SpaceX’s massive valuation push sparks debate over index inclusion rules

SpaceX is reportedly seeking to raise $75 billion through a new funding round that would value the company at an astonishing $1.75 trillion.

SpaceX is reportedly seeking to raise $75 billion through a new funding round that would value the company at an astonishing $1.75 trillion. If achieved, the valuation would place Elon Musk’s aerospace giant among the ten most valuable companies in the United States, rivaling some of the biggest names in the technology sector. However, despite its enormous market value, only a relatively small percentage of SpaceX shares are expected to be publicly available for trading.

The proposed valuation has reignited discussions about whether large private companies should receive special treatment when it comes to inclusion in major stock market indexes. Recently, S&P Dow Jones Indices reaffirmed its existing eligibility requirements, making it clear that exceptions will not be granted simply because a company is exceptionally large or attracts significant investor interest.

According to S&P’s guidelines, SpaceX would need to demonstrate financial strength before qualifying for inclusion in key indexes. Specifically, the company must report profitability under Generally Accepted Accounting Principles (GAAP) in its most recent quarter and also maintain cumulative profitability across the previous four quarters. These requirements remain in place regardless of the company’s size or market valuation.

Market analysts and investment strategists have largely supported S&P’s decision to maintain its standards. They argue that relaxing the rules for high-growth but unprofitable companies could undermine the credibility and reliability of benchmark indexes. In their view, indexes should continue to reflect consistent financial performance rather than simply reward scale and investor enthusiasm.

S&P’s decision also carries significant implications for the investment industry. Had the index provider altered its eligibility criteria, it could have triggered a legal and operational obligation for index-tracking funds managing trillions of dollars in assets to purchase SpaceX shares. Such a move would have created substantial demand for the stock and potentially influenced market dynamics.

While S&P has chosen to keep its rules unchanged, other major index providers are taking a different approach. Several organizations are reportedly reviewing and updating their frameworks to accommodate the growing number of highly valued technology and artificial intelligence companies preparing to enter public markets. Firms such as SpaceX, Anthropic, and OpenAI are among the companies prompting these discussions.

Nasdaq has already implemented notable rule changes aimed at making it easier for newly listed corporate giants to gain representation within its benchmark indexes. As a result, Nasdaq-100 index funds may eventually be required to purchase a significant portion of SpaceX’s publicly traded shares once the company becomes eligible.

Meanwhile, SpaceX already meets the criteria for accelerated inclusion in other prominent benchmarks, including the Russell US Equity Indexes and the FTSE Global Equity Index Series. This means the company could gain exposure to a broad base of institutional investors relatively quickly after a public listing.

The broader debate reflects growing concerns across financial markets about the declining number of publicly traded companies in the United States. Exchange operators and index providers are increasingly revising their rulebooks to attract high-profile technology and AI firms, recognizing their importance to future market growth. As some of the world’s most valuable private companies move closer to public listings, the decisions made by index providers today could reshape investment markets for years to come.