Elon Musk’s SpaceX is set to enter the public markets with an ambitious valuation exceeding $1.75 trillion, a move that will inevitably impact millions of Americans, particularly those invested in broad index funds. Notably, investors may find themselves owning a stake in SpaceX without directly purchasing shares, thanks to changes in index inclusion criteria that allow for unprofitable companies.
In a formal filing with the U.S. Securities and Exchange Commission on May 20, 2026, SpaceX outlined its financial position, reporting anticipated revenues of $18.7 billion for 2025, accompanied by a GAAP net loss of $4.9 billion. The company’s satellite-internet service, Starlink, contributed significantly, generating approximately $11.4 billion in revenue. However, losses primarily stem from the AI segment, following SpaceX’s acquisition of xAI in early 2026.
Musk is expected to retain approximately 42% ownership of the equity while holding the majority of voting power through Class B shares, which afford him ten votes each. This setup complicates any potential move to remove him from leadership positions. The public offering will release a mere 5% of company shares, with up to 30% allocated for retail investors—significantly higher than the typical structure for IPOs of this magnitude.
Historically, index funds have avoided including unprofitable companies, a precautionary measure adopted post-dot-com crash to protect passive investors from the volatility of money-losing firms. By implementing stringent eligibility criteria, including a requirement for four consecutive quarters of profitability, index providers aimed to safeguard investor interests. However, SpaceX’s impending IPO marks a shift in this longstanding rule.
Recent adjustments to index protocols have opened the door for swift inclusion of sizeable IPOs like SpaceX. The CRSP index, integral to Vanguard’s Total Stock Market fund, recently adopted a fast-track rule allowing an IPO to secure a position after just five trading days, provided it meets specific market cap requirements. This adjustment means that SpaceX will likely find its way into the CRSP index shortly after its debut, despite not fulfilling the traditional public float criteria.
Similarly, the FTSE Russell index has also established a fast-entry mechanism, inviting companies meeting market cap thresholds to join more rapidly than before. Nasdaq’s rules now allow inclusion in the Nasdaq-100 within 15 trading days for significant IPOs. However, the S&P 500 remains the slowest, still deliberating adjustments that could eventually embrace large, unprofitable companies.
The influx of capital from index funds that must accommodate SpaceX could be substantial, with projections of forced buying between $15 billion to $30 billion across major indices. This demand, occurring against a backdrop of limited available shares, emphasizes the unique circumstances surrounding SpaceX’s public offering—a company poised to enter the marketplace with a remarkably small public float.
The decision to fast-track SpaceX’s inclusion has sparked debate among commentators, questioning the balance between safeguarding passive investors and adapting to market realities. As the dynamics of index composition evolve, there is concern that abandoning established rules could undermine the foundational purpose of these benchmarks.
For individuals holding a diverse portfolio in broad indices, SpaceX’s impending presence is almost a certainty. Investors can gain exposure organically through their existing funds, which automatically adjust to include the new entrant over time. However, buying shares directly at IPO presents a different risk, particularly given the high valuation ratio to revenue and the potential for price suppression due to a staggered release of insider shares.
As discussions about future IPOs of large companies like OpenAI and Anthropic surface, it remains to be seen how these companies will navigate the altered landscape and whether similar fast-track policies will apply. For now, investors should remain informed of developments, as the trajectory of index compensation continues to unfold in response to market advancements.
