The Stock Market Will Make History on July 7. Here's What Investors Need to Know Now.
Key Points
Space Exploration Technologies became the largest initial public offering (IPO) ever on June 12.
The Nasdaq 100's new fast-track entry rules for mega-IPOs mean that the stock will join the index on July 7.
It will likely have an index weighting of around 1%.
Space Exploration Technologies (NASDAQ: SPCX) officially went public on June 12. In the process, it became the largest initial public offering (IPO) ever and currently has a total market cap of more than $2 trillion.
On July 7, the company and the stock will make history again. Not only will SpaceX officially join the Nasdaq-100 index, but it'll also be the first to do so under the newly created "fast-track entry" rules for mega-IPOs.
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What is the Nasdaq's new fast-track entry process for IPOs?
Nasdaq announced these new rules in May:
For the very largest new listings, those that rank within the top 40 of current Nasdaq‑100 constituents by Full Market Capitalization, there is also a Fast Entry pathway. These companies are evaluated on their seventh trading day and, if eligible, added shortly thereafter, with all existing liquidity requirements still applying.
This means that new listings meeting both size and liquidity requirements can be added to the index as soon as the 15th trading day following the IPO. The biggest reason for the policy change is SpaceX, but it's also due to the likely imminent IPOs on Anthropic and OpenAI. Both of those companies could be debuting with multitrillion-dollar market caps as well.
This will impact shareholders of the Invesco QQQ ETF (NASDAQ: QQQ) and the Invesco Nasdaq 100 ETF (NASDAQ: QQQM), which are both tied to the index, the most. Because weightings in the index are based on free-float market capitalization and not total market cap, SpaceX will likely see a weighting of around 1% when it joins.
Most stocks used to go public when they were much smaller and grow over time. Lately, companies have been remaining private longer until they decide to go public when they're much larger. SpaceX is the first example of the major market indices adjusting to reflect that. And there's likely more to come.
David Dierking has positions in Invesco NASDAQ 100 ETF. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.