SpaceX's swift addition to the Nasdaq-100 index is expected to unleash billions in passive buying, as brokerages kicked off coverage of the $2 trillion rocket and satellite company with largely bullish views.
The Elon Musk-led company joined the index on Tuesday, less than a month after its stock market debut on June 12 – among the fastest inclusions ever – thanks to the Nasdaq's revised rules for newly listed companies looking to enter widely tracked benchmarks.
Its entry in the tech-heavy index creates another source of demand for its stock as index funds and exchange-traded funds (ETFs) tied to the Nasdaq-100 will need to buy shares to match the benchmark's new composition. However, shares of SpaceX fell 5.4 percent, reflecting a slide in high-momentum tech stocks on concerns about the longevity of the AI boom.
“There's nervousness about expectations being too high,” said Mark Hackett, chief market strategist for Nationwide. “I expect that to continue until we get some earnings out.”
The stock carries a 1.34 percent weight on the Nasdaq-100, far below that of several heavyweights, including Nvidia and Apple. Historically, there is a waiting period between a company going public and its index inclusion, but SpaceX lobbied for a waiver for mega-cap companies, and Nasdaq changed its rules to allow entry after just 15 trading days.
More than a dozen brokerages, including IPO underwriters Morgan Stanley, Goldman Sachs and JP Morgan, started coverage with top ratings. Goldman Sachs analysts said they see the company well-positioned to scale its differentiated advantages across space, connectivity, and AI.
Most analysts see Starship, SpaceX's fully reusable next-generation rocket, as the key driver of lofty growth projections. Wall Street forecasts thousands of Starship launches annually by 2031, with JP Morgan projecting about 5,000, Wells Fargo 4,600, Bernstein 3,500, and UBS more than 1,500.
Raymond James set a Wall Street-high price target of $800 on SpaceX, arguing it could become one of the century's defining infrastructure platforms. However, MoffettNathanson, KeyBanc and Argus Research have neutral ratings, while CFRA is the only brokerage with a sell rating and a Street-low price target of $115.
Investors are betting SpaceX can evolve into a hyperscale AI infrastructure provider in the near term, taking on OpenAI and Anthropic with its Grok model. They also see significant room for Starlink to expand its dominance in satellite communications, while much of the company's longer-term ambitions depend on Starship's successful development.
With a market capitalization of about $2 trillion, SpaceX is the sixth-largest US company, and its CEO, Elon Musk, is the world's first trillionaire. FTSE Russell added the stock to its US indexes last month, but S&P Global declined to create a similar fast-track process for the S&P 500, and it is expected to take at least a year before SpaceX joins that index.
Source: www.aljazeera.com