Brits might be investing in SpaceX without realising it 

Investors who passed on SpaceX’s stock market debut last week are likely to end up holding a stake in the company anyway, often within weeks and without making any decision to buy it, according to analysis from investment platform AJ Bell.

SpaceX listed on the Nasdaq exchange last week at a valuation of $1.78 trillion.

Anyone holding a global or US index tracker fund is likely to gain some exposure to Elon Musk’s company in the near future, because passive funds are built to mirror the make-up of a benchmark index rather than to make active decisions about individual holdings.

Passive funds – also referred to as trackers or ETFs – copy the composition of an index such as the Nasdaq 100, S&P 500, FTSE 100 or MSCI World.

They are popular because they offer cheap exposure to a large number of assets, but the trade-off is that they are effectively obliged to hold whatever sits in the index they follow.

James Flintoft, Head of Investment solutions at AJ Bell, said the key question for anyone using these strategies is not whether SpaceX is a good investment, but whether, where and when they will hold it.

The answer depends on which index a fund tracks. SpaceX is listed on the Nasdaq, which underpins both the Nasdaq 100 and the Nasdaq Composite.

Owning a Nasdaq tracker does not mean immediate exposure, because companies must trade for a set period before being added.

That window is normally eight weeks, but a “fast entry” route was approved ahead of the float, allowing SpaceX to join after 15 trading days – putting its addition to the Nasdaq 100 around 7 July.

Other index providers have shortened their own timelines. FTSE Russell cut its waiting period to five trading days for large companies across its US and global equity index series, while MSCI settled on 10 days.

S&P, which runs the S&P 500, is the outlier: it kept its existing rules, under which a company must have traded publicly for 12 months and meet profitability thresholds before it can be included.

As a result, anyone whose US exposure comes through S&P 500 trackers will not hold SpaceX at listing or for some time afterwards.

The trend towards shorter inclusion windows predates SpaceX. Index providers have been competing to capture large new listings sooner, a shift Nasdaq attributes partly to companies staying private for longer and arriving on the market as more mature businesses.

What’s the exposure?

Investors who do gain exposure may be surprised by how small it is. The Nasdaq 100 weights its members by “float-adjusted” market value – the value of shares actually available to trade – rather than headline valuation.

At listing, only around 4% of SpaceX’s shares were freely traded, with the rest held by Musk, insiders and early investors.

On that basis, SpaceX accounted for roughly 0.61% of the Nasdaq 100, despite a valuation that on an unadjusted basis would imply a weighting close to 5%.

The float-adjustment rule does not apply to the Nasdaq Composite, which weights companies on headline valuation.

On the question of what new investors should expect, AJ Bell senior research analyst Terry McGivern pointed to past mega-listings as a guide, saying the data suggests “a bumpy ride, at least initially.”

He noted that Meta fell more than 50% in its first four months after its 2012 listing and traded below its IPO price for over a year, and that Uber lost around a third of its value before recovering.

Academic research on US IPOs between 1980 and 2024 found newly listed companies underperformed market peers by 3% to 5% a year on average over the following five years.

McGivern added that Uber eventually delivered roughly a 100% return on its offer price once the market reassessed it as an infrastructure business.

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