Key facts
- S&P Dow Jones Indices is consulting on potential changes to its listing rules.
- Proposed changes could allow unprofitable companies to be included in indices.
- SpaceX, OpenAI, and Anthropic are preparing to go public but are not yet profitable.
- Current rules require positive GAAP earnings over four quarters and in the most recent quarter for index inclusion.
The S&P 500 index has historically required companies to demonstrate profitability over four consecutive quarters to be eligible for inclusion. This rule has prevented highly valued but unprofitable companies, such as Tesla until late 2020, from joining the index. With upcoming IPOs from major tech firms like SpaceX, OpenAI, and Anthropic, which are currently unprofitable, S&P Dow Jones Indices is exploring modifications to these long-standing criteria. Such a change could lead to these companies quickly becoming significant components of major indices, impacting investor portfolios and the flow of capital.