For those looking to invest in SpaceX shares through the QQQ ETF, the wait could soon end. Once SpaceX gets added to the Nasdaq-100, ETFs tracking the tech-heavy index, including the QQQ, the largest such fund, will allow investors to own a slice of Elon Musk’s blockbuster IPO.
SpaceX shares were listed on the Nasdaq stock exchange and began trading on June 12; however, the company has not yet been added to the Nasdaq-100 index.
The Nasdaq-100 holds some of the best-known names in tech, including the Magnificent Seven stocks such as Apple, Microsoft, Nvidia, Amazon, Meta, Tesla, and Alphabet. SpaceX’s recent rise has been dramatic.
With SpaceX toppling TSMC and Amazon to become the 5th largest company, investor interest in this space is likely to increase.
When Will SpaceX Enter the Nasdaq-100?
SpaceX was not added to either of the two leading US stock market indices, the S&P 500 and the Nasdaq-100, on its listing date. While addition to the S&P 500 may take at least one year, inclusion in the Nasdaq-100 could happen any day within 15 days of the listing.
The first quarterly rebalance under the new rules for Nasdaq indices is scheduled for June 22. SpaceX may likely see its inclusion in the Nasdaq-100 index from June 23.
However, there’s a catch. Unlike other big tech stocks, which enjoy high weightage, SpaceX will see much lower weightage in the index. Eshaan Lazarus, Founder and CEO, 021 Trade, explains why: “SpaceX is selling only about 3% of itself to the public.
Under the new rules, a company floating less than 20% gets its index weight set at three times its float, not its full market capitalisation. The index counts you by the shares actually available for sale, not by what the whole house is worth.
So SpaceX will enter with the index weight of roughly $160 billion. Nasdaq-100 funds will give you exposure, but a thin slice at about 0.5% of the index.”
Invesco QQQ Trust (QQQ): The Gateway to Nasdaq-100
For those looking to invest in all the Nasdaq-100 stocks in a single investment, the Invesco QQQ Trust (QQQ) is the fund to buy. Technology stocks constitute 66% while Consumer Discretionary stocks make up 17% of QQQ’s portfolio.
Both the Invesco QQQ Trust (QQQ) and the Nasdaq-100 are up over 18% YTD and 36% over the last year. In the last 10 years, QQQ is up by over 600%.
Launched on March 10, 1999, the Invesco QQQ is listed on the Nasdaq stock exchange and is a low-cost option for investing in the Nasdaq index’s basket of stocks. Its Total Expense Ratio is 0.18%, and the Management fee is 0.18%.
What’s in It for Investors?
QQQ’s performance is largely driven by the technology sector, especially its major tech companies. The recent bull run in Nasdaq stocks is largely on the back of the AI wave, with stocks within the Artificial Intelligence sector running up significantly against the broader market. Investors should consider QQQ for its overall value rather than solely for exposure to SpaceX stock. And, even before that, evaluate whether you need to diversify across US stocks or not.
Disclaimer: This article is for informational purposes only and does not constitute financial, investment, or legal advice. Investment in foreign securities involves significant risks, including currency fluctuations, different financial reporting standards, and varying regulatory environments. Investing in ETFs and equities involves market risk. It is not a recommendation to invest in any specific U.S.-listed stock or ETF. Readers are advised to consult a qualified financial advisor before making any investment decisions.
