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SpaceX does not have early access to the S&P 500

Your pension plan may not be forced to buy SpaceX stock after all.

With SpaceX poised to go public soon at a huge valuation, the Nasdaq 100 and other indices recently relaxed their rules to allow Elon Musk's company to join early. This caused some consternation, as large funds often invest in exchange-traded funds (ETFs) based on the index. This means people could end up holding SpaceX stock in their pension funds whether they like it or not.

But the world's largest index, the S&P 500, just announced it will not relax early entry rules for so-called MegaCap companies. As a result, SpaceX must wait at least 12 months before considering adding to the index. Additionally, a company must have been profitable for the four most recent quarters to be included. This could be a challenge because SpaceX has never actually made a profit, according to its own S-1 SEC filing.

At a time when financial regulations are being eased in favor of corporations, the news seemed to dismay observers. “I was really surprised,” said Bloomberg Intelligence analyst James Seyffart. “But S&P is the market leader and can buck the trend.”

Analysts have been cautious about SpaceX, with many believing its potential $1.78 trillion market capitalization is excessive. Research firm Morningstar, which valued the company at $780 billion, called it "significantly overvalued" and said the IPO "does not offer the best entry point for individual investors." Analysts see xAI as a potential foundation for a lucrative sector like Starlink due to fierce competition from OpenAI, Gemini and Anthropic.

But S&P's decision may not completely cut off your pension. Other indices, including the Nasdaq 100 and FTSE Russell, have already changed their rules to allow SpaceX to join in just 15 and five trading days, respectively. Critics have argued that this "quick entry" would benefit early investors and hurt regular retail buyers.