SpaceX Just Joined the Nasdaq-100. Should You Worry About Your Index Fund?

Key points

• SpaceX joined the Nasdaq-100 index on July 7th, 2025, forcing index funds that track it to automatically buy shares.
• The Nasdaq changed its own rules, at SpaceX's request, to allow newly public companies to join the index after just 15 days of trading.
• SpaceX currently holds a market value above $1.5 trillion, but because only a small slice of shares were sold at launch, it is treated as a much smaller company inside the index.
• Economist Burton Malkiel, one of the founding thinkers behind index investing, says SpaceX is not a reason to avoid index funds.
• Larger share releases, called lockup expirations, are expected in mid-August 2025 and could shift how much room SpaceX takes up inside these funds.

Most people who own index funds do not pick the companies inside them. That is the whole point. An index fund, a type of investment that automatically buys a slice of every company in a given list, is designed to follow the market without requiring you to guess which stocks will win.

So when SpaceX landed inside the Nasdaq-100, a list of the hundred largest non-financial companies on the Nasdaq stock exchange, a lot of savers suddenly owned a piece of it whether they wanted to or not.

Here is the short version: it probably does not put your retirement at serious risk. But the story is worth understanding.

Index funds got popular largely because of a 1973 book called A Random Walk Down Wall Street by economist Burton Malkiel. His core argument was simple. Nobody, not even professionals, can reliably predict which individual stocks will beat the market over the long run. So most investors are better off buying the whole market at once and waiting. Warren Buffett has made the same point, suggesting ordinary investors put 90 percent of their money into a low-cost fund that tracks the S&P 500, a list of America's 500 largest public companies.

By 2024, the money sitting in passive funds like these outpaced the money in actively managed funds for the first time.

SpaceX's entry raised eyebrows for two reasons.

First, the Nasdaq quietly changed its rules so that a large enough company can join the Nasdaq-100 just 15 days after going public. Reuters reported that SpaceX requested that rule change. Critics called it queue-jumping.

Second, Musk controls SpaceX almost entirely on his own. Shareholders in most public companies can vote on proposals and, in extreme cases, sue the company. SpaceX has sharply restricted both rights. The CEOs of CalPERS, California's giant public pension fund, and New York's state and city pension offices all wrote to SpaceX complaining about this structure. Ordinary index-fund holders cannot vote at all, but the big fund managers who hold shares on their behalf can, and they now hold SpaceX shares in quantity.

Will this hurt my savings?

Probably not, but there is a real watch-out. SpaceX entered the index at a modest weight because only a small fraction of its shares were sold publicly. That changes in mid-August, when employees who were barred from selling at launch, under what are called lockup periods, can start selling. More shares on the market usually means the company takes up more weight in the index, though selling can also push the price down.

Malkiel's view, reported in full by The Verge AI, is direct: SpaceX is overhyped, but that is not an argument against index funds themselves. Markets have overhyped every transformative technology from railroads to the internet. The funds still delivered long-run returns because a small number of genuine winners carried everything else.

More AI-heavy companies, including Anthropic and OpenAI, are expected to go public later this year. If AI turns out to be a bubble, that concentration could sting. Malkiel's counter is that the market has always been concentrated at the top, and the index still works over time.

For now, the practical answer is: check how much of your fund is in the Nasdaq-100 versus a broader index like the S&P 500 or a total-market fund. Broader baskets spread the risk further. That is not a panic move. It is just good maintenance.