00:00Scott, yeah, after the closing bell tonight, index funds tracking the Nasdaq 100 have to start buying SpaceX stock, whether
00:07they want to or not.
00:08There are more than $800 billion in assets that directly track the Nasdaq 100, more than half of which from
00:15Invesco's QQQ.
00:17JP Morgan estimates there will be about $4.3 billion worth of forced purchases flows into SpaceX by funds that
00:24have to reflect its weighting in the composite before it officially appears there tomorrow.
00:29SpaceX's weight in the Nasdaq 100 will be very, very small at first, less than 1%.
00:34And these funds will have to sell a little from the other constituents in the index in order to make
00:39room, but the impact will be spread out over the other names, so it shouldn't be too noticeable.
00:43We've never seen something like this happen at this scale so quickly after an IPO.
00:49Remember, Scott, several months ago, Nasdaq altered its rules to allow for a fast tracking of mega cap companies into
00:55its flagship index.
00:56So instead of waiting months with a double-digit percent float, companies that would have a top 40 market cap
01:03can be included after 15 trading days with just a small sliver of a float.
01:08Now, SpaceX is waiting, and the index will grow as its float does.
01:12We'll see that happen as the company starts to lift its lockups, allowing insiders to sell, and that could start
01:17as soon as next month.
01:18And then SpaceX may opt to do secondary offerings over time, which would also bolster the float size.
01:24However, markets tend to front-run these rebalancings, especially ones as well-telegraphed as the SpaceX one.
01:31So, you know, any expected forced buying may already be reflected in the stock price.
01:37You can see it's not really doing much ahead of the event today.
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