The Elon Musk-led company's shares, trading under the ticker SPCX, will join Wall Street's prominent tech index following a colossal Initial Public Offering (IPO) in mid-June. The IPO, which raised an impressive $75 billion – making it the largest ever – initially saw the stock soar by 50% on its debut, reaching a peak of $225. However, this initial euphoria has since subsided, with shares deflating to $162 last week, marking a 28% drop from their all-time high.
The key question now revolves around the stock's performance post-inclusion. Historical precedents from other high-profile Nasdaq 100 additions paint a cautious picture. For instance, Palantir (PLTR), a software giant, joined the index on 23rd December 2024. Despite the fanfare, its stock peaked around the inclusion date and subsequently declined by approximately 25% in the following weeks.
A similar trend was observed with Strategy (MSTR), known for being the largest publicly traded company holding Bitcoin. Its official entry into the Nasdaq 100 on 23rd December 2024 was preceded by its cycle high a month earlier, peaking near $543 when Bitcoin was trading around $100,000. Today, Strategy's stock trades at roughly $100, representing a significant 80% correction from its peak, demonstrating that index membership doesn't guarantee sustained bullish momentum.
Experts explain this phenomenon by suggesting that investor optimism is often already elevated and largely priced in by the time of inclusion. Passive fund buying, which typically follows index additions, is also frequently anticipated by the market. Therefore, the ‘new’ news of index inclusion doesn't always translate into a fresh wave of buying enthusiasm.
SpaceX's IPO coincided with a frenzied period for the AI infrastructure trade, witnessing surging demand for AI compute, semiconductors, and high-bandwidth memory (HBM). This timing suggests that the stock's initial surge might have been fuelled by this broader market excitement. If historical patterns are any guide, investors should temper their expectations for a smooth upward trajectory for SpaceX shares immediately following its Nasdaq 100 entry. The company's future performance will likely depend more on its ongoing innovations and financial results rather than merely its index membership.
