SpaceX's Nasdaq 100 inclusion set to trigger up to $27B in passive fund buying

SpaceX's early inclusion in the Nasdaq 100 is expected to draw tens of billions of dollars in passive fund flows. Markets anticipate that mechanical buying by index funds could provide short-term support for the share price, though analysts remain divided on the company's longer-term growth prospects and valuation.

SpaceX will officially join the Nasdaq 100 before US markets open Tuesday. Index funds tracking the benchmark are expected to concentrate their rebalancing trades near Monday's close — the session before the inclusion takes effect.

The Nasdaq 100 is a benchmark index comprising the 100 largest non-financial companies listed on the Nasdaq by market capitalization. Its members include leading US technology firms such as Nvidia, Apple and Amazon.

SpaceX listed on June 12 and will join the Nasdaq 100 in less than a month after its debut. The rapid inclusion reflects Nasdaq's newly introduced "fast-track" regime, which allows large initial public offerings to be added to the index as soon as 15 trading days after listing.

Global assets under management tracking the Nasdaq 100 exceed $800 billion. The flagship ETF alone — Invesco's QQQ — holds about $500 billion in assets.

ETF.com, a US financial information outlet, cited JP Morgan estimates projecting that QQQ alone would generate roughly $4.3 billion in SpaceX buying demand.

When combined with funds tracking the Russell 1000, total mechanical buying tied to the index inclusion is estimated to reach as much as $22 billion to $27 billion.

The weighting SpaceX will receive in the index is also drawing attention. Standard calculations suggest a range of 0.47 to 0.70 percent, but the actual weighting could come in higher because Nasdaq is applying a newly created "float multiplier" rule designed for mega-cap IPOs with low free-float ratios. SpaceX's current free-float ratio stands at roughly 4 to 5 percent.

The share price surged to $225 during trading immediately after the listing before settling into a recent range of $149 to $163.

Wall Street's overall view is broadly positive. According to TipRanks, the 12-month average price target for SpaceX stands at $210.86, implying roughly 30 percent upside from current levels. Analyst recommendations are split, with four buy ratings, four holds and one sell.

Andrew Uerkwitz, an analyst at Arete Research who holds a bullish view, said next-generation Starlink satellites could expand the suburban broadband market and serve as a new growth driver for the company.

Cautious voices are also present. Some analysts said the Starship project, still in development, could weigh on plans to expand the next-generation Starlink business if it fails to proceed on schedule.

The prevailing market view holds that the Nasdaq 100 inclusion will likely provide a short-term demand boost from passive fund inflows, but that earnings and business results will ultimately determine the share price over the medium to long term. Key variables seen shaping SpaceX's future valuation include growth in Starlink subscribers, the profitability of its launch business and the development timeline for Starship.