SpaceX To Get Weighting Boost In Nasdaq 100 After Rebalance

(Bloomberg) -- SpaceX is set to get a larger weighting in the Nasdaq 100 later this month, a change that could trigger billions of dollars of buying by passive funds tied to the benchmark.

Its weighting is expected to rise to about 2.82% from roughly 1.28%, based on pro forma data from Nasdaq's Global Index Watch circulated late Friday. The final weighting will be determined later this month. Wall Street expects the change to result in billions in new buying by index funds and exchange-traded funds that track the benchmark.

SpaceX's relatively small weighting dates to its addition to the gauge in July. Most of its shares were still locked up and unavailable for public trading, limiting the weighting it received even after Nasdaq changed its rules to allow newly listed large-cap companies to enter sooner and eliminated a requirement that at least 10% of their shares be publicly tradable.

As those lockups expire, more SpaceX shares are becoming available for trading. That increases the company's free float, which can, in turn, increase its weighting in the Nasdaq 100.

More adjustments may follow. Additional SpaceX shares are scheduled to come out of lockup, potentially lifting its index weighting again.

SpaceX's first lockup expiration came in August, alongside its first earnings release as a public company, prompting concern that a surge in newly tradable shares could overwhelm demand. The selloff didn't materialize, including after a second lockup expired a week later. Insiders largely held onto their stakes and the stock held up.

The Nasdaq 100 tracks the largest non-financial companies listed on the Nasdaq Stock Market. There is no minimum market capitalization for inclusion, though companies must have average daily trading volume of at least 200,000 shares and meet other requirements.

A higher weighting matters because passive funds tied to the benchmark must adjust their holdings accordingly. They include the $481 billion Invesco QQQ Trust Series 1, known as QQQ. Roughly $1.7 trillion in assets tracked the Nasdaq 100 as of the end of the second quarter, according to Nasdaq.

With assistance from Yiqin Shen and Carmen Reinicke.