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S&P500 doesn't change rules for AI companies
Posted on 6/5/26 at 9:33 pm
Posted on 6/5/26 at 9:33 pm
quote:
SpaceX has requested unusually swift entry into several leading stock market indexes as a condition of its historic stock market debut. But the S&P 500 stock market index representing many of the largest profitable US companies has surprised market analysts by refusing to bend the rules for Elon Musk’s AI company.
quote:
But in its final decision, the S&P Dow Jones Indices stated that “no changes will be made to the eligibility criteria including financial viability screens, seasoning period, or minimum IWF.” Even after the standard yearlong wait, SpaceX, Anthropic, and OpenAI may struggle to deliver the consistent profitability necessary to qualify for the S&P 500.
quote:
The denial of accelerated S&P 500 entry for SpaceX comes just days after Morningstar analysts described SpaceX as having been “significantly overvalued” in the lead-up to its IPO. The investment research firm valued SpaceX at $780 billion—less than half of SpaceX’s $1.75 trillion IPO goal—primarily based on the strengths of SpaceX’s Starlink satellite service and rocket launch business.
Finally common sense... It's not a lot to ask to be profitable for four straight quarters before being added.
Ars tech source
4
Posted on 6/5/26 at 10:32 pm to UltimaParadox
My entire retirement relies on the strength of the S&P. Good on them
Posted on 6/5/26 at 10:47 pm to UltimaParadox
I didn't like that SpaceX had appealed for a change to SP Global's rules or that they even considered it. Had SPGI capitulated, they would've undermined the process. It maintains the integrity of the index and eliminates special treatment.
Look how long it took $TSLA to get added and they had a huge market cap when they finally got in. They would get close, but then report a loss for the most recent quarter which meant they would not qualify for that regular cycle addition.
GAAP positive earnings on a cumulative basis for the 4 most recent quarters with positive GAAP for the latest quarter is just one of many metrics. Market cap size is not the deciding factor either. If it were, $MRVL would've gotten in earlier in the year with the March rebalance or in the April or May additions this year since its market cap was larger than the others that were added.
Look how long it took $TSLA to get added and they had a huge market cap when they finally got in. They would get close, but then report a loss for the most recent quarter which meant they would not qualify for that regular cycle addition.
GAAP positive earnings on a cumulative basis for the 4 most recent quarters with positive GAAP for the latest quarter is just one of many metrics. Market cap size is not the deciding factor either. If it were, $MRVL would've gotten in earlier in the year with the March rebalance or in the April or May additions this year since its market cap was larger than the others that were added.
Posted on 6/6/26 at 12:13 am to CecilShortsHisPants
quote:
My entire retirement relies on the strength of the S&P.
Why?
Posted on 6/6/26 at 1:48 am to Everyday Is Saturday
quote:. Because I’m 37 and 100% of my 401k is an S&P index fund
Why?
Posted on 6/6/26 at 4:38 am to UltimaParadox
As much as I like Elon, this was the right decision.
This post was edited on 6/6/26 at 4:39 am
Posted on 6/6/26 at 7:09 am to UptownJoeBrown
I’m guessing the nasdaq doesn’t have such requirements? Wondering if QQQ is going to take a beating with some really overpriced IPOs coming in.
Posted on 6/6/26 at 7:12 am to PNW_TigerSaint
quote:
I’m guessing the nasdaq doesn’t have such requirements? Wondering if QQQ is going to take a beating with some really overpriced IPOs coming in.
NASDAQ changed the rules to bring in space X.
quote:
To win the largest initial public offering (IPO) in market history, the Nasdaq adjusted its index-inclusion rules, effective May 1, 2026. The exchange scrapped historical waiting periods, paving the way for massive, high-profile companies like SpaceX to be added to the benchmark Nasdaq-100 just 15 days after going public
QQQ holders going to be exit liquidity for insiders
quote:
But SpaceX also looks to be the biggest trap ever set for retail investors. The historical and structural deficiencies of the SpaceX IPO will result in the greatest fleecing of retail investors we've ever witnessed.
quote:
According to the SpaceX prospectus that was made public on May 20, the company behind reusable rockets, satellite-based broadband service Starlink, xAI, and social media platform X generated $18.67 billion in sales last year. If SpaceX prices at a $1.8 trillion valuation, it'll be trading at a P/S ratio of 96!
History tells us that no public company at the forefront of a game-changing technology has ever been able to sustain a P/S ratio above 30 over the long run. A P/S ratio of nearly 100 is a glaring red flag that screams, "bubble!"
quote:
Notably, Nasdaq (NASDAQ: NDAQ) amended several of its long-standing rules to expedite SpaceX's inclusion in the Nasdaq-100. The "Fast Entry" rule change, which took effect on May 1, shortened the waiting period for Nasdaq-100 inclusion from around three months to just 15 trading days (i.e., July 7, based on SpaceX's expected June 12 debut) for megacap IPOs that would be among the 40 largest nonfinancial companies. Minimum float requirements were also eliminated.
But this wasn't the only change made. SpaceX can enter the Russell U.S. Equity Indexes and FTSE Global Equity Index Series after just five trading sessions.
motley fool
This post was edited on 6/6/26 at 7:16 am
Posted on 6/6/26 at 9:54 am to UltimaParadox
So what’s the play here? Dump QQQ and drop it in VOO?
Posted on 6/6/26 at 10:26 am to UltimaParadox
SpaceX will have a 5% float, voo expects 50%. So far off from the requirements.
Posted on 6/6/26 at 10:47 am to SETH6180
I assume Space X will start higher than it should and go up from there before dropping hard? Then I might buy the trough. Any ideas?
Posted on 6/6/26 at 10:58 am to GeauxTigers123
Yea I don’t want any part of it right now, which is why I posed the question regarding my QQQ holdings
Posted on 6/6/26 at 11:45 am to PNW_TigerSaint
quote:
I’m guessing the nasdaq doesn’t have such requirements?
Of course it doesn’t. If S&P ran an exchange you can bet they’d make a different decision.
Posted on 6/6/26 at 12:49 pm to SETH6180
SpaceX is not going to have a large weighting in the QQQ like NVDA or Apple. Taking into consideration its projected market cap and small float, it will have a smaller weighting in that index.
Going forward, if you are planning to purchase QQQ thru new money vs reinvesting dividends, then consider buying QQQM. It is the same thing as the QQQ - holdings, weighting, exposure, but has a smaller expense ratio.
Going forward, if you are planning to purchase QQQ thru new money vs reinvesting dividends, then consider buying QQQM. It is the same thing as the QQQ - holdings, weighting, exposure, but has a smaller expense ratio.
Posted on 6/6/26 at 1:22 pm to waverly911
Thanks, yes I meant QQQM, that’s what I hold in long term investments.
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