On June 12, 2026, SpaceX President and COO Gwynne Shotwell, along with company executives, celebrated the successful listing of SpaceX at the Nasdaq exchange.
In many respects, SpaceX is remarkably similar to Bitcoin: it is unprofitable, generates no income, experiences extreme price swings, and has an equal number of detractors and devoted supporters.
However, there is one crucial distinction: no one forces investors to allocate funds to Bitcoin.
For the multitude of financial advisors and fund managers heavily invested in index funds, the situation with SpaceX is the exact opposite. This summer, the stock is set to be included in several major exchange-traded funds (ETFs), which form the core holdings for the vast majority of American investors. Consequently, these passive investors will find themselves involuntarily holding shares in this company, which embodies Elon Musk's grand ambitions.
Ayman Sayed, a partner at the registered investment advisory firm Strategic Investment Solutions in Orland Park, Illinois, stated: "Vanguard and other large asset managers following the new Nasdaq rules are harming American savers. My holding in the Vanguard Growth Index ETF (VUG) will soon include SpaceX. This is why I prefer Dimensional Funds; they do not simply replicate index constituents. This index adjustment will cause significant market distortion."
Note: VUG refers to the Vanguard Growth Index ETF.
Index providers such as CRSP Market Indexes, Nasdaq, FTSE Russell, and MSCI have all completed rule adaptations to prepare for the inclusion of SpaceX in their respective large-cap indices. Following a 4.5% rise on Tuesday, SpaceX's market capitalization surged to $2.7 trillion, making it the world's fifth-largest publicly traded company. Its sheer size is certain to increase the overall volatility of the indices it joins.
On Tuesday, SpaceX's implied volatility was near 120, approximately three times that of the BlackRock Bitcoin ETF (IBIT). By the market close, it was the most volatile constituent within the S&P 500 and Nasdaq 100 indices. It also stands as the only company with a market cap exceeding one trillion dollars that has yet to turn a profit.
The impact of including SpaceX in major indices is bound to be substantial, especially when compared to the inclusion of Strategic Group (Strategy) in the Nasdaq 100 index in December 2024, when its market cap was under $100 billion. The difference in scale is immense.
Kevin Kelly, co-founder of the research firm Delphi Digital, established in 2018 by former Bloomberg analysts, commented: "If investors are extremely averse to volatility, perhaps only bonds are suitable for allocation right now. The AI sector has attracted a flood of speculative capital, with many AI stocks trading like early-stage cryptocurrencies. Coupled with the polarized market sentiment on SpaceX, even if its IPO valuation was only six or seven hundred billion dollars, many traditional sell-side institutions would struggle with allocating to this stock."
Investors concerned about SpaceX's extreme price swings may find some solace: this period of high volatility is unlikely to persist indefinitely. In longer-dated options contracts expiring after the insider lock-up period, the decline in SpaceX's implied volatility has been far more pronounced than for other high-volatility stocks like Micron Technology Inc.
Noel Smith, Chief Investment Officer and founder of Convexity Capital Management, believes that once integrated into the passive trading ecosystem of major indices, the stock's currently elevated volatility is expected to gradually stabilize.
Smith stated via text message: "Once included in the indices, SpaceX's volatility will inevitably decrease; a level of 120 cannot be sustained long-term. With high-frequency trading providing continuous market-making and rebalancing, and passive funds avoiding frequent selling, the stock's liquidity will improve dramatically."
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