Key facts
- SpaceX shares are projected to attract approximately $15.5 billion in passive buying from Nasdaq-100 index rebalancing.
- The demand is expected due to an anticipated increase in SpaceX's index weighting following its June IPO.
- Pivotal Research initiated coverage with a Buy rating and a $220 price target.
- A significant insider share unlock of up to 319 million shares could increase supply.
- Concerns remain about SpaceX's valuation and the execution risk associated with Starship reusability.
SpaceX shares are poised for a significant influx of demand from an upcoming Nasdaq-100 rebalancing, with JPMorgan estimating that passive index funds could acquire approximately $15.5 billion of the company's stock. This projected buying wave is attributed to an anticipated increase in SpaceX's index weighting following its June initial public offering.
The Nasdaq-100 rebalancing is expected to take effect around September 21, with most fund trading occurring at the market close on that date. Despite potential headwinds from a large insider share unlock of up to 319 million shares, which could exert as much as $47 billion in selling pressure, bullish sentiment is being supported by analyst coverage.
Pivotal Research initiated coverage on SpaceX with a Buy rating and a $220 price target, citing the company's potential in reliable Starship reusability and expansion in launch, satellite, and wireless services. Analysts also highlighted Starlink's competitive positioning in wireless connectivity and noted accumulation of shares by institutional and billionaire investors. SpaceX has also reported strong recent revenue growth and a beat on quarterly earnings.
However, concerns persist regarding SpaceX's valuation, which is seen as high relative to its projected revenue, and execution risks associated with achieving Starship reusability. Investors are also awaiting the 14th Starship test flight, the success of which is crucial for validating the company's long-term expansion plans.
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