Space Exploration Technologies (SPCX 5.41%), better known as SpaceX, made its market debut just a few days ago, but it's already a member of the Nasdaq-100 index. The index is composed of the 100 largest non-financial stocks listed on the Nasdaq exchange. Ordinarily, there would be a three-month waiting period. Additionally, the company would be required to float at least 10% of shares on the public market. However, the index changed its rules ahead of SpaceX's IPO to allow inclusion after just 15 trading days and with a smaller float.
Inclusion in the Nasdaq-100 is notable because it creates forced buyers through index funds like the popular Invesco QQQ Trust (QQQ 1.50%). That could help support the stock price and push it higher. To that end, it may be worth examining how prior index entrants performed to gauge what could be in store for SpaceX stock.
Image source: Getty Images.
Here's what history says happens next
Despite the growing amount of capital dedicated to index investing, inclusion in the Nasdaq-100 index doesn't automatically produce excellent results for new stocks. The Nasdaq typically announces index inclusion several days before it actually adds a stock to the index. That can result in some investors front-running the perceived forced buying by index funds and portfolio managers once the stock is added to the index. As a result, the positive effect of being added to the Nasdaq-100 may already be priced into the stock by the time it joins the index.
Unfortunately, recent history indicates that, on average, new entrants into the index underperform the Invesco QQQ Trust index fund in the three-month, 12-month, and two-year periods following their entry. The table below shows new entrants into the Nasdaq-100 from 2020 through spring 2026 and their performance relative to the QQQ index fund.
| Effective Date | Company | 3-Month Relative Performance | 12-Month Relative Performance | 2-Year Relative Performance |
|---|---|---|---|---|
| 4/20/2020 | Dexcom | 9% | (23%) | (6%) |
| 4/30/2020 | Zoom Communications | 45% | 41% | (52%) |
| 6/22/2020 | Docusign | 10% | 19% | (68%) |
| 10/19/2020 | Keurig Dr Pepper | (1%) | (10%) | 36% |
| 12/21/2020 | American Electric Power | (1%) | (15%) | 30% |
| 12/21/2020 | Marvell Technology | (2%) | 44% | (7%) |
| 12/21/2020 | Match Group | (2%) | (34%) | (70%) |
| 12/21/2020 | Okta | (22%) | (34%) | (72%) |
| 12/21/2020 | Peloton Interactive | (23%) | (77%) | (91%) |
| 12/21/2020 | Atlassian | (12%) | 13% | (35%) |
| 8/26/2021 | CrowdStrike | (20%) | (12%) | (43%) |
| 12/20/2021 | Airbnb | 16% | (22%) | (12%) |
| 12/20/2021 | Fortinet | 5% | 7% | (21%) |
| 12/20/2021 | Palo Alto Networks | 19% | 22% | 65% |
| 12/20/2021 | Lucid Group | (30%) | (74%) | (89%) |
| 12/20/2021 | Zscaler | (20%) | (47%) | (31%) |
| 12/20/2021 | Datadog | (6%) | (36%) | (32%) |
| 11/21/2022 | Enphase Energy | (38%) | (77%) | (89%) |
| 12/19/2022 | Costar Group | (23%) | (24%) | (51%) |
| 12/19/2022 | Rivian Automotive | (48%) | (29%) | (65%) |
| 12/19/2022 | Warner Bros Discovery | 30% | (19%) | (40%) |
| 12/19/2022 | GlobalFoundries | (1%) | (34%) | (63%) |
| 12/19/2022 | Baker Hughes Co | (15%) | (19%) | (25%) |
| 12/19/2022 | Diamondback Energy | (18%) | (22%) | (40%) |
| 7/17/2023 | The Trade Desk | (5%) | (13%) | (42%) |
| 12/18/2023 | Coca-Cola Europacific Partners | 2% | (10%) | (6%) |
| 12/18/2023 | CDW | 3% | (40%) | (57%) |
| 12/18/2023 | DoorDash | 20% | 33% | 48% |
| 12/18/2023 | MongoDB | (21%) | (52%) | (34%) |
| 12/18/2023 | Roper Technologies | (6%) | (25%) | (46%) |
| 12/18/2023 | Take-Two Interactive | (16%) | (12%) | 1% |
| 3/18/2024 | Linde PLC | (15%) | (12%) | (23%) |
| 11/18/2024 | AppLovin | 62% | 52% | N/A |
| 12/23/2024 | Palantir Technologies | 22% | 102% | N/A |
| 12/23/2024 | Strategy | (10%) | (62%) | N/A |
| 12/23/2024 | Axon Enterprise | (4%) | (20%) | N/A |
| 12/22/2025 | Alnylam Pharmaceuticals | (17%) | N/A | N/A |
| 12/22/2025 | Ferrovial Se | (2%) | N/A | N/A |
| 12/22/2025 | Insmed | (18%) | N/A | N/A |
| 12/22/2025 | Monolithic Power Systems | 21% | N/A | N/A |
| 12/22/2025 | Seagate Technology Holdings | 47% | N/A | N/A |
| 12/22/2025 | Western Digital | 72% | N/A | N/A |
| 1/20/2026 | Walmart | 1% | N/A | N/A |
| Average | (0.27%) | (15%) | (32%) |
Data sources: Nasdaq, Google Finance. Calculations by Author.
As you can see, relative performance for new entrants in the first few months of trading as a member of the Nasdaq-100 can vary widely. On average, however, new entrants perform roughly in line with the rest of the index during their first three months, according to my calculations.
Over a full-year period and beyond, however, new entrants don't hold up as well as the stalwart companies in the index. Average underperformance over the first year is 15%, and the average stock underperforms the QQQ index fund by 32% in the two years following its addition to the Nasdaq-100.
While there's plenty of room for SpaceX to outperform the averages, the numbers should serve as a cautionary note for investors. There's another big reason investors should remain cautious with SpaceX stock.
NASDAQ: SPCX
Key Data Points
Will index inclusion mitigate the downward pressure on the stock?
One big overhang for SpaceX stock is the massive number of shares that could enter the market over the next year. SpaceX issued less than 5% of its shares in its IPO, requiring Nasdaq to rewrite the rules to include it in the index. But that means 95% of the shares will become available to sell over the next year, in various tranches. CEO Elon Musk has said he has no plans to sell any of his shares, which account for roughly 45% of the company's value. Still, around 10 times the amount sold in the IPO could be for sale over the coming months.
As a member of the Nasdaq-100 and several other indexes, SpaceX will have some forced buyers as lockup periods expire and the float increases. Nonetheless, selling is likely to weigh on the share price over the next year. This is a special instance, as SpaceX was fast-tracked into the Nasdaq-100. So, there's no telling just how well the index funds and portfolio managers benchmarked to the index will take the selling pressure.
However, investors should also note that SpaceX's valuation is extremely high relative to its earnings and revenue. The long-term returns from SpaceX don't depend so much on its inclusion in the Nasdaq-100, but on its ability to outperform the already high expectations for the company over the next five to 10 years. The odds are against it, but that's never stopped Elon Musk before.
