MW Here's who benefits if the S&P 500 eases its rules for 'megacap' companies
By William Gavin
It's not just SpaceX, Anthropic and OpenAI: Stripe, Databricks and Waymo could also face easier index entry if they choose to go public
SpaceX's planned initial public offering has pushed index providers to consider new rules that would make it easier for institutional investors to hold stakes in large, newly public companies.
Newly proposed S&P 500 rule changes are expected to benefit SpaceX, OpenAI and Anthropic as they work toward reported initial public offerings later this year. But other private companies may be able to capitalize on the changes as well.
The suggested rules, which S&P Dow Jones Indices has put up for review, specifically concern "megacap" companies, which could be eligible for quicker entry into the S&P 500 with a relaxation of the profitability requirement.
But what is a megacap company, actually? According to the criteria of S&P Dow Jones Indices, a company would need a market capitalization equal to or greater than the 100th-largest company in the S&P Total Market Index.
Based on Tuesday's close, that would mean a company needs to be at least as valuable as Bristol Myers Squibb $(BMY)$, which ranked 100th in the S&P TMI with a market cap of nearly $116.3 billion, according to Dow Jones Market Data.
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Entry into an index can boost a company's appeal among institutional investors. Many funds track specific indexes and adjust their holdings when companies are added to or removed from those indexes.
The proposed rule changes were widely seen as an overture to SpaceX, Anthropic and OpenAI, which likely wouldn't meet the existing profit requirements for index entry. They would also have to wait at least 12 months before joining the S&P 500, whereas the new fast-track proposal narrows that time frame to six months.
Using S&P Dow Jones Indices' definition of a megacap company and data from Crunchbase, at least six private U.S. companies could be considered megacaps if they were to go public today. Beyond the biggest three, payment-technology firm Stripe, data-warehousing company Databricks and robotaxi startup Waymo all clear the $116.3 billion mark.
Stripe President John Collison, however, told CNBC recently that an IPO would be a "solution in search of a problem." Representatives for SpaceX, OpenAI, Anthropic, Databricks and Waymo did not respond to requests for comment. Waymo is owned by Alphabet $(GOOG)$ $(GOOGL)$.
S&P Dow Jones Indices' existing rules have prevented fan favorites from swiftly entering the S&P 500. It took years for Tesla $(TSLA)$ to meet the profitability requirement, and even after it did, the index committee didn't add the company right away.
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At least two other index providers have discussed their own fast-entry rules.
Nasdaq in March approved a rule that went into effect on May 1. It cuts the time for a newly public large company to make the roster of the Nasdaq-100 to less than a month. Nasdaq previously told MarketWatch that the updated rules would allow passive managers to easily replicate the index.
SpaceX was making early inclusion on the Nasdaq-100 a condition if it were to list on the technology-heavy exchange, Reuters reported.
FTSE Russell, a subsidiary of the London Stock Exchange Group (UK:LSEG), is also exploring its own fast-entry rule for "sizeable" IPOs. The firm said that while it has historically omitted eligible IPOs from entering the Russell U.S. Equity Indexes for months at a time due to its quarterly schedule, clients advised that it may be better to more quickly add firms like SpaceX or OpenAI to its indexes.
"This would ensure that the Russell U.S. Equity Indexes are more representative of the U.S. equity market sooner, and fast entry index inclusion enables passive index trackers to participate in large IPOs with minimal tracking error," FTSE Russell said.
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-William Gavin
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(END) Dow Jones Newswires
May 06, 2026 09:55 ET (13:55 GMT)
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