Nasdaq Shortens Index Entry Period for Large IPOs

Nasdaq changed its rules to allow some large companies to join its Nasdaq 100 index after 15 trading days rather than waiting for the annual December review. The rule change means index funds that track the Nasdaq 100 could soon hold shares of companies that complete large initial public offerings.

One such fund, the Invesco QQQ exchange-traded fund, holds roughly $477 billion in total investments.

Index funds are designed to mirror the performance of a specific group of stocks rather than select individual companies. More than 1,000 index funds were available at the end of last year, according to the Investment Company Institute. Data from Morningstar through 2025 showed that 21 percent of actively managed U.S. stock funds survived and beat their average index peer over the previous decade.

Investors have directed more assets into index funds than actively managed funds since 2024.

SpaceX completed its initial public offering and reached a market value of $2.1 trillion after its shares rose 19.2 percent on the first day of trading. The company reported a net loss of $4.9 billion for 2025 and an additional $4.3 billion loss in the first three months of 2026.

S&P Dow Jones Indices requires companies to trade on an eligible exchange for at least 12 months and to show a profit in the most recent quarter and over the prior four quarters before joining the S&P 500. The firm has not changed these requirements for large IPOs.

Officials from pension funds in California and New York sent a letter to SpaceX last month regarding the company's corporate governance structure. The letter noted that index fund holders could become owners of SpaceX shares through their fund investments.

Some indexes apply additional criteria related to corporate governance standards. The S&P 500 ESG index removed Tesla in 2022 under such criteria.