S&P Dow Jones Indices keeps benchmark eligibility rules, denying mega IPOs fast-track entry days before SpaceX listing
Index funds tracking the S&P 500 will not be buying SpaceX at its debut. S&P Dow Jones Indices said June 4 it is keeping its 12-month seasoning and profitability requirements, rejecting fast-track entry for mega IPOs days before SpaceX lists. Axios and CNBC report.
The biggest IPO of the year will not come with automatic index demand. S&P Dow Jones Indices announced on June 4 that it will keep the eligibility requirements for its benchmarks, including the S&P 500, unchanged after a market consultation, a decision that lands days before SpaceX's listing. The index provider rejected proposals to halve the 12-month seasoning period for newly public companies to six months, and declined to waive the GAAP profitability screen, which requires positive net income across the four most recent quarters, on the basis of a company's size. In its statement, S&P said exceptions to financial viability, seasoning and float requirements should not be granted solely based on market capitalization. The practical consequence: index funds tracking the S&P 500 will not be forced buyers of SpaceX shares at or shortly after the debut, removing a source of mechanical demand that some investors had counted on. S&P did say it would modify entry rules for the broader S&P Total Market Index and Dow Jones U.S. Total Stock Market Index, creating a pathway into those less widely followed benchmarks. Sources: Axios, CNBC, Yahoo Finance.