SpaceX Joins Nasdaq-100 on July 7. Its Stock is Still Not a Buy

The biggest IPO successful past is astir to scope different milestone, but astute investors shouldn't confuse forced buying with lasting value.

On July 7, SpaceX (NASDAQ:SPCX) volition officially articulation the Nasdaq-100 aft the Nasdaq speech rewrote its eligibility rules to let recently nationalist mega-cap companies into the scale without waiting done the accepted seasoning period. That determination guarantees billions of dollars of passive buying from scale funds, ETFs, communal funds, and organization investors that way the benchmark. 

While that request could springiness the banal a short-term lift, it doesn't lick the valuation concerns that person already begun weighing connected shares. Let's look astatine wherefore the scale summation is important -- and wherefore it inactive isn't capable to marque SpaceX banal a bargain today.

Passive Funds Are About to Become Automatic Buyers

SpaceX's blockbuster IPO wasn't conscionable astir raising capital. Getting into large marketplace indexes rapidly was besides portion of the equation.

Previously, Nasdaq mostly required recently nationalist companies to found a trading past earlier joining the Nasdaq-100. Earlier this year, however, the speech adopted caller rules allowing qualifying mega-cap IPOs to bypass that waiting period. According to Nasdaq's regularisation filing with the Securities and Exchange Commission, the changes were designed to guarantee that exceptionally ample caller listings are reflected successful the benchmark sooner alternatively than later.

Trillions of dollars are invested successful products tied to the Nasdaq-100. Every ETF, scale communal fund, and organization portfolio designed to reflector the benchmark indispensable acquisition SpaceX shares careless of valuation.

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That buying isn't based connected net forecasts oregon discounted currency travel models. It's mechanical. History shows scale additions often make a impermanent request surge arsenic passive managers rebalance their portfolios. Given SpaceX's size, that question of buying could nutrient a bounce successful the banal astir its July 7 inclusion.