SpaceX shares a slide as it enters the tech-heavy Nasdaq-100 | Financial Markets News

SpaceX’s rapid rise on the Nasdaq-100 index is expected to generate billions in short-term purchases, while brokerages have launched a $2 trillion coverage of the rocket and satellite company with high expectations.

The company led by Elon Musk joined the index on Tuesday, less than a month after it began trading on the market on June 12 – among the fastest mergers – thanks to Nasdaq’s revised rules for newly listed companies that want to join the widely followed benchmark.

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Its entry into the tech-heavy index makes another source of demand for his property such as index funds and exchange-traded funds (ETFs) tied to the Nasdaq-100 will need to buy stocks to comply with the new benchmark structure.

However, shares of SpaceX fell 5.4 percent, reflecting the rise of advanced technologies, including Micron Technology, on concerns about the length of the AI ​​boom.

“There is a fear that expectations are too high,” said Mark Hackett, Nationwide’s chief market analyst. “I hope this will continue until we get the money.”

The stock carries a weight of 1.34 percent on the Nasdaq-100, according to LSEG data, less than that of several heavyweights, including Nvidia and Apple, as the Nasdaq adjusts its weight based on free float or the number of publicly traded shares.

Stupid views

Historically, there is a waiting period between when a company goes public and when it is listed on the Nasdaq-100 and/or S&P 500, and companies must show profits for more than four quarters of the S&P 500 and three calendar months of the Nasdaq-100, excluding the month of listing. SpaceX asked to leave the so-called mega cap companies. At the beginning of May, Nasdaq changed the rules that would allow a Texas company to enter the list after only 15 days of trading. S&P Dow Jones Indices, which drives the S&P 500 index, did not change its rules.

More than a dozen businesses, including the SpaceX IPO underwriters Morgan Stanley, Goldman Sachs and JP Morgan, began reporting on SpaceX with high ratings, in Wall Street’s first attempt to value it using conventional metrics rather than investor confidence in Musk’s long-term vision.

“We see that the company has an opportunity to expand its advantages in space, integration, and AI,” Goldman Sachs analysts said, betting that each market has the potential to be a multibillion-dollar opportunity over the next five years.

Many analysts see Starship, SpaceX’s next-generation reusable rocket, as a key driver of the industry’s growth.

Wall Street predicts thousands of Starship launches each year by 2031, with JP Morgan projecting about 5,000, Wells Fargo 4,600, Bernstein 3,500, and UBS more than 1,500, depending on SpaceX’s performance.

Raymond James set a Wall Street price target of $800 on SpaceX, arguing that it could be one of the platforms that defines the infrastructure. SpaceX’s IPO was priced at $135 per share.

However, not everyone has a problem.

MoffettNathanson, KeyBanc and Argus Research have the same rating of “neutral”, while CFRA is the only company with a “sell” rating and a target price of $115.

Betting on AI

Investors are betting SpaceX could evolve into a hyperscale AI provider soon, taking on the likes of OpenAI’s GPT and Anthropic’s Claude and its Grok brand.

He also sees an important place for Starlink to increase its dominance in satellite transport, as many of the company’s ambitions hinge on the development of its next-generation Starship rocket.

“SpaceX has a clear advantage in putting AI equipment on the ground and eventually in orbit, positioning it as a leading ‘haloscaler’, ultimately able to provide compute at a very low cost,” Deutsche Bank analysts said.

With a market capitalization of nearly $2 trillion, SpaceX is the sixth largest company in the United States, and its CEO, Elon Musk, is the company’s leader. the first trillion in the world.

FTSE Russell added stocks to the US index last month, with funds such as the iShares Russell 1000 ETF already giving investors a share of the biggest IPO in US history.

However, S&P Global declined to create a similar fast track to the S&P 500 in June, and it is expected to take a year before SpaceX joins the world’s most followed index.