On Friday, something historic happened. Elon Musk took SpaceX public. And we're not talking about just another IPO. We're talking about the largest IPO in history.
The company raised roughly $75 billion. And the stock surged 19% on its very first trading day. So far, that sounds like classic Musk hype. But there's a second part of the story that almost nobody noticed. The S&P 500 refused to include the stock, while other major indexes actually changed their rules to make room for it.
SpaceX debuted on the Nasdaq under the ticker SPCX. The IPO price was set at $135 per share, and the company sold more than 555 million shares. Do the math and you get around $75 billion raised. Yes, you read that right. The biggest IPO ever.
And the stock didn't stay still. It closed at $160.95, more than 19% above its offering price. At its intraday peak, the company's valuation exceeded $2 trillion.
To understand just how crazy that was, consider this: trading volume in the Class A shares surpassed 207 million shares. In dollar terms, that's roughly $33 billion traded in a single day. More money changed hands in this one stock than in both QQQ and SPY combined. A single company attracted more capital than two entire index ETFs.
This is where things get even more interesting. You might assume that a $2 trillion company automatically earns a spot in the S&P 500. Not quite.
"But why?" Because the S&P 500 has rules. And it doesn't change them for anyone, no matter how big they are.
First, there's the so-called "seasoning" requirement. In simple terms, a stock must trade publicly for 12 full months before it can even be considered for inclusion. Second, profitability. A company needs four consecutive quarters of positive earnings. Third, it must have enough shares available in the public float so that funds can realistically buy them.
And why do these rules exist? They're not arbitrary. The seasoning rule exists for a simple reason: IPOs are often highly volatile. Prices can swing wildly during the first few months. The S&P 500 doesn't want millions of ordinary investors' retirement savings tied to a stock that hasn't yet settled into a more stable trading pattern. It wants the price to mature first. Profitability serves as a quality filter. The index is supposed to represent America's leading companies. And traditionally, "leading" has meant "profitable."
In fact, during June, S&P Dow Jones even held a consultation on whether it should relax the rules for mega-cap companies. The idea was seriously considered. There was pressure. The answer, however, was no. The rules remain unchanged for everyone, with no exceptions. That means SpaceX (SPCX) stays out of the S&P 500 for at least another year. And it won't be the only one. The same applies to other giants preparing to go public.
At the same time, other major indexes did the exact opposite. They changed their rules to accommodate the stock, and they moved quickly.
The Nasdaq-100 reduced its waiting period from three months to just 15 trading days. The Russell 1000 went even further, cutting the wait to only five trading days. The shortest inclusion window of all.
"Why does that matter?" Here's the key point.
When a stock joins an index, passive funds are forced to buy it. They don't get to choose. They have to. Estimates suggest that between $22 billion and $27 billion of automatic buying could come from Nasdaq-100 and Russell-linked funds alone.
And where does that money come from? Funds sell a little Apple, a little Microsoft, a little Nvidia, and reallocate the capital. In other words, if you own an ETF that tracks the Nasdaq-100, you suddenly end up owning SpaceX whether you wanted to or not. Something you thought was completely passive ends up giving you exposure to a specific stock without you ever making an active decision.
