S&P 500 refuses SpaceX's fast-entry request, closing the door for OpenAI and Anthropic

SpaceX requested unusually swift entry into several leading stock market indexes as a condition of its stock market debut. On June 4, S&P Dow Jones Indices, the company that creates and manages the S&P 500, refused to bend its rules for Elon Musk's space and AI company.

The consultation and what was proposed

To weigh expedited entry, the index provider held a monthlong consultation on changing or waiving several main requirements for so-called MegaCap companies with "unprecedented market capitalizations". The proposals included shortening the "seasoning period" for new IPOs from 12 months to six, waiving the investable weight factor (IWF) requirement that MegaCap companies make at least 10 percent of their shares publicly available, and waiving the requirement to demonstrate profitability in the latest quarter along with the previous four.

Such changes would have accommodated SpaceX's plan to offer only about 3 percent of its IPO shares to public investors, and the fact that the company is currently unprofitable with a growing debt load that has reached $29 billion because of its spending on AI infrastructure.

What the decision means

In its final decision, S&P Dow Jones Indices stated that "no changes will be made to the eligibility criteria including financial viability screens, seasoning period, or minimum IWF". SpaceX therefore does not get accelerated access to potentially billions of dollars from passive funds that automatically purchase shares of S&P 500 companies. The same door closes for OpenAI and Anthropic, which might otherwise have entered the index not long after their own expected initial public offerings. Even after the standard yearlong wait, the three companies may struggle to deliver the consistent profitability needed to qualify.

Bloomberg Intelligence estimated that swift entry would have triggered $14 billion of passive fund buying for SpaceX, more than $8 billion for OpenAI and $4.6 billion for Anthropic, because $7.5 trillion in passively managed funds track the S&P 500. The provider did carve out one concession: it changed IWF rules for "lower-profile benchmarks" such as the S&P Total Market Index and the Dow Jones US Total Stock Market Index, which could give an IPO faster entry there.

Other indexes moved faster

Nasdaq changed its rules to let SpaceX enter the Nasdaq-100 within 15 trading days instead of the usual three months, and FTSE Russell granted SpaceX and other follow-on companies accelerated entry to the Russell Top 500 Index after the close of the fifth trading day following an IPO. The S&P decision came days after Morningstar analysts described SpaceX as "significantly overvalued" in the lead-up to its IPO, valuing the company at $780 billion — less than half of its $1.75 trillion IPO goal — mainly on the strength of its Starlink satellite service and rocket launch business.