S&P Keeps 4-Quarter Profit Rule as Nasdaq Clears SpaceX for Nasdaq 100 in 15 Days
Updated
Updated · Reuters · Jun 5
S&P Keeps 4-Quarter Profit Rule as Nasdaq Clears SpaceX for Nasdaq 100 in 15 Days
3 articles · Updated · Reuters · Jun 5
Summary
S&P Dow Jones left its index-entry rules unchanged, preserving requirements including four consecutive profitable quarters that could keep loss-making SpaceX out of the S&P 500 after its June 12 IPO.
Nasdaq moved the other way, cutting the Nasdaq 100 seasoning period to 15 trading days from as long as a year and scrapping its 10% minimum float rule, changes that suit SpaceX's planned 3%-4% float.
Those looser Nasdaq rules could force index funds to buy heavily: Research Affiliates' Rob Arnott estimates passive funds may need to absorb up to 40% of the shares offered, raising squeeze risk.
The rule split lands as passive investing dominates U.S. equities, with 53% of assets in cap-weighted index funds by end-2025 and active managers seeing nearly $60 billion of outflows in March and April.
Breakingviews argues that dynamic is helping inflate already stretched valuations, with SpaceX's planned $75 billion IPO poised to test how much indexes now shape prices rather than merely track them.
Are stock indexes being manipulated to create the next big market squeeze?
Is the world's safest investment strategy now secretly fueling a massive market bubble?
With algorithms dominating Wall Street, are we blindly investing our way into an epic crash?
SpaceX’s Record-Breaking $1.75 Trillion IPO: Index Rule Changes, Forced Buying, and Risks for Investors
Overview
This report explores how major index providers are handling SpaceX’s landmark IPO, focusing on the tension between strict index rules and the desire to include high-growth companies. S&P Dow Jones Indices is sticking to its rules-based approach and credibility by requiring positive earnings, which keeps unprofitable SpaceX out of the S&P 500 for now. In contrast, Nasdaq and FTSE Russell are changing their rules to allow fast entry for SpaceX, aiming to capture market excitement. This divergence highlights how index rules, company profitability, and governance structures shape investor exposure and market dynamics during major IPOs.