The S&P announced it will not alter its rules to expedite the inclusion of companies like SpaceX into its S&P 500 index, which requires a 12-month seasoning period before entry. This decision could impact SpaceX's upcoming IPO by delaying its inclusion for at least a year, which may prevent millions of passive investors from having to buy into SpaceX quickly. The S&P's rules preserve its core indexing principles despite some broader index changes allowing more lenient float requirements for large companies.

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7 mins ago - Business

Surprise! S&P will not change its rules to get SpaceX in early

Emily Peck
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Animated illustration of the SpaceX Starship flying up across a stock chart as an upward green line moves from left to right.

Illustration: Brendan Lynch/Axios

The S&P said Thursday that it's not changing its rules to fast-track mega-cap IPOs onto its marquee stock index, the S&P 500.

Why it matters: S&P's decision doesn't mention SpaceX, but it means that Elon Musk's company — as well as Anthropic and OpenAI, if they go public as expected — won't be making it into the index for at least a year.

And it's a surprise, coming after other major indexes drew fire for changing their rules to more quickly accommodate Elon Musk's company.

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The big picture: Millions of passive investors won't be forced to own SpaceX quickly — a move many had criticized.

Between the lines: If the SpaceX IPO, coming next week, pops — that may set the S&P up for criticism. If it flops, they'll look smart.

"We'll see whether this turns out to be a wise choice," Bloomberg Intelligence senior ETF analyst Eric Balchunas posted on X. "Either way tho SPX is such a powerful brand it prob doesn't matter either way."

Zoom in: Under the rules, companies must wait a 12-month seasoning period before being included in the cap-weighted S&P 500 index.

The group considered changing that to six months, as well as updating other requirements.
It also considered adjusting the so-called "float requirement," which held that a company must offer at least 10% of its overall shares to be considered for inclusion. SpaceX is planning to offer fewer than 5% of its shares.

What they're saying: In a statement, S&P said the decision "preserves core index principles."

"Although there may be trade-offs between strict adherence to these eligibility requirements and broad representativeness, the current methodology provides substantial market coverage and sector balance. As a result, the indices can continue to meet their stated objectives while preserving their role as representative and investable benchmarks for the U.S. equity market."

Yes, but: The S&P did change some rules for some of its broader indexes —including the S&P Total Market Index and Dow Jones U.S. Total Stock Market Index.

These are meant to capture the entire breadth of the stock market, compared with the S&P 500, which covers the very largest American companies.
For those broader indexes, S&P came up with an alternative float requirement for very large companies that are offering less than 10% of their shares.

Go deeper: SpaceX and the coming stock tsunami

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S&P will not change the rules to allow SpaceX into its benchmark index early

Surprise! S&P will not change its rules to get SpaceX in early

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