SpaceX denied early US benchmark index inclusion as S&P maintains current rules

S&P Global reportedly said on Thursday it was not revising eligibility standards for entry into its stock market indices, dealing a significant setback to Elon Musk’s SpaceX by blocking an immediate entry for the world’s biggest ever IPO into the benchmark S&P 500 index.

The 54-year-old has played a crucial role in rewriting the IPO playbook for SpaceX in certain ways from planning to give retail investors an elevated influence in financial decisions to pushing for early index inclusion and implementing entrenchment mechanisms to gain control.

SpaceX is looking to raise $75 billion at a staggering $1.75 trillion valuation which would immediately rank it among the top 10 most valuable US listed companies. Notably, only a small fraction of the company’s total shares will actually be available for public trading.

S&P Dow Jones Indices further clarified exceptions regarding financial viability and investible capitalization weight will not be granted because a company is massive.

SpaceX must prove it is profitable under GAAP in its most recent quarter and over the cumulative total of its last four quarters. 

Meanwhile market strategists praised the decision made by S&P, adding that bending rules for large and unprofitable growth companies would hurt the index’s integrity.

S&P has left his rules unchanged as changing them would have legally forced index funds in managing trillions of dollars to buy up SpaceX shares. 

As S&P blocked early entry, major index providers are changing their rules to accommodate newly listed giant corporations like SpaceX, Anthropic and OpenAI. 

Nasdaq has already made significant changes to its rules which primarily means Nasdaq-100 index funds will soon be forced to buy a sizable portion of SpaceX’s available shares.

SpaceX is already eligible for fast-entry inclusion into both the Russell US Equity Indexes and the FTSE Global Equity Index Series. 

It is pertinent to mention that exchange operators are actively working to rewrite their rulebooks to secure high-profile tech and AI listings, fueled by the broader concern over the steady decline in the total number of US listed public companies.