How SpaceX's inclusion in the S&P and Nasdaq 100 could impact investors
Speakers
Todd Sohn
— Chief ETF Strategist, Strategas Securities
Peter Haynes
— Head of Index and Market Structure Research, TD Securities
Summary
CNBC’s Dominic Chu hosts Peter Haynes and Todd Sohn to discuss the upcoming SpaceX IPO and its impact on ETFs and indices. Haynes explains that while the IPO is important, the major index events will come later this year when lock-up shares are released, and S&P’s decision not to fast-track mega caps means SpaceX won’t join the S&P 500 for at least a year. Todd Sohn argues that this creates an opportunity for investors to seek SpaceX exposure via the Nasdaq 100 and Russell 1000 growth, potentially leading to index dispersion and outperformance over the S&P 500.
- SpaceX IPO is a large event but market infrastructure is prepared.
- S&P 500 will exclude SpaceX for at least a year due to committee decision on mega-cap eligibility.
- Key index rebalancing milestones for SpaceX occur in June and later in 2025 when lock-up shares become free.
- Todd Sohn suggests investors will pivot to Nasdaq 100 and Russell 1000 growth for earlier SpaceX inclusion, creating dispersion.
- Thematic space ETFs face questions about asset stickiness post-IPO.
- Peter Haynes highlights the efficiency of index rebalancing mechanisms and the role of hedge funds in providing liquidity.
- Active ETF managers may find alpha in how they weight SpaceX.
Ideas
Prefer Nasdaq 100, Russell 1000 over S&P
Because the S&P 500 will exclude SpaceX for at least a year due to the index committee's decision not to fast-track mega-cap IPOs, investors seeking SpaceX exposure will turn to benchmarks that include it sooner, such as the Nasdaq 100 and Russell 1000 Growth. This could drive outperformance of those indices relative to the S&P 500 and create index dispersion similar to the Korea EM debate.
Prefer Nasdaq 100, Russell 1000 over S&P
Because the S&P 500 will exclude SpaceX for at least a year due to the index committee's decision not to fast-track mega-cap IPOs, investors seeking SpaceX exposure will turn to benchmarks that include it sooner, such as the Nasdaq 100 and Russell 1000 Growth. This could drive outperformance of those indices relative to the S&P 500 and create index dispersion similar to the Korea EM debate.
