When a $2 trillion company by market capitalization trading at a price-to-sales ratio of around 100 times joins an index quickly, beware.
The Nasdaq-100 index will join the benchmark technology index after the market closes on July 6. This will force passive investing ETFs that track the index to buy SpaceX (SPCX). With over $800 billion tracking the Nasdaq-100, the below 1.0% weighting of SPCX stock will draw $8 billion in purchases. ETFs like the QQQ will add this recent IPO.
In contrast, the S&P 500 (SPY) reinforced its requirements for a stock’s inclusion. A firm must report positive profits in the last quarter, along with the sum of the last four quarters. In the last week, S&P Global (SPGI) fell by 67 bps and is down around 1.8% in the last month. Nasdaq (NDAQ) lost 4.47% last week and is down by 13.2% in the month.
Nasdaq’s inclusion of SpaceX did not hurt its share price. It faces meaningful competition from regulators approving Bitcoin (BTC-USD) perpetual futures on Kalshi. Kalshi is a prediction market. That development, on June 2, sent shares of CME Group (CME) and Cboe Global Markets (CBOE) as well.
BTC-USD fared poorly in the month, too. It closed on the weekend at $60,165, down by nearly 18%.
Your Takeaway
Investors should re-evaluate their exposure to the QQQ ETF. Even though a sub 1% exposure is negligible, it still matters. If SpaceX stock falls below $100, investors will suffer a small, needless loss.
Tech Insider
