SpaceX (SPCX) is expected to see its weighting in the Nasdaq 100 rise from approximately 1.28% to 2.82% following an index rebalance scheduled for later this month. The change could prompt billions of dollars in purchases by exchange-traded funds and other passive investment vehicles that track the index, including the $481 billion Invesco QQQ Trust.

Space Exploration Technologies Corp. began Friday’s trading session at $151.21, below Wall Street’s average analyst target of $221.06. The aerospace company joined the Nasdaq 100 in July, but its initial weighting was limited because relatively few shares were available for public trading while most of its stock remained subject to lockup restrictions.

Nasdaq’s Global Index Watch published pro forma calculations late Friday indicating that SpaceX’s allocation could increase to approximately 2.82%. Nasdaq is expected to confirm the final weighting later this month, making that announcement the next key milestone for funds that benchmark their portfolios to the index.

The adjustment matters because index-tracking funds must realign their portfolios to reflect changes in the Nasdaq 100’s composition. The Invesco QQQ Trust is among those funds, with approximately $481 billion in assets. Total assets benchmarked to the Nasdaq 100 stood at roughly $1.7 trillion at the end of the second quarter. Financial analysts expect the rebalance to generate billions of dollars in new SPCX purchases by ETFs and index funds. These purchases would result from the benchmark adjustment and do not by themselves indicate a change in the funds’ individual views of the company.

Nasdaq previously modified its eligibility criteria to allow newly public large-cap companies to enter the index more quickly. However, SpaceX’s restricted free float limited its weighting when it was added. As lockup restrictions have expired, more shares have entered public circulation, increasing the company’s free float and contributing to the projected weighting increase. Further lockup expirations are scheduled and could lead to additional weighting changes in later rebalances.

SpaceX’s first lockup expiration occurred in August at the time of its first earnings announcement as a publicly traded company. Although there were concerns that a large number of newly available shares could pressure the stock, the expected selling pressure did not materialize. Company insiders largely retained their holdings through another lockup expiration one week later.

Institutional Interest

Baird Financial Group initiated a position of 78,590 SPCX shares during the second quarter, valued at approximately $13.4 million. Other smaller institutional investors also opened positions during the period, including Syntax Research, Atwood & Palmer, and Marquette Asset Management.

SPCX has traded within a 12-month range of $104.83 to $225.64. Its 50-day moving average is $134.79, and its market capitalization is approximately $1.98 trillion.

Wall Street’s consensus rating for the stock is “Moderate Buy,” with an average price target of $221.06. Goldman Sachs has maintained a Buy rating and a $220 price objective, citing expansion opportunities involving artificial intelligence, Starship, and Starlink. Guggenheim and Argus have recently initiated or raised their ratings to Buy.

Quarterly Results and AI-Computing Contract

SpaceX reported its second-quarter financial results on August 4. Revenue reached $7.81 billion, a 91.9% increase from the same period a year earlier. The company reported a loss of $0.09 per share, which was $0.17 better than the consensus forecast for a $0.26 loss.

Analysts currently project full-year earnings per share of -$0.15. At the same time, a lockup release involving 319 million shares has created potential downward pressure, while some analysts have raised concerns about SpaceX’s valuation of approximately 98 times sales.

SpaceX Chief Financial Officer Bret Johnsen also announced a new AI-computing contract valued at approximately $1.11 billion per month. Revenue from the contract is scheduled to begin on December 1. Alongside Nasdaq’s final weighting decision, further lockup expirations and the contract’s scheduled revenue start are the main developments identified in the article’s near-term timeline.

Source: Blockonomi