Wall Street Is Already Bending Its Rules to Suck More People Into SpaceX’s IPO

SpaceX, Elon Musk’s rocket, satellite, and AI company, is preparing for a highly anticipated IPO this month, aiming for a valuation of nearly $1.8 trillion and potentially raising $75 billion upon listing on Nasdaq. If successful, the company would join the ranks of the world’s most valuable publicly traded firms almost instantly. To accommodate SpaceX’s massive scale, major index providers like Nasdaq and FTSE Russell have relaxed their rules. Nasdaq’s new policy could allow SpaceX to enter the Nasdaq-100 index after just 15 trading days, while FTSE Russell’s adjustments may make it eligible for some indexes in as little as five days. This marks a significant shift from past practices, where companies like Tesla waited nearly a decade before being added to major indexes like the S&P 500. Index funds and ETFs, which mirror these benchmarks, hold trillions in assets tied to retirement accounts and pension funds. If SpaceX is included quickly, these funds may be compelled to purchase shares—even if investors never intended to hold them. This could expose ordinary investors to SpaceX’s unprofitable operations through their retirement savings without direct choice. The changes reflect broader tensions in Wall Street’s approach to mega-IPOs. After the dot-com crash, index administrators introduced safeguards to prevent speculative bubbles by requiring public companies to trade for years and demonstrate profitability before inclusion. However, with SpaceX poised to become one of the largest companies overnight, index providers are prioritizing market relevance over traditional caution. Criticism has emerged from industry figures and social media. NYSE Group President Lynn Martin questioned the rule changes on Bloomberg TV, calling market integrity a non-competitive issue. Analysts and commentators, including Ian McMillan and Zack Nelson, have accused the adjustments of favoring wealthy investors at the expense of retail investors, framing it as a potential exploitation of retirement funds. SpaceX did not respond to requests for comment on the matter.