Investors Challenge Passive Funds' Role in SpaceX's $135 Valuation as Nasdaq Rules Draw Fire
Updated
Updated · Financial Times · Jun 19
Investors Challenge Passive Funds' Role in SpaceX's $135 Valuation as Nasdaq Rules Draw Fire
3 articles · Updated · Financial Times · Jun 19
Summary
$135 a share for SpaceX has revived claims that passive funds distort prices, but the latest debate argues index trackers are price takers, not the force setting valuations.
Active investors still determine relative prices because passive funds must buy from willing sellers; even huge ETF inflows move the index level, not the stock-by-stock price discovery process.
Nasdaq's inclusion rules sharpened the controversy because the Composite can use full market capitalization, while the Nasdaq-100 float-adjusts holdings with a cap of three times.
At roughly 5% float, SpaceX's Nasdaq-100 weight would be about 85% below its Composite weighting rather than 95% lower, fueling criticism that the index overstates thinly traded newcomers.
The broader takeaway is that high return dispersion may improve stock pickers' chance of beating an index, but it also raises the risk of underperformance, leaving passive investing the cheaper default.