S&P Dow Jones Indices announced Thursday that it will keep its current eligibility rules for major benchmarks. This move prevents large new public companies, such as Elon Musk's SpaceX, from receiving immediate inclusion in the S&P 500.

The 12-month seasoning period that blocks SpaceX

S&P Dow Jones Indices has decided to maintain its strict 12-month seasoning requirement for newly public companies. According to the report, the index provider will also refuse to waive profitability and public float requirements simply because a company is exceptionally large. This conservative stance ensures that any firm entering the S&P 500 has a proven track record of public trading and financial stability.

This decision represents a significant departure from the current appetite for "mega-cap" listings. By refusing to expedite the process, S&P Dow Jones Indices is signaling that size alone does not grant a company the right to bypass the traditional safeguards designed to protect passive investors from early-stage IPO volatility.

The $14 billion passive buying gap for SpaceX

The financial stakes of this decision are massive for the next wave of technology IPOs. Bloomberg Intelligence estimates that expedited inclusion in the S&P 500 would have triggered approximately $14 billion in forced passive buying for SpaceX. Similarly, OpenAI would have seen $8 billion in inflows and Anthropic roughly $4.6 billion, as reported in the source.

Because S&P Dow Jones Indices is sticking to its rules, these companies will not see an immediate surge of demand from funds that track the benchmark. This creates a gap between the actual market value of these firms and the "forced" demand typically generated by the world's most influential index.

Morningstar's $780 billion valuation vs. Musk's $1.75 trillion target

The debate over index inclusion coincides with a sharp disagreement over the actual value of Elon Musk's SpaceX. While Musk targets a $1.75 trillion valuation, analysts at Morningstar have valued the company at $780 billion—less than half of the target. Morningstar equity analyst Nicolas Owens noted that at the higher valuation, SpaceX would trade at a trailing price-to-revenue multiple of 93.7 times based on 2025 revenue projections of $18.67 billion.

Morningstar's skepticism extends to the company's AI ambitions, with Owens stating that Grok is not currently among the leading AI labs.. This suggests that for many, an investment in SpaceX is as much a bet on the personaal brand and mobilization power of Elon Musk as it is on the company's aerospace fundamentals.

A divergence from the Nasdaq and FTSE Russell fast-track

S&P Dow Jones Indices is bucking a broader industry trend toward accelerated inclusion for massive companies. Nasdaq recently updated its rules to allow a company like SpaceX to join the Nasdaq 100 Index in as little as 15 trading days. FTSE Russell has gone even further, shortening its waiting period to just five trading days.

This creates a fragmented landscape where a company's "market significance" is recognized by some index providers but ignored by others. While proponents argue that trillion-dollar firms should be represented immediately to reflect the actual market, S&P Dow Jones Indices is prioritizing the protective function of trading history and profitability.

Will profitability requirements stall the AI IPO wave?

A critical uncertainty remains regarding how S&P Dow Jones Indices will evaluate the "profitability" of AI-driven firms that prioritize growth over immediate earnings. The source does not specify if there are any exceptions for companies with extreme revenue growth but negative net income, which is common in the current AI sector.

Furthermore, it remains unclear if the "public float" requirements will be a hurdle for companies like SpaceX, which may maintain tight control over share distribution. Since the report only provides the perspective of S&P Dow Jones Indices and Morningstar, the specific strategies these AI giants will use to meet these benchmarks remain unknown.