stock in their investment portfolios. Let’s explore the reasons behind this phenomenon.
Understanding the Limitations of SpaceX for Certain Investors
While it’s understandable why many investors are enthusiastic about the potential of SpaceX, there are valid reasons for others to consider steering clear of the stock, especially during its initial public offering phase.
SpaceX has made significant strides by utilizing reusable rockets to transport astronauts to space in a more efficient and cost-effective manner. Additionally, the company has successfully launched its low-Earth orbit satellite network, Starlink, which provides internet services to underserved areas lacking reliable access to traditional internet infrastructure. Starlink has seen remarkable success, boasting over 9 million active users.
Image source: Getty Images.
Despite its successes, in 2025, SpaceX reportedly experienced a substantial loss of around $5 billion against revenue exceeding $18.5 billion, according to tech news outlet The Information. There are media reports suggesting that the company could aim to raise approximately $75 billion at an eye-popping valuation of $2 trillion, leading to stock trading at extremely high price-to-earnings multiples.
Moreover, the domain of space exploration and commercialization is relatively nascent, which inherently brings a level of uncertainty. This uncertainty stems from potential regulatory hurdles and operational challenges that the company may face as it navigates this uncharted territory.
Given the immense hype surrounding the IPO, along with Musk’s decision to allocate 30% of shares to retail investors and the typical lock-up provisions accompanying IPOs, it is reasonable to anticipate significant volatility in the stock during its early trading days.
While long-term investors may choose to overlook these fluctuations, many Wall Street participants tend to focus on shorter-term trading, and some investors may not be comfortable with the anticipated volatility associated with this stock.
How Investors Might Find Themselves Holding SpaceX Stock Despite Reluctance
There’s a palpable desire among investors to secure a stake in SpaceX. Musk and his team have reportedly engaged more than 20 investment banks to facilitate the substantial IPO process.
Given the immense size of the company, it is poised to play a significant role within the financial markets, making it likely for major market indexes to seek inclusion of SpaceX as soon as it goes public. In fact, several indexes have already begun modifying their governance rules to expedite the inclusion process for SpaceX.
The Nasdaq Composite (^IXIC +1.71%) has recently introduced a novel “fast entry” rule, allowing Nasdaq to evaluate new publicly traded companies based on their market capitalization relative to the rest of the index during a company’s seventh trading day.
If SpaceX ranks among the top 40 companies in the Nasdaq-100 on its seventh trading day and satisfies the remaining eligibility criteria, it could gain admission to the index just 15 days after its IPO. Previously, the Nasdaq-100 required newly listed firms to wait a minimum of three months for inclusion.
This situation is not exclusive to SpaceX; it also applies to other potential mega-cap IPOs on the horizon, such as Anthropic and OpenAI, which are expected to go public later this year or next, with valuations anticipated to exceed $1 trillion.
The broader S&P 500 Index is also considering revisions to its rules that would allow for the swift entry of SpaceX and other mega-cap IPOs into the index sooner than the current one-year waiting period. The newly proposed guidelines could facilitate entry as soon as six months following an IPO.
The S&P intends to classify a mega-cap company as one that possesses a market capitalization equivalent to or exceeding that of the 100th-largest firm in the S&P Total Market Index.
Once a company secures a spot in an index, any funds that track that index will be required to purchase the stock. With a projected market cap ranging from $1 trillion to $2 trillion, SpaceX would instantly ascend to become one of the largest companies in the stock market, significantly impacting the weightings in both the S&P 500 and Nasdaq-100, thus enhancing its influence on these indices.
This reality underscores the importance for investors to recognize that even if they choose not to invest directly in SpaceX, there is a strong possibility that they may inadvertently own shares of the company if they hold any funds that track the S&P 500 or Nasdaq-100.
