Vanguard funds may get a slice of SpaceX before others. Here’s how.
May 4, 2026
Vanguard investors may soon get a little SpaceX, and they could grab a sliver before index funds tracking the S&P 500 and Nasdaq 100.
SpaceX—Elon Musk’s rocket and artificial-intelligence company—is headed for an initial public offering as soon as this June. The sale, which could value the company at up to $2 trillion, is expected to raise $50 to $75 billion, making it the largest IPO in U.S. history.
Even at a $1.5 trillion market value, SpaceX would be one of the 10 largest companies in the U.S. It would be smaller than Apple and Nvidia, but larger than Walmart or Berkshire Hathaway.
An expected wave of megacap IPOs has led index providers to rethink or change rules so that the stocks can get into indexes much faster. Nasdaq’s new rules, going into effect May 1, offer “fast entry” for some companies after just 15 days on the market.
S&P Dow Jones Indices is considering rule changes that could speed SpaceX’s entry into the S&P 500 after six months, rather than the 12-month period that new companies traditionally have to wait.
The changes should create a wave of forced buying for SpaceX and other megacap IPOs as firms like Vanguard, BlackRock, and State Street add the stocks to their funds.
More than $4 trillion in U.S. index funds track the S&P 500, according to Morningstar. More than $400 billion tracks the Nasdaq 100 through exchange-traded funds like Invesco QQQ Trust.
Vanguard will also be a buyer through its index funds. Vanguard manages over $1.4 trillion in S&P 500 index funds. It oversees another $2 trillion in Vanguard Total Stock Market, making it America’s largest stock fund (through both mutual fund and ETF share classes).
While Vanguard’s S&P 500 funds track that index, Vanguard Total Stock tracks the CRSP US Total Market Index, a proxy for the broader market. The index’s rules suggest it’s likely to add SpaceX just five days after the IPO starts trading, prompting the Vanguard fund to buy it too, according to Rodney Comegys, Vanguard’s Head of Global Equity.
“On day five of every IPO that’s large enough, we put it in our fund,” he says.
Investors shouldn’t expect SpaceX to have a big impact initially, due to the size of the “float” and index fund rules.
The float is the percentage of a stock that trades publicly. For IPOs, initial floats of 15% to 25% are common, although SpaceX is expected to be smaller at around 5%.
“It’s not going to be the size of Nvidia and the Mag Seven,” says Comegys.
If SpaceX were valued at $1 trillion, for instance, and 5% of its equity traded publicly, that would peg it as a $50 billion company, about the same size as Target or Nike, Comegys points out.
That’s a far cry from the $1.5 trillion value being bandied about, but it reflects the nature of IPOs and index funds. Major stock market indexes are typically float-adjusted. That means a company’s weight in the index is based on the total value of its publicly traded shares, not the total value of the company.
“We are always a proportional buyer,” Comegys says.
With so many giant funds issuing buy orders, the demand could help balloon SpaceX stock. It’s happened before. In late 2020, shares of Tesla, Musk’s other major company, surged 70% in the weeks before it was added to the S&P 500.
“If [SpaceX] valuations are even in the ballpark of what we think, there’s probably going to be some buying pressure,” says Morningstar analyst Daniel Sotiroff. But it’s likely to be short-term, he adds. “Once the forced buying by index funds subsides, we’ll see what the market really thinks.”
Investors in Vanguard Total Stock should get exposure to SpaceX on the early side. It’s unlikely to be enough to move the needle on the fund or SpaceX’s stock, notes Comegys. “I don’t think I will be the buyer that drives the incremental price,” he says.
If history is any guide with Tesla, however, it shouldn’t hurt.
Write to Ian Salisbury at ian.salisbury@barrons.com
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