Did Nasdaq make the right move changing rules for SpaceX?
Nasdaq recently changed its rules to speed up SpaceX's entry into its index - a move that has concerned some analysts, who fear it could be risky for Americans' retirement funds.
SpaceX CEO Elon Musk had requested the change, but Nasdaq said it was already planning the modification. The rocket-launching, satellite internet company will now almost immediately enter the Nasdaq 100. Typically, companies don't enter the index for a year. The reason is new stocks are often volatile and have a limited history of reporting finances.
The changes mean a large swath of index funds - which millions of Americans own in their retirement funds, pension plans and personal portfolios - are poised to hold SpaceX shares soon after the company goes public, The New York Times writes.
Artificial intelligence companies OpenAI and Anthropic could also make the Nasdaq 100 quickly after they go public. Nasdaq President Nelson Griggs said in May on Bloomberg TV that SpaceX and the AI companies are so big that it was important for investors to have access to them.
Standard & Poor's said it would not change its rules to add SpaceX or others quickly to the S&P 500. Critics argued SpaceX had stayed private longer than your normal new company added to index and should be thought of differently than a startup raising funds.
Question:Did Nasdaq make the right move changing rules to speed up index entry for companies like SpaceX?
Economists
Norm Miller, University of San Diego
YES: SpaceX is barreling toward index inclusion not because it's a sound investment, but because its sheer valuation forces index committees' hands. Companies like SpaceX and OpenAI have stayed semi‑private far longer than normal, so this "listing moment" looks far more like an investor exit ramp than a genuine capital raise. That dynamic should give anyone pause before piling into these names - or blindly accepting the exposure that broad index funds will soon impose.
David Ely, San Diego State University
NO: Speeding up index entry will benefit Nasdaq and large private companies undergoing IPOs that gain faster entry. However, passive investors in impacted index funds will be forced almost immediately to hold positions in SpaceX. Similar exposure to Anthropic and OpenAI could follow if these companies go public as expected. The change in rules exposes passive investors to greater risk since new stocks are often volatile shortly after an IPO.
Ray Major, economist
NO: More than half of all investment and retirement funds are tied to index funds that are legally obligated to automatically buy SpaceX. This creates artificial demand and volatility while forcing a massive restructuring of fund allocations. Because most everyday investors have index funds in their portfolio, the risk of these transactions is transferred to the average person. Waiting a year before allowing new stocks to enter the index allows the price to settle and reduces the risk to average investors.
Caroline Freund, UC San Diego School of Global Policy and Strategy
NO: Many of the largest recent IPOs have lost value in their first year, and it's telling that the companies themselves are pushing for faster index entry. For new issues, inclusion has to inflate some valuations at entry. Clearing those thresholds triggers automatic buying from index funds, much of it pension money. If they underperform, retirement savers pay the price. Why fix something that isn't broken?
Kelly Cunningham, San Diego Institute for Economic Research
YES: Complexities of the stock market and financial transactions are beyond the full comprehension of most investors, particularly passive investors with personal retirement and pension plans. Individual retail investors willing to spend the time and effort to research and understand publicly available information can make their own investment decisions. Professional investors are generally familiar with major companies such as OpenAI, Anthropic and SpaceX to assess their potential influence and make informed recommendations for major market indexes.
Alan Gin, University of San Diego
YES: The normal rules for listing a company on a stock index are appropriate for new companies that don't have much of a track record. For more established companies, such as SpaceX, it would be appropriate to loosen the listing rules. They are going to be big players in the stock market, and not listing them means that investors in index funds would be missing a significant part of the market in their portfolios.
James Hamilton, UC San Diego
YES: SpaceX is going to be a major presence in capital markets for decades to come. Some analysts have warned that the IPO is overvalued, and I share their concerns. But if you follow a market-weighted investing strategy, you need to hold some SpaceX because this is where a lot of market capital is going to be. By allowing quick inclusion in the Nasdaq-100 index, the exchange is giving index-fund investors what they want.
Executives
Chris Van Gorder, Scripps Health
YES: Waiting a year is unlikely to change volatility. Companies like SpaceX are coming to market after an extended period of time being private and after having generated billions in revenue. That's different than your traditional "tech" IPO that might barely generate revenue and generate huge losses.
Jamie Moraga, Franklin Revere
YES: Previously, IPOs could wait up to a year to join the index, and this change allows multibillion-dollar mega-cap IPOs like SpaceX to enter after 15 trading days. For the index, it attracts desirable high-growth companies that may have delayed going public, boosting the market and giving investors faster access to higher risk, higher return opportunities. Newly public companies gain liquidity and price support from passive funds, while investors can adjust allocations if needed. Nasdaq can also revise rules if downsides emerge.
Mark Kersey, San Diego County Taxpayers Association
YES: SpaceX is one of the most prominent and innovative private companies on the planet. Demand from investors for the company's shares will be high, and it is important that the Nasdaq 100 reflect that. Given the index's tech-heavy bent, as well as SpaceX's massive market capitalization, it makes sense that the company would be added right after it goes public.
Phil Blair, Manpower
NO: During this time of constant turmoil in the market, we should not be changing policies that have been in place and worked for many years to placate a one-off request.
Gary London, London Moeder Advisors
YES: (But with reservations). While SpaceX is a new kind of company (literally, out of this world), it has a single money-producing enterprise in Starlink. Its other ventures lose money and there is no assurance that will change in the foreseeable future. Starlink has been a Wi-Fi game changer, but it will soon have competitors. Fast-tracking SpaceX and other nascent companies will likely inflate their initial price, and might be a mistake that catches investors flat-footed.
Bob Rauch, R.A. Rauch & Associates
YES: Speeding up index entry was the right move. When a company as large as SpaceX goes public but isn't added quickly, the Nasdaq benchmark understates the real market and overweights smaller legacy names. That creates a tracking error for index funds and misallocates capital. Faster inclusion simply aligns the index with economic reality and gives investors an accurate picture of market leadership.
Austin Neudecker, Weave Growth
NO: Index funds exist to provide broad, rules-based market exposure, not to accelerate access to popular companies. Nasdaq's waiting period served a vital purpose: allowing time for financial stability, disclosures and operational scrutiny before our index accounts automatically invest. SpaceX may prove worthy of inclusion, but will immediately carry weight in investors' portfolios. Changing the rules creates the appearance that the index is becoming marketing rather than governance. Consistent standards build trust. Special exceptions erode it.
Have an idea for an Econometer question? Email me at phillip.molnar@sduniontribune.com. Follow me on Threads: @phillip020
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