Whoever coined the term "rules are meant to be broken" probably would have found success working on Wall Street. Two major stock market index providers — the Nasdaq and the FTSE Russell — have adopted fast entry rules that will allow Elon Musk's SpaceX to be added to their respective benchmarks just days after the company has its initial public offering (IPO) on Friday.
Trading under the ticker symbol SPCX, SpaceX's debut is expected to come with a $1.75 trillion valuation. Because it'll be the largest IPO in history, millions of Americans who own index funds in their retirement accounts will be forced to own the popular yet unprofitable company when it is officially added to the stock market's benchmarks.
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What is a fast entry rule?
Stock market indices have historically set rules around how long a company has to exist and how well it has to perform before it can be accepted. For instance, the Financial Times Stock Exchange's Russell 1000, which serves as a benchmark for the 1,000 largest publicly traded companies in the U.S., previously required companies to wait until quarterly or semi-annual reviews before being added to the index.
A flood of high-profile IPOs expected this year has changed that. The Russell 1000 confirmed on May 26 that it has slashed its inclusion rule for companies whose market caps rank in the 500 largest to just five trading days.
The Russell 1000 represents approximately 93% of the total market capitalization of the entire U.S. equity market. That makes it a trusted barometer for large-cap investing, with the index funds that track it having become fixtures in 401(k) plan offerings.
Similarly, the Nasdaq-100, an index of the 100 largest non-financial companies listed on the Nasdaq stock exchange, confirmed May 1 that it will now allow qualifying companies to join its ranks after 15 trading days.
SpaceX is offering an unprecedented 30% of its IPO shares to retail investors. The indices' decisions to adjust their rules was in part motivated by that opportunity, according to Joel Shulman, CEO of ERShares, an asset management and investment firm.
While most companies reserve between 5% to 10% of their IPO shares for everyday investors, Musk's decision is expected to attract everyday supporters and fuel SpaceX's target of raising $75 billion in its public offering.
Without including the stock, Shulman says that the indices could lag others' performances and be perceived as "slow out of the gate." So they're bending the rules.
How the SpaceX IPO could be a risk to investors
With SpaceX's accelerated inclusion in those benchmarks, managers of the funds mirroring the indices' compositions will be forced to purchase shares. But that mandatory buying comes with risks — particularly for the stock of an unprofitable company.
For context, its target $1.75 trillion valuation would make SpaceX around 97% larger than a company like Walmart. However, SpaceX only generated $19 billion in revenue in 2025 while operating at a net loss of $5 billion. Last year, Walmart generated revenue of $681 billion — the most of any company in the world — alongside $20 billion in net income (aka profit).
"SpaceX has high demand but negative net income," says Warren Hurt, chief investment officer at wealth management firm F&M Trust. "There is the natural risk of an asset dropping in price. But what makes this uniquely risky to the passive investor is the cap-weighted structure of [some indices]."
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When an index is market cap-weighted, bigger companies account for larger shares of its performance. Hurt says that given SpaceX's target valuation, passive investors will immediately become sizable SpaceX shareholders, which in turn introduces concentration risk — the potential for outsized losses due to overexposure to a single investment.
The Nasdaq modified its weighting calculation so companies like SpaceX that aren't issuing many shares will not dominate its performance. But that leads to another issue: The index is potentially trading index stability for IPO volatility.
"The fact that it is virtually impossible to value an asset with negative earnings and an unknown future revenue stream makes price discovery very challenging," says Hurts. "I would expect a volatile opening day for this IPO."
For retirement savers in particular, that volatility can lead to sequence of returns risk — the danger that withdrawals during times of poor market performance early in your retirement can hurt your overall returns for years to come. That volatility could be exacerbated by forces beyond everyday investors' control, like insider selling once SpaceX goes public.
However, it could be offset by retail investors' aggressive appetite for SpaceX shares, as well as demand from thematic exchange-traded funds (ETFs) and institutional buying. Shulman notes that there are currently 22 space-themed ETFs that are likely to buy shares of SPCX.
"There's a lot of money that's going to be chasing SpaceX, in particular institutional money and retail money," he says. "So I'm anticipating a strong IPO."
Should retirees invest in SpaceX?
Some retirement plans are taking preemptive action. Denmark's $25 billion public sector pension fund, AkademikerPension, announced on May 29 that it officially blacklisted SpaceX ahead of its IPO, stating that "the extreme concentration of power effectively prevents the board from exercising meaningful oversight and makes it impossible to remove Musk against his will."
However, Shulman — who manages the Private-Public Crossover ETF, a fund with about 13% exposure to SpaceX — downplays the pension fund's decision. He argues that SpaceX has a better price floor than other areas within the market, especially when accounting for Starlink. (That business segment dominates the space-based broadband market and boasts more than 10 million subscribers.)
Shulman adds that for those nearing retirement, owning the stock or having exposure to it through index funds could be one of the last opportunities for outsized gains before drawdowns start to diminish retirement account balances.
"Many people who are retirement age are excited about SpaceX," he says. "Some of our investors think this is their last chance to get something that's going to be exciting."
As retirement approaches, it's prudent for savers to reduce their risk exposure through rebalancing. But as with any investment, you shouldn't put all of your eggs in one basket.
Despite shorter timelines, people preparing to retire can still take advantage of growth opportunities, albeit in cautious and deliberate ways.
"I'm seeing more excitement on this IPO than anything in years," Shulman says. "Do I think someone on a fixed income should put all their money in this? Of course not. But some people think it's a way to get a little extra pop right before their retirement years."
