Markets continued their positive trajectory in May. US large and small-cap stocks did best, while international also did well. Bonds had lower, but still positive returns. For the year, stocks continue to make investors happy.
SpaceX Initial Public Offering – Coming Soon
Startup companies all begin in the same place – as an idea in the mind of an entrepreneur. Most typically require an upfront investment of money from the owner as well as outside investors. While most startups fail, those that succeed continue to grow through various stages of maturity. Many of the most successful businesses eventually underwrite an initial public offering, or IPO. This is the process by which the owners of the company sell some of their stock to public investors, allowing them to cash in on their years of hard work and diversify their investments. By the time a company has an IPO, it’s usually worth hundreds of millions, or billions of dollars.
Until now – throughout the rest of 2026, SpaceX, OpenAI, and Anthropic are expected to go public as some of the largest companies in the world – and in the case of SpaceX, potentially valued at well over $1 trillion. So, how should investors approach investing in these companies once the stocks are publicly traded?
For investors in mutual funds and exchange-traded funds (ETFs) the manager ultimately decides when to buy these stocks, if at all. Since most ETFs track an index, the index rules and methodology determines this decision. If the index adds the stock, the ETF follows along as well. Perhaps the most watched index for US investors is the S&P 500. Not every stock makes it into this index; there are criteria for eligibility. Here is a non-exhaustive list:
- Domiciled (legally incorporated) in the United States
- Files appropriate quarterly earnings and annual reports
- Listed on an appropriate stock exchange, such as the New York Stock Exchange
- Market capitalization (total value of the stock) must be $22.7 billion or greater
- Has adequate quantity of stock for investors to trade (called the float – it excludes shares that company insiders and executives continue to hold and other restricted shares)
- Net income must be positive for the most recent quarter, and the sum of the most recent four quarters
- Trade in public markets for 12 months
While SpaceX checks most of these boxes, the last one obviously takes time, so under normal circumstances, it would not be added to the S&P 500 right away (in fact, another of Elon Musk’s companies, Tesla, traded publicly for 10 years before its inclusion to the S&P 500, mostly because of its inability to meet the profitability criteria. This was in spite of the fact that the value of Tesla stock grew tremendously during those years). Because it meets the current profitability rules and its sheer size, S&P is considering reducing the 12 month trading period to 6 months to allow SpaceX into the index sooner.
Currently, the SpaceX IPO is scheduled for as early as June 12th. While we aren’t sure when the stock will be added to the S&P 500, it will happen at some point. When it does, it will also be added into investor portfolios of funds that track that index, as well as other similar indexes provided by S&P. It’s something that our team will continue to monitor over the coming weeks.
If you have any questions or want to share your own opinion about SpaceX stock, let us know!
