Index providers have metrics that must be met before they will consider adding a company to its institutional index. That is why when Peleton and Zoom were doing so well during Covid and subsequently crashed, index investors were not impacted. They never met the metrics to be included in most benchmarks.
One of the metrics to be included in a benchmark is time. Companies have to be trading publicly for 12 months before they can be included in a benchmark. This is called seasoning. And it is there for a reason. Lots of companies IPO to much fanfare, only for the stock to crash a few weeks later and never get back to its highs. Look at AirBnB, Coinbase, Roblox. The stock market is littered with them.
SpaceX went public on Friday with an estimated valuation of $1.8 trillion with a set price of $135 a share (this is being written on Wednesday evening). It is trading at 96 times future revenues. For comparison, Nvidia is trading at 21 times. SpaceX disclosed a net loss of $4.28 billion last quarter and that is on top of reported net loss of $4.94 billion in 2025. 69% of its revenue comes from Starlink.
But because the valuation is so big, index providers are making an exception for SpaceX and adding it to their indexes from between 5 to 15 days after the IPO. NASDAQ, MSCI and FTSE Russell all said they are going to do this.
The impact is it is going to artificially inflate the price of SpaceX. Index funds have to buy any company that is listed in the index they are tracking and they have to have the weighting of the benchmark. They have no choice but to buy SpaceX. And with so many index funds out there and just 4% to 4.5% of the companies shares being released, there is going to be huge demand for these shares from institutional investors, driving the share price up.
One index provider that has not altered its rules is the S&P, which creates the world’s biggest index, the S&P 500. They still requires a company to be listed for 12 months before being eligible to be listing in its index. The S&P 500 also requires the companies most recent quarter and the sum of its last four consecutive quarters to show a positive profitability. Given the massive losses that Space X has posted, it could be a while before we see it in the S&P 500, just like it too Tesla years to be included in the S&P 500 index.
This rule breaking also paves the way for OpenAI and Anthropic to be added to indexes without seasoning. Is it a mistake to include these big, unprofitable companies in people’s index funds? The only good news is that the expected weighting of SpaceX in these indexes is very small.
Steven Barrett
15 June 2026