MW In 'wild' twist, SpaceX won't be allowed early entry to the S&P 500 after all
By Emily Bary
S&P Dow Jones Indices considered whether to loosen index requirements but opts to keep its policies unchanged
While other index providers have amended their rules in order to speed up entry for major companies like SpaceX, S&P Dow Jones Indices is standing its ground.
In a surprising development, S&P Dow Jones Indices has decided against policy changes that would have allowed SpaceX and other gigantic technology companies to see quicker index entry after their initial public offerings.
The operator of the S&P 500 SPX had been conducting a review of whether to exempt newly public megacap tech companies from profitability requirements as well as a rule stipulating that they have to wait at least a year before they're eligible to join the benchmark index.
Late Thursday, however, S&P Dow Jones Indices announced "there will be no changes to existing methodology for this index family."
Nasdaq has already amended its policies, with a spokesperson saying at the time that its new rules, which open the door to index entry within 15 days, are designed to ensure that the Nasdaq-100 NDX "remains timely and representative" of the market. And FTSE Russell has made it so companies can make it into the Russell Top 500 index after the close of only the fifth trading day following an IPO.
See more: Nasdaq paves the way for SpaceX and OpenAI to quickly join a premier index after IPOs
In that context, Eric Balchunas, a senior ETF analyst at Bloomberg Intelligence, called the S&P Dow Jones Indices announcement "wild," in a post on LinkedIn. "This could create significant return dispersion [between] 'passive' indexes," he added.
In its review of whether to change its own policies, S&P Dow Jones Indices was exploring whether the "overall index's effectiveness as a benchmark" would be lessened without huge new public companies, it said in late April. But the index provider said Thursday that it it determined exemptions "should not be granted solely based on market capitalization" and that its decision to stand by its original rules "preserves core index principles by maintaining consistent application of these key requirements."
"Although there may be trade-offs between strict adherence to these eligibility requirements and broad representativeness, the current methodology provides substantial market coverage and sector balance," S&P Dow Jones Indices added in its latest release.
The prospect of rule changes had been controversial, as many index funds track the S&P 500. That meant that ordinary investors could have found themselves exposed to SpaceX $(SPCX)$ - and the volatility expected to accompany its stock after the IPO - even though the Elon Musk-led company doesn't meet the profitability requirements that other S&P 500 members have had to clear before they could be added.
Read: Elon Musk's SpaceX IPO could quickly launch into your retirement plan
SpaceX is due to begin trading next Friday, and other blockbuster IPOs could follow. Anthropic has already filed confidential paperwork for an offering.
Alex Matturri, a former CEO of S&P Dow Jones Indices, wrote on LinkedIn that his one-time employer was "the adult in the room" for sticking with its original policies.
"Given all the other index providers bending over backwards to change their methodologies, it's good to see S&P DJI not make any changes," he wrote.
-Emily Bary
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(END) Dow Jones Newswires
June 04, 2026 22:11 ET (02:11 GMT)
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