Index Funds Are Being Forced to Buy SpaceX Due to Nasdaq Rebalance
The recent Nasdaq 100 index rebalance in September significantly increased the weighting of SpaceX (SPCX), forcing passive funds like Invesco QQQ (NASDAQ:QQQ) to buy more shares regardless of their preferences. This shift occurred as post-IPO lockups expired, expanding the public float and increasing SPCX's market capitalization within the index. Despite reporting a $541 million net loss in its last quarter on $7.81 billion of revenue, SpaceX has seen strong growth metrics including 92% year-over-year revenue increase and an adjusted EBITDA rise by 191%. However, this forced buying comes with potential market volatility due to upcoming lockup expirations that could flood the market with new supply. The situation highlights how index rebalances can influence stock ownership for fund holders. As SpaceX's float expands, it not only affects its weight in indices but also introduces more tradable shares into the open market.
Topics: nasdaq-100 passive_funds qqq spacex