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▲ SpaceX (SPCX)/AI generated image
SpaceX (SpaceX, SPCX) has entered another zone of supply and demand shock ahead of its inclusion in the Russell Index. With the stock price having surged 67% immediately after listing and then sharply declining from its peak, there's a growing possibility that billions of dollars in index buying will pour in just before the market close.
According to the US economic media outlet CNBC on June 26 (local time), FTSE Russell will include SpaceX in the US Russell Index as part of its semi-annual index rebalancing process after the market close on Friday. Passive exchange-traded funds that track the Russell Index must add SpaceX shares to their portfolios.
SpaceX's stock price has repeatedly surged and fallen since its major IPO this month. The stock price soared to $225.64 during intraday trading on June 16, a 67% increase from its IPO price of $135. However, the closing price on Thursday fell to $153.
Jefferies estimated in a report this month that Russell index-tracking passive funds would need to buy approximately $3 billion worth of SpaceX shares. Fund managers are likely to begin buying near Friday's market close to minimize tracking error. The market anticipates that this process could increase short-term buying pressure.
SpaceX's market capitalization is $2 trillion, approaching that of Amazon (Amazon, AMZN). However, the actual tradable shares in the market only amount to approximately $100 billion. The remaining stake is held by Elon Musk, insiders, and employees.
The options market also reflected the possibility of increased volatility. SpaceX options expiring on Friday priced in a 3.6% movement in either direction for the stock price by the end of this week. SpaceX is also expected to be included in the Nasdaq 100 Index in July.
SpaceX incurred a $4.9 billion loss last year but is valued as a company poised to dominate the satellite internet, AI, and commercial space launch markets. However, its stock is trading at 107 times its estimated 2025 revenue, which is high compared to Nvidia's (Nvidia, NVDA) 21 times.
*Disclaimer: This article is for investment reference only, and we are not responsible for any investment losses based on it. The content should be interpreted for informational purposes only.*
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