Summary<\/p>\n
SpaceX went public last week in a record-breaking IPO, and the company’s stock may soon appear in your 401(k).
\n The space exploration company could be added to major indexes within days or weeks, meaning funds you already own might automatically purchase shares.
\n However, experts say the stock’s initial weighting will be modest despite its $2 trillion valuation, as a relatively small percent of shares are publicly available..<\/p>\n
\n AI-generated summary was reviewed by a CNN editor.<\/p>\n
\n SpaceX, Elon Musk\u2019s massive space-exploration-slash-AI company, went public last week in a record-breaking IPO<\/a>. But even if you\u2019re not buying yet, you could still see the company\u2019s stock in your 401(k) soon via a number of avenues.\n <\/p>\n \n And if you\u2019re on the other side and want to avoid shares of the company that made Musk the world\u2019s first trillionaire, there are things you should look out for, including potential funds to avoid.\n <\/p>\n \n As a publicly traded company<\/a>, SpaceX is eligible to be included in some benchmark stock market indexes if it meets certain criteria. Many funds commonly held in 401(k)s and other accounts track different indexes. As a result, when SpaceX gets into some of those indexes, funds you already own might buy the shares as well.\n <\/p>\n \n That could happen in as little as a few days or weeks.\n <\/p>\n \n In May, the Nasdaq adjusted its rules to allow for the faster inclusion of mega IPOs like SpaceX into the Nasdaq 100, shortening the window to 15 days from three months before eligibility for inclusion.\n <\/p>\n \n FTSE Russell, another index provider, also adjusted its rules for quicker inclusion. SpaceX could be eligible to be included in indexes offered by CRSP, another benchmark provider, after five trading days.\n <\/p>\n \n However, S&P Dow Jones Indices, which manages the S&P 500, said on June 4 it wouldn\u2019t follow suit for its benchmark index. That means SpaceX won\u2019t be eligible to be included in the popular S&P 500 for at least a year. Tesla (TSLA<\/a>), for comparison, went public in 2010 and did not join the S&P 500 until 2020.\n <\/p>\n \n But don\u2019t expect exposure through index funds to boost or hurt your account just yet.\n <\/p>\n \n SpaceX\u2019s weight in indexes is set to be based on the number of shares made public. The company went public with less than 5% of its shares immediately available, meaning its weight in indexes would be relatively small to begin with.\n <\/p>\n \n Because there\u2019s only a limited number of SpaceX shares available, \u201cthe stock\u2019s performance shouldn\u2019t meaningfully affect the direction of major indices that hold it,\u201d said Mike Dickson, head of research and quantitative strategies at Horizon Investments.\n <\/p>\n \n SpaceX\u2019s $2 trillion valuation puts it in the top 10 largest publicly traded US companies. Despite the enormous headline numbers, its weighting in benchmark indexes like the Vanguard Total Market Index will start much smaller, according to Rodney Comegys, CIO at Vanguard Capital Management.\n <\/p>\n \n \u201cNo matter which index we\u2019re talking about, the mega IPOs will enter the benchmarks as relatively modest weights,\u201d Comegys said.\n <\/p>\n