When SpaceX makes its market debut on June 12, it’ll be the largest initial public offering (IPO) in the stock market’s history. Unsurprisingly, it has come with a lot of hype, but also a lot of scrutiny because of how the IPO is expected to be treated.

The S&P Dow Jones Indices, which manages the S&P 500, considered altering its rules to fast-track SpaceX as well, but it faced significant backlash and decided against it after a vote. The Nasdaq, however, altered its rules to fast-track SpaceX into its Nasdaq-100 index. Let’s take a look at what that means.

Missed Nvidia in 2009? This Rare Signal Is Flashing Again. In 2009, a “Double Down” signal flashed for a little-known chipmaker called Nvidia. For the first time in years, that same “Total Conviction” signal is flashing for a company 1/100th the size of Nvidia. Continue »

How have the Nasdaq rules changed?

Traditionally, to be included in the Nasdaq-100, a company would need to have traded for at least three months and meet a liquidity threshold. However, the Nasdaq changed its rules, and now, to be included, a company only needs to be valued in the top 40 of Nasdaq companies in its first week, and then it can join after 15 trading days.

Whenever SpaceX is added to the Nasdaq-100, investors in the Invesco Nasdaq-100 ETF (NASDAQ: QQQM) will automatically gain exposure to SpaceX. Since it mirrors the index, it won’t be optional.

Notably, though, this rule change doesn’t apply to the Nasdaq Composite.

How much of QQQM will SpaceX make up?

QQQM contains 103 companies across all non-financial sectors. Here are its top 10 holdings before the SpaceX IPO:

Data source: Invesco. Percentages as of June 5.

With a $1.77 trillion market cap, SpaceX would instantly be the seventh-most valuable company in QQQM (as of market caps on market close on June 5). That doesn’t mean it’ll instantly join its top holdings, however.

Although QQQM is weighted by market cap — meaning larger companies account for more of the fund — it doesn’t look at its total valuation. It’s based on a company’s free-float market cap, which is the value of its shares that are available to the public.

Since SpaceX will have a relatively small free float of shares, its free-float market cap will be much lower than its $1.77 trillion valuation. It’s likely to be closer to $75 billion. But once the Nasdaq adds its 3x multiplier — intended to prevent large companies with small free floats from being excluded — SpaceX will be weighted in the index at around $225 billion.