Goldman Sachs analyzes the SpaceX (SPCX.US) index effect: valuation, volatility, and concentration are almost “insensitive”

According to Jinse Finance APP, Goldman Sachs strategist Ben Snyder recently published a research report pointing out that despite numerous market concerns ahead of SpaceX's (SPCX.US) record-setting IPO, the stock's rising weighting in major market indexes has had virtually no disruptive effect on index valuations and performance.

Nearly five months after going public, about one-third of SpaceX's shares have become freely tradable, compared to just 5% at the start of its listing. Snyder and his team wrote in a November 6 report that the expansion of freely tradable shares has increased SpaceX's weight in multiple benchmark indexes, prompting index-tracking funds to raise their allocations to the stock.

For index investors, this conclusion means that including SpaceX has not significantly changed the overall characteristics of their portfolios. Goldman Sachs' comparative calculations show that with or without SpaceX, the Nasdaq 100 Index sees only slight changes in valuation, volatility, and constituent concentration.

Nasdaq 100 moderately affected

Among the major broad-based US indexes covered in the report, SpaceX has the highest weighting in the Nasdaq 100 Index, at about 2.5%.

Goldman Sachs estimates that the Nasdaq 100’s current price-earnings ratio, based on expected earnings for the next 12 months, is 19.5; if SpaceX is excluded, the valuation drops to 19.2.

Since SpaceX was included in the index, the Nasdaq 100 Index has declined by 10.3% cumulatively; if SpaceX is excluded, the index falls by 10%. After SpaceX’s inclusion, the index’s annualized volatility, which measures price swings, has also risen only slightly.

In both calculation scenarios, the top ten constituent stocks account for a combined 50% share of the index; the top twenty account for 67%, and if SpaceX is excluded, 64%.

Index rebalancing may drive new buying

The research report shows that as of the end of October, passive ETFs collectively held about $30 billion of SpaceX shares, of which approximately $20 billion was held by funds tracking the Nasdaq 100 Index.

As the float continues to expand, index funds are likely to further increase their holdings. Goldman Sachs expects that as existing shareholders’ lock-up periods gradually expire, about half of SpaceX’s shares will become publicly tradable by mid-2027.

Before then, regular index adjustments may generate additional buying interest. Based on current data, Goldman Sachs estimates that rebalancing the Russell 1000 Growth Index will prompt passive ETFs tracking the index to buy more than $10 billion of SpaceX shares, with the next regular rebalance scheduled for December 11.

The report also notes that, due to compiling rules in the Nasdaq 100 Index that restrict the weighting of stocks with low free float, the impact of this rebalancing on SpaceX’s weight within the Nasdaq 100 will be relatively limited.

Inclusion in the S&P 500 may wait until 2027

Currently, SpaceX has not yet been included in the S&P 500 Index. Goldman Sachs believes that, according to the S&P’s admission rules, it is likely only eligible for inclusion in the second half of 2027.

According to S&P criteria, a stock must: be listed for at least 12 months; and in line with GAAP standards, report positive net profit from continuing operations in the latest quarter and in total over the past four quarters.

Based on market consensus earnings forecasts, after SpaceX reports its second quarter 2027 results, it will likely meet the profitability threshold; by then, it will also have met the minimum listing duration requirement.

Goldman Sachs adds that another route for inclusion would be a merger with an existing S&P 500 constituent. However, such inclusions are subject to individual review, and the timing remains uncertain.