Index funds will be forced to buy more SpaceX shares as insiders sell, Morningstar said.
- Morningstar said SpaceX’s weighting in the Russell 1000, Morningstar US Total Market and MSCI USA indexes is set to at least double at upcoming rebalances.
- More than 900 million additional SpaceX shares became eligible for insider sales on Aug.6.
- Morningstar estimates the larger float could propel SpaceX into the Russell 1000’s top 100 holdings.
Shares of SpaceX (SPCX) rose 1% overnight late Wednesday as Morningstar said major indexes are preparing to increase the stock’s weighting, forcing index funds to buy more shares just as insiders gain the ability to sell more than 900 million shares.
SPCX stock gained 1.2% on Wednesday to close at $139.63 and added another 0.6% after-hours.
SpaceX Index Weight Set To Double
“Something odd is going on,” Morningstar said, noting that SpaceX’s weight in the Russell 1000, Morningstar US Total Market and MSCI USA indexes is set to at least double “no matter if its stock price rises or falls” before upcoming rebalances.
These indexes use free-float-adjusted market cap, counting only publicly tradable shares. SpaceX’s limited float explains why its $1.4 trillion valuation at the end of July earned it the same 0.08% Russell 1000 weight as $57 billion Delta Air Lines.
More than 900 million additional SpaceX shares became eligible for sale by insiders on Aug. 6, which is equal to 143% of the 639 million shares available for public trading shortly after the company’s IPO. Morningstar estimated that the release could increase SpaceX’s float-adjusted market value by 2.43 times, lifting its Russell 1000 weight to about 0.2% and placing it among the index’s top 100 holdings. Assuming July 31 prices, its weight could hit 0.7% following the Dec.11 rebalance.
Index Funds Forced To Buy SpaceX
“Index funds will be forced to buy more SpaceX stock just as insiders are selling,” Morningstar said, warning that “it may be hard to determine the stock’s true value and trading equilibrium in the short term.”
The dynamic is unusual as SpaceX shares fell 31% in July. While falling market values typically reduce index weights, the expansion of SpaceX’s tradable float is expected to outweigh its stock decline. “This flies in the face of market-cap weighting,” the brokerage said.
Funds including the iShares Russell 1000 ETF (IWB), Vanguard Total Stock Market ETF (VTI) and Invesco MSCI USA ETF (PBUS) bought SpaceX shortly after its June high and held it through its July lows. The Nasdaq 100, tracked by the Invesco QQQ Trust (QQQ), added SpaceX on July 7. The S&P 500 cannot add SpaceX before June 2027 because of its one-year seasoning requirement, while profitability rules could delay inclusion further. Morningstar expects SpaceX to remain below 1% of major U.S. indexes in the near term.
Wolfe Sees 25% SpaceX Upside
Separately, Wolfe Research called SpaceX’s upcoming Louisiana spaceport and recent White House launch-regulation relief “bullish indicators for one of the biggest external constraints on SpaceX’s ambitions.” The brokerage said that the project “paves the way to alleviate the most obvious external constraint” to Starship’s rapid-reuse ambitions.
Wolfe maintained an ‘Outperform’ rating and $175 price target, implying a 25% upside from current levels. The firm identified a successful orbital Starship Flight 14 in early September as the next potential catalyst. SpaceX plans to invest $100 billion in the Louisiana facility, which is expected to become Starship’s primary launch hub and support thousands of launches annually. Musk said it could create “probably 10,000 really exciting jobs.” The facility is key to SpaceX’s plans to expand Starlink, deploy orbital data centers and eventually reach Mars.
How Do Retail Traders Feel About SPCX?
On Stocktwits, retail sentiment for SPCX declined to ‘bearish’ from ‘neutral’ levels a week ago amid a 6% rise in 24-hour message volumes.
One user said, “$SPCX Breakout!!!! Stay with me Bulls! This is just getting warmed up! Going to need more jet fuel!!!!”
View this Stocktwits post
Another user said, “$SPCX is getting ready to retest $145-$150 if buyers can hold above $140. Above $150 IPO high then we shall see $160 quickly”
View this Stocktwits post
SPCX stock has fallen 13% over the past three months.
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