Key Points
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SpaceX cemented its name in the record books by more than doubling the largest-ever cash raise for an initial public offering (IPO).
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Before SpaceX debuted, the U.S. Russell Equity Indexes amended their inclusion criteria, expediting the entry of Wall Street’s hottest IPO.
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However, the removal of certain investor protections, coupled with SpaceX’s unique lockup schedule, doesn’t benefit retail investors.
- 10 stocks we like better than Space Exploration Technologies ›
On June 12, Elon Musk’s SpaceX (NASDAQ: SPCX) cemented its name in the record books by more than doubling the largest-ever cash raise for an initial public offering (IPO) at $75 billion. It also closed out its first trading day with a valuation of roughly $2.1 trillion, placing it ahead of established trillion-dollar companies Broadcom and Tesla.
But SpaceX was rewriting record books long before it even went public. Thanks to several structural changes to major index inclusion, this artificial intelligence (AI) and space economy conglomerate can find its way into the Russell 1000 and Russell 3000 after today’s (June 18) trading session. However, investors would be wise to keep their distance.
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Image source: Getty Images.
SpaceX was granted fast entry by several index oversight committees
On May 1, Nasdaq (NASDAQ: NDAQ) Global Indexes rewrote the rules and investor protections governing inclusion in the Nasdaq-100. Among the most notable changes was the removal of the low float requirement and a substantial shortening of the timeline to entry from approximately three months to just 15 trading days. Including holidays, SpaceX can enter the Nasdaq-100 after July 6.
But the U.S. Russell Indexes took things one step further. In late May, the eligibility criteria were amended to shorten the timeline for large-scale IPOs to join the pertinent U.S. Russell Indexes to just five trading sessions.
To be clear, this means only the S&P 500 will exclude SpaceX shortly after its IPO.
FTSE Russell adds eligible megacap IPOs after the close of the 5th trading day.
Nasdaq adds them about 15 trading days after listing.
The S&P 500 kept its rules, so SpaceX waits the full…
— Hedgeye (@Hedgeye) June 4, 2026
Accounting for SpaceX’s debut on June 12 and the four trading days of this holiday-shortened week, it’ll have met the five-trading-day requirement to join the Russell 1000 and Russell 3000 after today. This means index funds that track the Russell 1000 and Russell 3000 will be required to purchase shares of SpaceX.
Since SpaceX only sold a little over 4% of its outstanding shares when it went public, forced purchases by index funds have the potential to artificially inflate its share price over the next couple of weeks.
Image source: Getty Images.
These structural changes can lead to the fleecing of retail investors
While fast entry provides an early boost for SpaceX, the rewriting of index inclusion rules that had protected investors from exposure to unqualified stocks has set retail investors up to be fleeced.
SpaceX’s prospectus outlines an unorthodox lockup schedule that’ll allow most insiders (Elon Musk excluded) to begin dumping a portion of their shares on unsuspecting retail investors as early as the second trading day after its first quarterly report in August. Several staggered time- and performance-based unlock periods will enable a wealth transfer from retail investors to company insiders. The (potential) artificial boost in share price from fast-entry index inclusion helps support this wealth transfer.
Great look at the SpaceX shares unlock schedule as well as the potential passive buying schedule from @JSeyff @FrancisSharoon Depending on the early post-IPO returns, this could really play with and disperse the returns of “passive” funds (which is why there’s arguably no such… pic.twitter.com/KOuEkJlngF
— Eric Balchunas (@EricBalchunas) May 28, 2026
Despite expedited index inclusion, SpaceX fails the sniff test miserably as a trillion-dollar business:
- It’s not profitable.
- It ended its first trading day at nearly 113 times its 2025 sales.
- Anthropic and OpenAI have run circles around its AI segment, xAI, on a sales growth basis.
- Its prospectus points to equity-based dilution to come (even after its record IPO cash raise).
SpaceX will undoubtedly create a lot of buzz with its rapid entry into the U.S. Russell Indexes, but retail investors would be wise not to take the bait.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Broadcom and Tesla. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
