S&P Said No, Nasdaq Said Yes — Passive Funds Get the Bill

When a company joins a stock-market index, every fund tracking that index has to buy its shares — not because a manager chose it, but because the index rules require it. The three firms that run the world's benchmark indexes just answered the same question about SpaceX in opposite ways, and the result is that active investors and passive investors are now pulled in opposite directions on the same stock. S&P Dow Jones, which runs the S&P 500, briefly proposed fast-tracking megacap IPOs by cutting the 12-month seasoning wait and dropping its profitability requirement — a change that would have steered $24T in S&P 500-tracking funds toward SpaceX, OpenAI, and Anthropic. On June 4, S&P rejected its own proposal. The S&P 500 requires positive GAAP net income (the standard accounting measure of profit) for the most recent quarter and the four before it. SpaceX lost $4.9B in 2025, which blocks it until 2027 at the earliest ^[1][2]. S&P's rationale was explicit:

exceptions to the financial viability, seasoning, and IWF (investable weight factor) requirements should not be granted solely based on market capitalization — S&P Global

Nasdaq and FTSE Russell went the other way. Nasdaq shortened its Nasdaq 100 inclusion window to 15 trading days; FTSE Russell cut its equivalent to 5. SpaceX joins the Nasdaq 100 on July 7, and because funds mirroring the index must hold every constituent, that inclusion mechanically forces an estimated $4.3–8B in automatic inflows into the stock ^[3][2].

Whether to admit unprofitable megacaps into benchmark indexes

S&P Dow Jones (S&P 500): Kept GAAP profitability requirement and 12-month seasoning period. Blocked SpaceX until 2027–2028. Cited need to protect passive funds from volatility ^[2][1]

Nasdaq + FTSE Russell: Nasdaq shortened inclusion window to 15 trading days; FTSE Russell to 5. Dropped profitability and trading-history barriers. SpaceX joins Nasdaq 100 July 7 ^[3][2]

What the active market did with SpaceX is the other half of the story. Shares plunged 30% from a peak of $225.64 within two weeks of the June 12 IPO, erasing roughly $1T in market value. The decline tracked a CCC ESG rating from MSCI, the 2025 loss, and a $20–25B bond issuance to fund AI ambitions ^[4]. Active institutions didn't just sell. Several refused to participate at all. Danish pension fund AkademikerPension ($25B in assets) blacklisted SpaceX, citing severe governance concerns and a valuation above $1T it found hard to justify. A coalition including NYC Comptroller Mark Levine, NY State Comptroller DiNapoli, and CalPERS CEO Marcie Frost warned that the dual-class share structure — Musk controlling 80%+ of votes as CEO, CTO, and chairman — strips investors of meaningful rights. SpaceX's IPO filing grants Musk an effective veto over his own removal through super-voting shares, a structure governance experts said exceeds typical norms for founder-led tech companies ^[5][6]. Then state investment officials from four states challenged Nasdaq directly, arguing the rule changes force passive funds to buy shares of volatile, high-valuation companies at the expense of retirement savings. Oregon Treasurer Elizabeth Steiner said she was deeply troubled. Nasdaq defended the changes as reflecting a market where companies stay private longer and list at larger scale, and said they were not designed for any single company ^[7]. The split isn't about whether SpaceX is an AI company. The S&P 500 added Marvell Technology, an AI chipmaker, on June 22 — it passed the profitability test ^[8]. The barrier is profit, not sector. And Nasdaq's relaxed rules were built for a broader wave: OpenAI and Anthropic are both targeting $1T+ IPO valuations ^[9]. On one company, the verdicts now diverge. The active market repriced SpaceX down 30% and major institutions boycotted its governance. Passive funds will be forced to buy $4.3–8B of it. The profitability standard that would have kept SpaceX out of both indexes is applied by one provider and waived by two others — and the waiver is what makes the inflows automatic, regardless of what the active market concluded.