SpaceX rises 3% as Russell 1000 inclusion fuels index fund demand

SpaceX (SPCX) rose 3% to above $158 on Friday as investors positioned for the company's addition to the Russell 1000 Index after the closing bell.

"The Russell inclusion creates a forced buyer in every passive fund tracking the index, but the small float means the actual share demand is modest relative to the headline," said Zachary Evens, an analyst at Morningstar.

The stock has surrendered most of the gains from its record-breaking June 12 debut, when it surged to $225 from an issue price of $135. It now trades just 5% above its $150 listing price and has fallen 10% over the past five sessions. SpaceX will enter the Russell 1000 with a 90.4% growth and 9.6% value classification, though its float-adjusted market cap of $109.2 billion gives it just a 0.15% weighting in the CRSP US Total Market Index.

The inclusion marks the first of several benchmark additions that could broaden SpaceX's investor base. The stock becomes eligible for MSCI indexes on Friday and will join the Nasdaq-100 on July 6, though it cannot enter the S&P 500 until at least June 2027. Lock-up expirations over the next year will gradually increase the public float from less than 5% today, with Evens estimating the ratio will stay below 30% after 180 days and under 50% after 366 days.

The company sold less than 5% of its shares in the IPO, limiting the stock's representation in passive portfolios. Many indexes use float-adjusted market capitalization for weightings, making SpaceX the 106th-largest holding in the CRSP benchmark.

"The free float will increase with more insider sales, but there's also going to be increased demand from the index funds, and those two may offset each other," said Nikolai Roussanov, a professor of finance at the University of Pennsylvania.

CFRA analyst Keith Snyder said insider selling may be slower than typical post-IPO lock-up expirations because of loyalty to Chief Executive Officer Elon Musk. "Your average insider is more faithful to the company than a standard insider would be," Snyder said. "I think a lot of people are going to hold on because they believe in the long-term story."

The stock's recent weakness — down 10% over five sessions — reflects broader reassessment of lofty valuations and cooling enthusiasm around artificial intelligence spending, according to the source material. OpenAI is reportedly considering delaying its own IPO following SpaceX's post-debut struggles.

This article is for informational purposes only and does not constitute investment advice.