Main Takeaways

SpaceX is projected to rank among top holdings in the S&P 500 and Nasdaq-100.
Yet it may lead in communication sector ETFs.
SpaceX could rise to second-most-valuable communications stock after Alphabet.
10 stocks we prefer over Vanguard World Fund - Vanguard Communication Services ETF

Even without plans to purchase SpaceX shares at its potential public debut around June 12, the IPO will probably influence your investments.

Roughly 156 million American adults hold stocks. Much of this value sits in S&P 500 index funds, mutual funds, and market-cap weighted growth ETFs likely to include SpaceX soon.

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Those seeking substantial SpaceX allocation instead of minor exposure are in the right spot. Among Vanguard's 56 budget equity ETFs, the Vanguard Communication Services ETF (NYSEMKT: VOX) stands to include the largest share of SpaceX by a wide margin.

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The SpaceX IPO marks a market-shifting occasion

SpaceX aims to raise $75 billion at a valuation near $1.75 trillion, marking the biggest IPO ever. The S&P 500 and Nasdaq-100 facilitate rapid inclusion for large growth firms like SpaceX, Anthropic, and OpenAI, possibly weeks post-listing.

This quick addition skips the standard seasoning phase where new public firms face evaluation on key criteria. The seasoning delay means index fund holders miss early gains before addition at elevated prices. Tesla exemplified this after its 2010 debut, joining the S&P 500 only in December 2020 with a market cap in hundreds of billions.

Valuing SpaceX at $1.75 trillion immediately could strain index funds and passive market-cap ETFs, as the $75 billion float proves too limited for proper top weighting. Thus, the S&P 500 and Nasdaq-100 will likely assign SpaceX weight at three to five times its public float rather than full market cap. Insider sales will grow the float and SpaceX weighting over time.

Even at full $1.75 trillion market cap weighting, SpaceX would comprise just over 2% of the S&P 500. This remains notable for S&P 500 index fund holders. Investors wanting greater SpaceX access via low-cost ETF should examine the Vanguard Communication Services ETF instead.

Readying the communications sector for growth

This sector ETF holds major communication stocks. While SpaceX's GICS sector assignment remains unclear, communications fits best since Starlink satellites drive most revenue and it owns X, formerly Twitter.

Joining communications at three to five times the $75 billion float would yield $225 billion to $375 billion weighting, placing it ahead of Verizon Communications (NYSE: VZ) but likely behind Netflix (NASDAQ: NFLX) for fourth in the Vanguard Communication Services ETF. Insiders may sell holdings before the standard 180-day lockup. Additional sales could occur at least five to 10 trading days post-IPO, plus at 70, 90, 105, 120, and 135 days after.

This timeline allows market-cap weighting by end of 2026 rather than float-based. At that point, with communications sector inclusion and sustained $1.75 trillion valuation, SpaceX might reach about 19% of the Vanguard Communications Sector ETF.

Numerous assumptions apply. The core idea is that communications sector addition without post-IPO decline positions SpaceX quickly as a top-three holding alongside Meta Platforms (NASDAQ: META) and Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG).

Overall, the Vanguard Communication Services ETF offers an appealing option for investors pursuing amplified SpaceX exposure in ETF form.

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Daniel Foelber holds Netflix. The Motley Fool holds and recommends Alphabet, Meta Platforms, Netflix, and Tesla. The Motley Fool recommends Verizon Communications. The Motley Fool maintains a disclosure policy.

The opinions expressed here belong to the author and may not reflect those of Nasdaq, Inc.