SpaceX's lift-off moment stalls

**Leanna Byrne** (0:00)
A place in the Nasdaq 100 is meant to be a lift-off moment, but not for SpaceX.

**James Drury** (0:06)
It's one of the quickest additions ever as well.

**Evan Solomon** (0:08)
Usually, you'd have to wait around three months.

**Sernjana Tiwari** (0:10)
This has been under a month of trading.

**SPEAKER_5** (0:12)
When you look at the tech-heavy Nasdaq, you're seeing a lot of that pressure from AI companies that investors are just getting a little bit nervous.

**Leanna Byrne** (0:21)
It's World Business Report from the BBC World Service. I'm Leanna Byrne. SpaceX is being added to one of the world's most closely watched share indices. So why hasn't that been enough to reassure investors? NATO allies are under pressure to find the money for a huge rise in defense spending and China's robotaxi firms are racing overseas, but will passengers trust cars without drivers?
So just 25 days ago, SpaceX made its debut on the stock market.
It was the largest initial public offering in history listed on the Nasdaq and sold $75 billion worth of shares at $135 each. And now, it's officially joined the Nasdaq 100 That's the index of big tech-heavy companies that includes names like Apple, Microsoft and Nvidia. This matters because funds that track the Nasdaq 100 now have to buy SpaceX shares automatically. But then, why did SpaceX shares fall today? To give me all the answers is Eileen Burbridge, a tech investor and founding partner at venture capital firms, Passion Capital and NFG. Eileen, hello. Thanks for joining us.

**Eileen Burbridge** (1:48)
Thanks, Leanna.

**Leanna Byrne** (1:48)
Can you explain to me the Nasdaq 100? Is it difficult to get into?

**Eileen Burbridge** (1:53)
It's typically taken other companies at least six, if not 12 months, to get into that index because previously Nasdaq used to require a certain period in which the stock should try to stabilize, in which there would be quarterly earnings reports, in which case you could track profitability, maybe revenue thresholds, and in this case for these mega cap companies, Nasdaq made an exception and said that it would allow SpaceX to be on the index after just, as you said, 25 days.

**Leanna Byrne** (2:23)
So how much influence will SpaceX have on that list now it's on it?

**Eileen Burbridge** (2:29)
It's interesting because it is just a percentage of its free float and SpaceX did float a very small percentage of its share capital. So its influence or its weighting in the actual index is not very great. However, because of its rather high share price, it's causing others to actually redistribute their allocation across the index because that means they're having to sell other positions in order to take up the position in SpaceX.

**Leanna Byrne** (2:56)
Really flesh that out for me. What does that mean? Essentially, so there's other companies on the list who are now having to change things because it's come in?

**Eileen Burbridge** (3:04)
Yeah, I mean, the companies are probably not having to change things. They're probably having to keep an eye on what's happening to the volume of their trading and their shares that are being traded because investors, institutional investors and fund trackers, ETFs and the like, are having to redistribute their holding across the index to make space for SpaceX.

**Leanna Byrne** (3:22)
Interesting. Also with me now, Jennifer Snyder, Financial Advisor at Brighton Securities in Rochester, New York. Jennifer, SpaceX shares are down around 6%, but if billions of dollars are automatically buying SpaceX stock, so why is it not going up?

**Jennifer Snyder** (3:38)
I think it still comes back to the hype and the overvaluation. We are essentially investing in what future earnings can look like.
And to think that in 2025, I think revenue for SpaceX was $19 billion, and it's valued at $2 trillion, $3 trillion. I forget where we're at in the trillions with it. That is a lofty number to have to reach for future earnings. So there's a lot of that concern, but investors are positive that everything that they're going to promise, not just from a rocket launching aspect, but the other companies that it embodies, Starlink, launching services, national security and defense, all of this is what we're really looking at for the future returns.

**Leanna Byrne** (4:25)
Eileen, do you agree with that? What do you think, all is well?

**Eileen Burbridge** (4:30)
Well, I'm not sure that's how I characterise with your other guest just said, because I agreed with what she said, but I think the emphasis she was making is that investors aren't really investing in SpaceX because of its existing fundamentals. They're looking at future growth opportunities, and as she said, the share price represents a hundred times its revenues. And so people are buying into the promise and also the allure of Elon Musk.