As SpaceX debuts on the Nasdaq 100, expectations are high

Early analyst assessments indicate confidence in the newly listed space exploration and artificial intelligence company's potential for long-term growth

As a result of SpaceX's inclusion in the Nasdaq 100, passive funds that follow the index will now automatically own shares in the company, which went public on June 12.

One week after being added to the Russell 1000 Index on June 29, SpaceX (NASDAQ:SPCX) joined the index today, July 7.

According to Bloomberg, forced buying by index funds that follow these two indices could result in an estimated £5.4 billion in inflows for SpaceX.

Elon Musk's space exploration company was expedited for inclusion after the index providers changed their rules to account for some of the largest initial public offerings (IPOs) in history.

Watch the entire video here: Instead of requiring three months following an IPO, Nasdaq's new regulations allow newly listed companies to be included in as little as 15 trading days.

How will the inclusion of the SpaceX index affect flows?

According to Nasdaq, its component companies' combined market capitalization (market cap) of £31.5 trillion is tracked by approximately £1.4 trillion in assets worldwide, with about half of that amount coming from exchange-traded funds (ETFs). The remaining half is invested in derivatives like options and futures.

The top 100 businesses listed on the Nasdaq Stock Market, excluding financial institutions, are represented by the Nasdaq 100 index. Alphabet, Amazon, Apple, Tesla, Meta, Microsoft, and Nvidia are all included in this index, which is frequently referred to as a tech-focused index. However, it also includes numerous other businesses valued at £100 billion or more, such as those in the healthcare, materials, and industrial sectors, which are represented in ten of the eleven standard industry classification sectors.

Funds that track an index, such as the Nasdaq 100, are essentially compelled to purchase a stock's shares when it enters the index in order to maintain the index's representation. A stock's share price may rise as a result of increased demand for it.

The biggest Nasdaq-tracking ETF accessible to UK investors is the UCITS version of Invescos Nasdaq-100 ETF (LON:EQQQ). According to the Barclays Smart Investor platform, it was the seventh most popular purchase from June 26 to July 2.

The quiet period that usually follows an IPO has ended as a number of investment banks have released positive analyst statements on SpaceX in addition to the boost from index fund inclusion. Based on asset strength and long-term growth prospects, Morgan Stanley, Goldman Sachs, UBS, and Bernstein Research are among the companies endorsing the stock with buy recommendations or something similar.

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