SpaceX is aiming for an IPO with a valuation of at least $1.8 trillion and a fundraising target of $75 billion, which would make it the largest initial public offering in history. Its sheer scale has already compelled major index providers such as Nasdaq to urgently revise their inclusion rules, significantly shortening the waiting period for index eligibility. Passive investment funds could automatically generate up to $20 billion in buying demand, with 30% of the offering slated for retail investors. This unprecedented capital event will reshape Wall Street’s rulebook and influence the IPO trajectories of AI unicorns like OpenAI.
SpaceX’s IPO plans are reshaping Wall Street’s operational logic in unprecedented ways. The rocket, satellite, and AI conglomerate led by Elon Musk is expected to raise more than twice the amount of any previous IPO in history, a scale so vast that it has compelled market participants to reorganize around it—from rewriting index inclusion rules and recalibrating passive funds’ automatic buying estimates to retail investors positioning ahead of the listing.
According to a Bloomberg report on Monday, SpaceX is targeting a valuation of at least $1.8 trillion and plans to raise $75 billion. To accommodate this unprecedented transaction, Nasdaq has amended its rules to allow SpaceX to be added to $NASDAQ 100 Index (.NDX.US)$ , just 15 trading days after its listing—down from the previous minimum waiting period of three months.
FTSE Russell has taken similar steps, and S&P Dow Jones Indices is also consulting on related rule changes. If approved, $S&P 500 Index (.SPX.US)$ the S&P indices could open their doors to SpaceX. Bloomberg Intelligence analysts James Seyffart and Rob Du Boff estimate that if S&P follows suit, passive funds’ automatic buying demand for SpaceX could approach $20 billion, representing roughly one-quarter of the offering size.
Meanwhile, SpaceX is considering reserving as much as 30% of the offering—potentially up to $22.5 billion—for retail investors, fundamentally overturning the traditional IPO practice where institutions dominate pricing. While this arrangement could support post-listing share prices, it has also raised concerns about subsequent liquidity. Owen Lamont, portfolio manager at Acadian Asset Management, remarked, “I can’t think of another IPO in my lifetime that would be more impactful than this one.”
Index Rules Forced to Be Rewritten
SpaceX’s arrival has placed unprecedented pressure on index inclusion rules originally designed to maintain market order.
Nasdaq has reduced the waiting period for new listings to join the Nasdaq-100 Index from three months to just 15 trading days and introduced a market capitalization adjustment mechanism for companies with low free-float shares—tripling the weighting multiplier applied to such stocks. In an interview with Bloomberg Television, Nasdaq President Nelson Griggs stated that this move ensures low-free-float companies hold meaningful weight in the index and will be gradually adjusted over time: “This is effectively a guardrail.”
However, these changes have not been without controversy. Lynn Martin, President of NYSE Group—the parent company of the New York Stock Exchange—publicly criticized Nasdaq’s rule revisions as tailor-made to attract SpaceX’s listing, stating bluntly: “From our perspective, market integrity is not a dimension for competition.”
In their research report, Seyffart and Du Boff noted that SpaceX plans to lift the lock-up period for insiders earlier than usual. If S&P’s proposal is approved, at least 90% of the locked-up shares would already be unlocked by then. This means shares sold by employees and early investors could be absorbed precisely by index-tracking funds. 'These changes should not be underestimated—market participants are voicing their concerns,' the two analysts wrote.
Brian Hartigan, Global Head of ETFs and Index Investments at Invesco—which manages the Nasdaq-100-tracking $Invesco QQQ Trust (QQQ.US)$and$Invesco NASDAQ 100 ETF (QQQM.US)$ two large ETFs—supports the direction of the rule adjustment: 'The essence of indexing is to capture the largest and most liquid securities representing public markets.'
Unprecedented Role of Retail Investors
In the traditional IPO model, institutional investors receive allocations, while retail investors absorb speculative sentiment and enter the market afterward, providing exit liquidity for institutions. SpaceX is upending this logic.
Musk plans to reserve as much as 30% of the offering for ordinary investors—a move extremely rare in IPO history. Janice Vines, a 65-year-old retired teacher from Ohio, has already purchased shares in the $Entrepreneur Private-Public Crossover ETF (XOVR.US)$ as an early positioning strategy and intends to directly invest another $20,000 when SpaceX goes public. 'My main goal is to get some SpaceX IPO shares,' she said. 'Elon is a visionary, and I hope to ride his coattails into retirement.'
Steve Sosnick, Chief Strategist at Interactive Brokers, issued a warning about this arrangement. He pointed out that in traditional IPOs, retail investor participation after listing is a key driver of post-IPO price appreciation. However, if retail investors already receive substantial allocations during the IPO phase, this subsequent buying momentum could weaken. 'You have to consider to what extent they’re sacrificing secondary market performance by allocating such a large volume of shares to individual investors,' he said.
Sosnick also noted that, given limited cash in retail accounts, investors may need to sell existing holdings to free up capital for participating in SpaceX, potentially putting downward pressure on Tesla and Bitcoin.
AI Narrative Drives Valuation Debate
SpaceX’s appeal stems not only from its rocket business but also from Musk’s reframing of the company as an 'AI infrastructure company disguised as a rocket company.'
Jeff Muhlenkamp, portfolio manager at the Muhlenkamp Fund, stated: 'There’s a reason why all AI companies want to go public this year: the current market environment is perfectly suited for such stories. We are in a climate that favors growth and narrative-driven investing.'
However, skepticism about valuation cannot be ignored. Based on a target market capitalization of at least $1.8 trillion, SpaceX’s price-to-sales ratio stands at approximately 93 times—15 times the average of the Nasdaq 100. Roger Ibbotson, emeritus professor of finance at Yale University with over five decades of capital markets research experience, believes SpaceX is unlikely to escape the historical pattern of IPO stocks underperforming the broader market over the long term. 'Much of SpaceX’s value lies in its story and narrative, but the problem is that these stories are often hard to deliver on,' he said.
A Danish pension fund with $25 billion in assets explicitly stated it would not participate, with its chief investment officer describing SpaceX’s governance structure—under which Musk retains firm control over voting rights and board appointments—as 'disastrous.'
On the other hand, David Wagner, portfolio manager at Aptus Capital Advisors, plans to gradually accumulate shares during the first month following the listing, betting that passive investment demand will drive up the stock price. Citing Tesla as a cautionary example for short sellers, he remarked: 'Fundamental investors who reject an investment solely based on valuation have valid reasons, but look at how many people got Tesla wrong. Valuation simply doesn’t matter for SpaceX.'
The Outcome Extends Far Beyond One Company
The outcome of SpaceX’s IPO will have profound implications for the entire IPO market.
AI unicorns such as OpenAI and Anthropic are lining up for large-scale listings, and SpaceX’s success or failure will directly determine whether this window remains open. 'If things go smoothly, it could trigger a wave of large offerings and unrestrained market euphoria; if it falters, it could slam the door shut on OpenAI and Anthropic,' Lamont said.
The industry classification of SpaceX also remains unresolved, which will affect the index sector it ultimately joins. Its rocket business points toward the industrial sector, but a potential cloud services agreement with Anthropic worth nearly $45 billion, along with its space-based data center plans, could push it into the technology sector.
Over 20 ETFs linked to SpaceX have filed applications this year, covering various types such as leveraged long, inverse, andoptions strategymore. Wall Street’s product engine is running at full speed, and the market will ultimately decide the outcome of this unprecedented listing bonanza.
Editor/Joe