A lot of investors chose to buy SpaceX when the company went public last week via an initial public offering that priced at $135 per share, according to the company’s regulatory filings. Next week, many more will be buying it whether they like it or not, as index providers that include Nasdaq and FTSE Russell have moved to cut the traditional seasoning period for megacap IPOs from as long as a year to as short as five trading days.
The change means that some of the world’s largest index-tracking funds — the kind that sit in 401(k) plans, endowments, and pension portfolios — will soon be required to hold SpaceX stock regardless of the fund manager’s view of the company’s value. That forced-buying dynamic has been a source of unease for passive investors who prefer a stock to trade for months before it enters a benchmark, giving the market time to settle on a price.
Economist Owen Lamont, a former finance professor who now serves as a portfolio manager at Acadian Asset Management and whose investment research is widely followed, addressed the concern on a recent episode of the Wall Street Journal’s “Take On the Week” podcast. Lamont said that owning some of SpaceX’s stock should not keep true passive investors up at night.
“If you’re an index investor, you’ve already decided not to worry about every little thing,” Lamont said.
But the index providers’ decision to accelerate inclusion is unlikely to boost returns for the average investor, Lamont added. He described the wave of megacap IPOs as a potential warning signal about broader market conditions.
Lamont has termed past waves of IPOs and other stock issuance the “third horseman of the bubble apocalypse” because they tend to precede significant market corrections. “If we were hypothetically in a big AI bubble, one of the symptoms of an AI bubble would be a lot of IPOs,” he said. “Another symptom would be a huge pop,” referring to the first-day surge in a newly public stock’s price.
SpaceX’s own first-day pop was 19%, a relatively modest rise compared with other recent buzzy tech offerings. That number falls short of the kind of explosion that Lamont said would confirm the bubble diagnosis had taken hold.
“Passive investors,” Lamont argued, are by design the wrong group to judge individual stock valuations — their strategy is to own the entire market, not to pick winners. The accelerated inclusion schedule, however, forces them to hold a stock that has barely been tested in public trading, with a valuation that may still be in flux. The risk, Lamont said, is not that index investors will lose money on SpaceX specifically but that the broader pattern of fast-tracked, high-valuation IPOs fills the benchmarks at a market top.
The concern arrives as multiple AI-related companies are racing toward public listings, some of them at blockbuster valuations. MSI previously reported that the wave of pending AI and space-economy IPOs is binding retirement-fund assets to the tech sector at an unprecedented pace. The Nasdaq Composite, the tech-heavy index that is most exposed to the trend, closed at 25,888.84 on the day of SpaceX’s public trading debut.
Lamont’s framing of the IPO wave as a historical precursor to market corrections — the “third horseman” — places the current moment in a longer pattern. Each of the previous waves he has identified, stretching across the pre-financial-crisis private-equity flood and the 2021 SPAC surge, was followed by a period in which the broader indexes declined and the companies that had rushed to market saw their valuations compress.