Space stocks saw a downturn in overnight trading following an announcement from S&P Global, which stated that it would not alter eligibility rules for newly listed megacap companies for inclusion in the S&P 500. This news dealt a significant blow to expectations surrounding SpaceX’s upcoming IPO, which many investors believed could spark substantial passive-investment activity across the sector.
In the wake of this announcement, several space-related stocks experienced declines. AST SpaceMobile (ASTS) fell by 2%, while Rocket Lab USA (RKLB) and Redwire (RDW) each dropped by 3%. Sidus Space (SIDU) saw a smaller reduction of 1%. This decline occurred following a previous day of optimism tied to a roadshow hosted by JPMorgan, where CEO Elon Musk detailed ambitious plans for over 100,000 Starlink satellites and a vision for orbital AI infrastructure.
The volatility in space stocks comes as investors express concerns regarding SpaceX’s eye-popping valuation amid its reported $4.94 billion net loss in 2025. The company is looking to sell 555.6 million shares at a price of $135 each, potentially raising $75 billion and placing its valuation at approximately $1.77 trillion, or over $1.8 trillion on a fully diluted basis. This offering is set to price on June 11, with trading anticipated to commence the following day.
In a decision affecting SpaceX’s inclusion in significant stock indices, S&P Dow Jones Indices confirmed that it would maintain its current criteria for the S&P 500, the S&P MidCap 400, and the S&P SmallCap 600. The index provider emphasized that changes in eligibility for these indices would not be made based solely on market capitalization. This ruling means that companies must demonstrate positive GAAP earnings over the latest quarter and the previous four quarters to qualify for inclusion.
While S&P’s decision represents a hurdle for SpaceX, it did approve modifications for the S&P Total Market Index and related indices, allowing larger IPOs to qualify for accelerated inclusion under updated float-adjusted market capitalization requirements. This could facilitate faster inclusion for certain companies, though SpaceX is currently facing restrictions.
Investor sentiment had been hopeful that a rule change might have expedited SpaceX’s entrance into the S&P 500, which would likely have necessitated trillions of dollars in passive funds to purchase SpaceX shares soon after its IPO. Influencer Alexandra Merz, CEO of L&F Investor Services, previously predicted that if SpaceX were to gain quick index inclusion, it could compress the typical IPO demand cycle. Following S&P’s announcement, she voiced her discontent with the decision and suggested that it could push investors toward Nasdaq 100 index funds instead.
Meanwhile, Nasdaq has revised its rules to ease the pathway for newly listed megacap firms like SpaceX to join the Nasdaq-100, with eligibility potentially attainable after a mere 15 trading days. This development could require Nasdaq-100 index funds to acquire a significant portion of SpaceX’s publicly available shares.
Amid this backdrop, sentiment among retail traders on platforms like Stocktwits varied across different space stocks. SpaceX maintained an “extremely bullish” sentiment with high message volume, whereas ASTS received a more bearish outlook. In contrast, RKLB was viewed neutrally, RDW exhibited “extremely bullish” sentiment, and SIDU retained a “bullish” status.
Over the past year, stock performance in this sector has shown considerable gains, with RKLB surging by 346%, ASTS climbing 274%, SIDU advancing 218%, and RDW increasing by 26%. As the market prepares for SpaceX’s IPO, all eyes will be on how these stocks continue to react to the evolving landscape in the space investment arena.
