Nasdaq rebalance may drive $15.5B of passive buying in SpaceX

Nasdaq will announce the next Nasdaq 100 rebalance on Friday after the market close, with changes taking effect Sept. 21. The index sets company weights using either total outstanding shares or three times a company’s free-floating shares, whichever is lower. That rule has limited SpaceX’s index weight while a large portion of its stock remained under lockup after the June IPO.

More than one billion SpaceX shares have been released from lockups since the offering, increasing the company’s free float to nearly 30% of outstanding shares from under 10% immediately after the IPO. JPMorgan Securities strategists estimate that change could raise SpaceX’s Nasdaq 100 weighting from about 1.25% to roughly 2.25% following the rebalance. With about $1.7 trillion in assets tracking the Nasdaq 100, that rise in weight would translate to roughly $15.5 billion of passive buying into SpaceX shares.

Index funds and ETFs that track the Nasdaq 100, including large funds tied to the QQQ ETF, generally must adjust holdings to match updated index weights. That mechanical rebalancing can create concentrated demand in a short period, especially for a company whose tradable share count has expanded recently.

Market participants have presented two main scenarios: some of the newly tradable shares could be sold into the buying pressure, or the buying could push the stock price higher. Ed O’Gorman, chief executive of River Wealth Advisors, warned, “The market price is going to get shoved around here by, to some degree, forced buying.” Steve Sosnick, chief strategist at Interactive Brokers, suggested, “Either some of the newly unlocked shares would sell into the presumed buying that might occur, or the stock could rally because it could get a big pickup from the demand from indexers. It should get more demand from QQQ and the like.”

After a heavily subscribed IPO in June, SpaceX shares traded with volatility and have settled into a range over the past month, generally between $133 and $150 and close to the $135 IPO price. Early lockup expirations in August coincided with the company’s first earnings release and did not produce a large insider selloff; many insiders retained holdings.

Share release schedules point to further increases in the public float. About 319 million shares held by select insiders are scheduled to become eligible for sale in the near term. More than one billion additional shares are expected to be unlocked by the end of October, and roughly 1.3 billion more would become tradable after SpaceX reports third-quarter results in mid-November. As the free float grows, SpaceX’s index weight could rise further, which would prompt additional adjustments by funds that track the Nasdaq 100.

SpaceX ranks as the sixth-largest company by market value among Nasdaq 100 constituents, with a market capitalization above $2 trillion, but its current index weight has placed it 19th by weight. The upcoming rebalance and continued share unlocks will affect the scale of passive demand and the balance of selling by newly tradable holders.