Key Points
Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, made its market debut just a few days ago, but it’s already a member of the Nasdaq-100 index. The index is composed of the 100 largest non-financial stocks listed on the Nasdaq exchange. Ordinarily, there would be a three-month waiting period. Additionally, the company would be required to float at least 10% of shares on the public market. However, the index changed its rules ahead of SpaceX’s IPO to allow inclusion after just 15 trading days and with a smaller float.
Inclusion in the Nasdaq-100 is notable because it creates forced buyers through index funds like the popular Invesco QQQ Trust (NASDAQ: QQQ). That could help support the stock price and push it higher. To that end, it may be worth examining how prior index entrants performed to gauge what could be in store for SpaceX stock.
Here’s what history says happens next
Despite the growing amount of capital dedicated to index investing, inclusion in the Nasdaq-100 index doesn’t automatically produce excellent results for new stocks. The Nasdaq typically announces index inclusion several days before it actually adds a stock to the index. That can result in some investors front-running the perceived forced buying by index funds and portfolio managers once the stock is added to the index. As a result, the positive effect of being added to the Nasdaq-100 may already be priced into the stock by the time it joins the index.
Unfortunately, recent history indicates that, on average, new entrants into the index underperform the Invesco QQQ Trust index fund in the three-month, 12-month, and two-year periods following their entry. The table below shows new entrants into the Nasdaq-100 from 2020 through spring 2026 and their performance relative to the QQQ index fund.
Effective Date
Company
3-Month Relative Performance
12-Month Relative Performance
2-Year Relative Performance
4/20/2020
Dexcom
9%
(23%)
(6%)
4/30/2020
Zoom Communications
45%
41%
(52%)
6/22/2020
Docusign
10%
19%
(68%)
10/19/2020
Keurig Dr Pepper
(1%)
(10%)
36%
12/21/2020
American Electric Power
(1%)
(15%)
30%
12/21/2020
Marvell Technology
(2%)
44%
(7%)
12/21/2020
Match Group
(2%)
(34%)
(70%)
12/21/2020
Okta
(22%)
(34%)
(72%)
12/21/2020
Peloton Interactive
(23%)
(77%)
(91%)
12/21/2020
Atlassian
(12%)
13%
(35%)
8/26/2021
CrowdStrike
(20%)
(12%)
(43%)
12/20/2021
Airbnb
16%
(22%)
(12%)
12/20/2021
Fortinet
5%
7%
(21%)
12/20/2021
Palo Alto Networks
19%
22%
65%
12/20/2021
Lucid Group
(30%)
(74%)
(89%)
12/20/2021
Zscaler
(20%)
(47%)
(31%)
12/20/2021
Datadog
(6%)
(36%)
(32%)
11/21/2022
Enphase Energy
(38%)
(77%)
(89%)
12/19/2022
Costar Group
(23%)
(24%)
(51%)
12/19/2022
Rivian Automotive
(48%)
(29%)
(65%)
12/19/2022
Warner Bros Discovery
30%
(19%)
(40%)
12/19/2022
GlobalFoundries
(1%)
(34%)
(63%)
12/19/2022
Baker Hughes Co
(15%)
(19%)
(25%)
12/19/2022
Diamondback Energy
(18%)
(22%)
(40%)
7/17/2023
The Trade Desk
(5%)
(13%)
(42%)
12/18/2023
Coca-Cola Europacific Partners
2%
(10%)
(6%)
12/18/2023
CDW
3%
(40%)
(57%)
12/18/2023
DoorDash
20%
33%
48%
12/18/2023
MongoDB
(21%)
(52%)
(34%)
12/18/2023
Roper Technologies
(6%)
(25%)
(46%)
12/18/2023
Take-Two Interactive
(16%)
(12%)
1%
3/18/2024
Linde PLC
(15%)
(12%)
(23%)
11/18/2024
AppLovin
62%
52%
N/A
12/23/2024
Palantir Technologies
22%
102%
N/A
12/23/2024
Strategy
(10%)
(62%)
N/A
12/23/2024
Axon Enterprise
(4%)
(20%)
N/A
12/22/2025
Alnylam Pharmaceuticals
(17%)
N/A
N/A
12/22/2025
Ferrovial Se
(2%)
N/A
N/A
12/22/2025
Insmed
(18%)
N/A
N/A
12/22/2025
Monolithic Power Systems
21%
N/A
N/A
12/22/2025
Seagate Technology Holdings
47%
N/A
N/A
12/22/2025
Western Digital
72%
N/A
N/A
1/20/2026
Walmart
1%
N/A
N/A
Average
(0.27%)
(15%)
(32%)
Data sources: Nasdaq, Google Finance. Calculations by Author.
As you can see, relative performance for new entrants in the first few months of trading as a member of the Nasdaq-100 can vary widely. On average, however, new entrants perform roughly in line with the rest of the index during their first three months, according to my calculations.
Over a full-year period and beyond, however, new entrants don’t hold up as well as the stalwart companies in the index. Average underperformance over the first year is 15%, and the average stock underperforms the QQQ index fund by 32% in the two years following its addition to the Nasdaq-100.
While there’s plenty of room for SpaceX to outperform the averages, the numbers should serve as a cautionary note for investors. There’s another big reason investors should remain cautious with SpaceX stock.
Will index inclusion mitigate the downward pressure on the stock?
One big overhang for SpaceX stock is the massive number of shares that could enter the market over the next year. SpaceX issued less than 5% of its shares in its IPO, requiring Nasdaq to rewrite the rules to include it in the index. But that means 95% of the shares will become available to sell over the next year, in various tranches. CEO Elon Musk has said he has no plans to sell any of his shares, which account for roughly 45% of the company’s value. Still, around 10 times the amount sold in the IPO could be for sale over the coming months.
As a member of the Nasdaq-100 and several other indexes, SpaceX will have some forced buyers as lockup periods expire and the float increases. Nonetheless, selling is likely to weigh on the share price over the next year. This is a special instance, as SpaceX was fast-tracked into the Nasdaq-100. So, there’s no telling just how well the index funds and portfolio managers benchmarked to the index will take the selling pressure.
However, investors should also note that SpaceX’s valuation is extremely high relative to its earnings and revenue. The long-term returns from SpaceX don’t depend so much on its inclusion in the Nasdaq-100, but on its ability to outperform the already high expectations for the company over the next five to 10 years. The odds are against it, but that’s never stopped Elon Musk before.
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Adam Levy has positions in Airbnb and DexCom. The Motley Fool has positions in and recommends Airbnb, Alnylam Pharmaceuticals, Atlassian, Axon Enterprise, CoStar Group, CrowdStrike, Datadog, Docusign, DoorDash, Ferrovial Se, Fortinet, GlobalFoundries, Marvell Technology, MongoDB, Monolithic Power Systems, Okta, Palantir Technologies, Peloton Interactive, Take-Two Interactive Software, The Trade Desk, Walmart, Warner Bros. Discovery, Western Digital, Zoom Communications, and Zscaler. The Motley Fool recommends DexCom, Enphase Energy, Linde, Match Group, Palo Alto Networks, and Roper Technologies and recommends the following options: long January 2027 $65 calls on DexCom and short January 2027 $75 calls on DexCom. The Motley Fool has a disclosure policy.
