But in its final decision, S&P Dow Jones Indices said that “no changes will be made to the eligibility criteria, including the financial feasibility screen, seasoning period, or minimum IWF.” Even after the standard year-long wait, SpaceX, Anthropic and OpenAI may struggle to deliver the consistent profitability needed to qualify for the S&P 500.
Money Rules and Exceptions
The bullish entry into the S&P 500 would trigger $14 billion of passive fund buying for SpaceX, according to Bloomberg Intelligence. Bloomberg’s investment research arm has also estimated that OpenAI could gain more than $8 billion, and Anthropic could earn $4.6 billion from similar passive purchases initiated by their S&P 500 listings.
That’s because $7.5 trillion in passively managed funds – popular among both individual investors and institutional investors – follow the S&P 500 by purchasing shares of companies according to their proportional representation in the S&P 500 index. For example, brokerage giants Vanguard and Fidelity both offer passive investment funds that track the S&P 500 structure.
However, according to Quartz, S&P Dow Jones Indices “made a concession” by changing the investable weighting factor rules for “low-profile benchmarks” such as the S&P Total Market Index and the Dow Jones US Total Stock Market Index. This may allow IPOs to enter those indices faster.
In contrast, the Nasdaq Stock Exchange changed their rules Allowing SpaceX to enter the Nasdaq-100 index within 15 trading days instead of the usual three months. Similarly, the FTSE Russell Index provider decided to give SpaceX and other follow-on companies quick access On the Russell Top 500 index at the end of the fifth trading day after the IPO.
The denial of accelerated S&P 500 entry for SpaceX comes just days after Morningstar analysts called SpaceX “significantly overvalued” in the lead up to its IPO. The investment research firm valued SpaceX at $780 billion – less than half of SpaceX’s $1.75 trillion IPO target – based primarily on the strength of SpaceX’s Starlink satellite service and rocket launch business.
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