Expiring lockups lift SpaceX's weight in the Nasdaq 100 to more than double
A pro forma calculation from Global Index Watch, the service through which Nasdaq publishes index data, circulated on Friday evening and puts SpaceX's weight in the Nasdaq 100 at about 2.82 per cent, against about 1.28 per cent now. The driver is a wider free float, as selling restrictions have lapsed since the company entered the index in July. The settled weight is due later this month, and funds tracking the index are expected to align their portfolios with it.
Economics & Markets··Evening
The pro forma weight is 2.82 per cent
SpaceX's weight in the Nasdaq 100 rises to about 2.82 per cent on the pro forma calculation that Global Index Watch, the service through which Nasdaq publishes index data, circulated on Friday evening. The same calculation puts the company's weight today at about 1.28 per cent. A pro forma figure is not treated as the index provider's final decision; the settled weight is due later this month. Because the weight decides how much of a tracking fund's money goes to one company, the number stops being a technical detail.[1]
The free float widened as lockups expired
The increase comes from a wider free float. SpaceX entered the index in July, and the post-listing selling restrictions known as lockups have expired one after another since then. A lockup is a contractual term barring the sale of shares until a set date, and once it lapses those shares can trade freely. The more shares circulate freely, the larger the weight the index gives the company.[1]
An obligatory trade for tracking funds
Funds that use the index as their benchmark are expected to adjust their portfolios to the new weight. Among the largest vehicles affected is the exchange-traded fund Invesco QQQ Trust Series 1, which holds roughly 481 billion dollars in assets. Because such funds replicate the index composition closely, a change in the weight is an obligatory trade for them. A further rise in the weight also looks possible once the remaining lockups expire.[1]
