SpaceX IPO: You May Soon Be Invested in Elon Musk’s Overvalued Stock, Like It or Not

Millions of Americans may be forced to own Elon Musk’s SpaceX stock soon after it goes public, due to recent changes in how the Nasdaq includes stocks in its Nasdaq 100 index. 

Sounds outrageous, doesn’t it? It gets even worse when you dig into the details, though. 

SpaceX filed its initial public offering (“IPO”) paperwork with the Securities and Exchange Commission on April 1. Musk is now reportedly targeting a $2 trillion offering for the company, which would make it the largest IPO of all time. The debut would instantly put SpaceX among the world’s most valuable companies.

Just days before that filing – but months after Musk had made it clear that he wanted SpaceX to go public in 2026 – Nasdaq announced new rules impacting how it structures its stock indexes that would be highly favorable to SpaceX.

On March 30, Nasdaq approved two big changes to how stocks are included in the Nasdaq 100 index:

• It cuts the waiting period for inclusion from at least three months to 15 trading days for any newly listed stock whose market capitalization ranks among the top 40 of the Nasdaq 100 index. 
• Stocks will no longer need to have at least 10% of their stock trading publicly to be eligible for inclusion. 

The rules go into effect on May 1 – just in time for the anticipated June IPO date of Musk’s SpaceX. 

It’s almost as if Nasdaq wrote the rules for the SpaceX IPO. The company is selling less than 5% of its stock in the IPO, and it will easily rank among the largest Nasdaq-listed stocks. 

However, it’s not the only IPO that might qualify for the special Nasdaq treatment. Artificial intelligence (“AI”) giants OpenAI and Anthropic both have been discussing going public, making 2026 the hottest year ever for IPOs, if this trio all make their debut during this time.

For SpaceX, the change is particularly egregious, given the stock’s massive overvaluation and the way that Musk has inflated the stock’s price before its IPO. The net result is that investors in Nasdaq funds will be “stuffed” with SpaceX stock, whether they like it or not. 

In other words, your retirement account may be Elon Musk’s “exit liquidity” at whatever exorbitant value it’s priced at. Here’s how it works and how stunningly expensive the stock is.

How Investors May Be Forced to Buy SpaceX Stock

Here’s how Musk has worked the market so far and how it looks like insiders may be legally able to dump massively inflated SpaceX onto the general public. 

The new rules mean that any Nasdaq 100 index fund must buy SpaceX in order to track the index accurately. So, any investor owning shares in a Nasdaq fund will own SpaceX whether they like it or not.

Nasdaq may not be the only company considering a new index inclusion process geared toward large IPOs. S&P Dow Jones Indices, the company behind the Standard & Poor’s indexes, such as the S&P 500, is also mulling changes. So, S&P funds could be next, affecting millions of investors worldwide. 

But it’s the details on SpaceX’s inclusion in Nasdaq funds that make it outrageous. 

Now, a Nasdaq fund or one tracking the S&P 500 (or any other index) adds and subtracts stocks all the time. If investors own shares in one of those index funds, they own all its component stocks, too. In this respect, there’s nothing different between Nasdaq’s new process and its old one. 

The real change is Nasdaq’s inclusion rules, which help prevent the index from buying stocks at a price that does not reflect their market value. By letting newly listed stocks “season” on the public exchange, investors determine a fair trading range for the stock. Nasdaq’s new rules upset that. 

In the case of SpaceX, it can be public for just 15 trading days before it’s included in the index. With literally everyone knowing that SpaceX will go into the index in just weeks after the IPO – and that funds will have to buy regardless of the stock price – the price will likely be even more volatile.

So, the Nasdaq’s rule change helps create a feeding frenzy. Supply is already going to be very tight, with SpaceX expected to sell less than 5% of its shares. Investors were already excited about the IPO, now Nasdaq’s new rules add more concentrated demand, as fund companies are forced to buy the stock in short order, so that they accurately track the index.

