SpaceX's stock, trading under the ticker SPCX, officially joins the Nasdaq-100 ahead of the US market opening on Tuesday. This significant transition comes as the stock is currently trading approximately 29% lower than its recent peak value.

The Nasdaq announced on June 26 that SPCX was set to join the index, following its market debut on June 12.

Why This Development Matters

For investors and market analysts, the addition of SpaceX to the Nasdaq-100 is especially noteworthy. The inclusion means that index-tracking funds will have to purchase SPCX shares to align with the benchmark. This requirement can create upward momentum for the stock, although its actual impact will depend on how much of the index is comprised of SpaceX.

  • SPCX’s initial index weighting is about 1%.
  • Approximately $800 billion in mutual funds and ETFs will invest in SpaceX shares.
  • SpaceX reached a valuation of nearly $2 trillion upon its IPO.
  • The stock peaked at $225.64 but closed at $160.42 on Monday.

JPMorgan estimates that SpaceX will hold approximately a 1.3% weight in the index, placing it around 21st in ranking alongside industry giants like Nvidia and Tesla. Mike Khouw, chief strategist at OpenInterest.PRO, warns that low percentage weightings within the index will limit the stock purchases from those aiming to track it. He also highlighted ongoing concerns regarding volatility.

JJ Kinahan, a Cboe senior vice president, suggested that increased volatility is likely, asking if investors are comfortable with projected moves of $20 in the upcoming weeks.

Furthermore, expiration of insider lockups could complicate things. The restrictions are set to lift in phases between 70 and 135 days following the June 12 IPO, and significant shareholders such as Elon Musk will have their shares locked for 366 days.

Analyst Charles Minervino from Susquehanna pointed out that these factors could add pressure on SPCX, as the influx of new shares might coincide with increased demand from the index.

What to Watch for in the Coming Days

Investors should keep an eye on upcoming trading sessions to see if the index buying can offset the potential volatility due to new supply flooding the market. The results might clarify whether SpaceX’s performance can stabilize or if further challenges are on the horizon.

Disclaimer: This material is for informational purposes only and is not financial advice.