Prediction: SpaceX Will Be 19% of This Low-Cost Vanguard ETF Before the End of 2026
Written by Daniel Foelber for The Motley Fool -> SpaceX will be a top holding in the S&P 500 and Nasdaq-100. But it could dominate communication sector ETFs. SpaceX could become the second-most-valuable communications stock, behind Alphabet. Even if you have zero interest in
SpaceX could become the second-most-valuable communications stock, behind Alphabet.
Even if you have zero interest in buying SpaceX when it goes public as early as June 12 , its initial public offering (IPO) is highly likely to affect your portfolio.
About 156 million U.S. adults own stocks. And a lot of that wealth is in S&P 500 index funds , mutual funds, and market-cap weighted growth-focused exchange-traded funds (ETFs) that could soon own SpaceX.
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Investors looking for a scoop of SpaceX rather than a sprinkle have come to the right place. Out of Vanguard's 56 low-cost equity-focused ETFs, the Vanguard Communication Services ETF (NYSEMKT: VOX) will likely hold (by far) the highest percentage of SpaceX stock.
SpaceX is raising $75 billion at a valuation of around $1.75 trillion -- making it the largest IPO in history. The S&P 500 and Nasdaq-100 (the largest 100 non-financial companies on the Nasdaq Composite) are paving the way for fast-track entry for mega-cap growth stocks like SpaceX, Anthropic , and OpenAI , potentially weeks after they go public.
The fast-track entry will allow these behemoth companies to bypass the traditional seasoning period , during which newly public companies are assessed against core principles. The issue with the seasoning period is that it effectively creates a lag, so a newly listed company can post monster gains that index fund investors miss out on. And then, the company is added to the index at a higher price. This is exactly what happened with Tesla (NASDAQ: TSLA) , which went public in 2010 but wasn't added to the S&P 500 until December 2020, when it had a market cap in the hundreds of billions.
However, valuing SpaceX at $1.75 trillion right off the bat would effectively break index funds and passively managed market-cap-weighted ETFs, because the float of $75 billion would be simply too small for funds to properly weight SpaceX as a top holding. Therefore, the S&P 500 and Nasdaq-100 will most likely weight SpaceX based on three to five times the value of the shares available to the public to trade, known as the float, rather than its market cap. And as insiders sell SpaceX shares, the float will increase, and so will SpaceX's weight.