That said, Nasdaq is introducing a weighting penalty that helps reduce the impact of the stock’s index inclusion. But SpaceX will still see a ton of money flowing in from passive Nasdaq funds.

This setup may be the best reason to trade the stock in the short term, at least for those with a high risk tolerance. But it’s terrible for investors who care about fair markets. 

In addition, Nasdaq’s old process helped support traditional lock-up rules that are normally part of an IPO. When a company goes public, insiders are usually prevented from selling their shares for some period of time, often 180 days or more, known as a lock-up period. 

A lock-up reduces the conflict of interest that exists between insiders who know the company best and outside investors. A lock-up helps prevent bad outcomes from this conflict, including “pump-and-dump” schemes, where insiders hype a stock and then cash out while hype is high.

Now, SpaceX is looking to bend the typical rules on lock-up periods, according to the Financial Times. SpaceX has considered skipping the lock-up period completely or having a staggered lock-up period, letting insiders cash out of their shares over the period of a few months. 

Combine insiders’ desire to cash out quickly with SpaceX’s unbelievable valuation – an estimated 125 times sales at a proposed $2 trillion valuation – and it’s not a pretty picture.

SpaceX’s IPO Could Be the Most Expensive Ever

Because of Nasdaq’s rule change and potential changes to the lock-up, the SpaceX IPO is likely to be a huge giveaway to insiders and its CEO, Musk. Musk has done a masterful job of inflating SpaceX’s stock in the last two years, as I’ve explained in some detail.

SpaceX has had a series of valuation rounds in the last two years, which have priced its stock. But what SpaceX is doing differs significantly from what private companies do in a fundraising round.

In a typical round, outside investors are putting up significant cash to buy a major stake in a private company. But in SpaceX’s rounds, the focus has been on revaluing the stock higher rather than raising cash. In fact, SpaceX hasn’t really been raising cash in the last couple of years, since it’s been making money, thanks to its high-margin Starlink satellite-based internet business. 

Instead, it’s been letting insiders cash out of their shares as part of tender offers, some of which it buys back, and some of which it sells to outsiders – with SpaceX setting the valuation. 

Here’s how SpaceX has re-valued its own stock over the past two years or so:

• July 2024: A $210 billion valuation (as part of a tender offer)
• December 2024: A $350 billion valuation, based on a tender offer for $1.25 billion in stock (of which SpaceX bought $500 million worth)
• July 2025: A $400 billion valuation, based on a tender offer for $1 billion in stock (of which SpaceX bought an unspecified amount)
• December 2025: An approximately $800 billion valuation, based on a tender offer in which the company and other investors would buy $2.56 billion in stock from insiders
• February 2026: A merger between SpaceX and Musk-led startup xAI (a combo of social media site X.com in March 2025) valued the new company at $1.25 trillion.

For the IPO, SpaceX has recently discussed a valuation of $1.75 trillion, which would see the stock trading at an estimated 110 times sales! Not long after, the company began discussing a $2 trillion market cap, according to reports, valuing the company at an estimated 125 times sales.  

So, Musk has deftly pushed up the valuation of SpaceX to sky-high levels – and now Nasdaq (and maybe other index funds) will force tracking funds to buy it right out of the IPO gate. This additional demand could push the valuation – senselessly – even higher. 

Think SpaceX is massively, horribly overvalued? Doesn’t matter. You’ll own it in the month or so after its IPO if you own a Nasdaq index fund, thanks to Nasdaq’s rule changes. That includes 401(k) retirement plans invested in Nasdaq funds as well as any individual retirement account money invested in them. 

Investors with S&P funds should hope that this index company takes a more sensible approach than Nasdaq did.

Regards,

James Royal

Editor’s Note: Elon Musk reinvented the auto industry, sparked a new era of space exploration, and built the world’s largest satellite network. But his new initiative – “Project Apex” – could become the crown jewel of his career. And, like Tesla, it could make early investors incredibly wealthy. Click here for the details.