New York | While you might want to ignore all the hubbub around SpaceX, Elon Musk and IPOs, your 401(k) likely can't.
SpaceX is now worth USD 2.1 trillion after its stock launched 19.2 per cent higher in its debut on Wall Street. Whether or not you believe it deserves to be worth more than Exxon Mobil, Bank of America and Coca-Cola combined, the collective market does. And if SpaceX maintains that big a value, it will join some high-profile stock indexes.
Many of these indexes don't care about how realistic a company's growth plans are or who its CEO is. They're simply trying to show how slices of the market, or the whole thing, are performing. And if SpaceX is big enough to meet the qualifications to join those indexes, whether it's in a few weeks or a year, it will gain entry.
That matters for investors and their 401(k) accounts because they're depending more than ever on funds that simply mimic these indexes. It's a lower-cost way to invest, allowing savers to keep more of their investments. Partly because of that, such index funds have usually proven to be better performers than funds that try to pick and choose individual stocks.
Just one in five actively managed US stock funds survived and beat their average index peer over the last decade, at 21 per cent, according to Morningstar's data through 2025. Such disparities in performance meant investors had more money invested in US index funds than actively managed ones beginning in 2024, and the gap has only grown since then.
Here's a look at what's going on:
What indexes are
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They're things the investment industry has created to answer the question: What is the market doing? It's otherwise tough to answer quickly when the US market has thousands of stocks moving in different directions at any moment.
The S&P 500 is perhaps the most famous and influential index. It tracks 500 of the biggest US stocks, and trillions of dollars in investments are either directly mimicking it or at least benchmarking themselves against it.
The Dow Jones Industrial Average is well known because it's been around since the 19th century, but it tracks only 30 big stocks so Wall Street pays it little attention.
Companies want to be in indexes
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Because index funds are the way so many investors put money into the stock market, companies want to be part of indexes. Stocks can see a big jump in their prices after S&P Dow Jones Indices, Nasdaq, FTSE Russell or other companies announce they'll be joining their indexes.
The investment industry has created funds, including both traditional mutual funds and exchange-traded funds, to track almost every kind of index. More than 1,000 index funds were available at the end of last year, according to the Investment Company Institute. Of them, 185 tracked the S&P 500.
SpaceX could soon be in indexes
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Nasdaq changed its rules to allow some huge companies to join its Nasdaq 100 index after just 15 trading days. That's a break from the past, where it would wait until each December to add new members in an annual reconstitution to make sure it includes the 100 largest non-financial companies on the Nasdaq.
Some popular funds track the Nasdaq 100 index, including the QQQ exchange-traded fund from Invesco that has roughly USD 477 billion in total investments. That means QQQ holders could soon own shares of SpaceX, without doing anything on their own.
Other AI giants could as well
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Anthropic and OpenAI are two other huge AI-related companies looking to sell their own stocks soon on a US exchange for the first time. Their IPOs could potentially make each worth close to USD 1 trillion.
It used to be that companies would have an IPO long before they got that big. But SpaceX, Anthropic and OpenAI swelled to tremendous sizes thanks to dollars from private investors, including pension funds, companies and rich investors, away from the public market.
That's forcing the reconsideration for the investment industry about how quickly to add companies to indexes that they say track the biggest companies.
Not every index is making changes to fast-track big IPOs
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The company behind the S&P 500 is not making changes to allow SpaceX and other “mega” IPOs faster entry into the index. For it, a stock needs to trade on an eligible exchange for at least 12 months before it can join the index.
Not only that, S&P Dow Jones Indices also requires companies to have made a profit in its most recent quarter and over the sum of its last four quarters.
SpaceX lost USD 4.9 billion last year and another USD 4.3 billion through the first three months of 2026. It acknowledges that it “may not achieve profitability in the future.” Over the long term, a stock's price tends to track with how much profit the company is making.
Not everyone is happy about SpaceX's IPO entry to indexes
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Officials from pension funds for firefighters, teachers and other workers in California and New York sent a letter to SpaceX last month decrying its corporate governance, including how much power Musk will hold over the company through his ownership of a special class of stock with more voting power.
They said they could become owners of SpaceX stock because they hold index funds.
If Musk is able to control so much of the voting power on the board of directors, it would make him tremendously powerful atop SpaceX, “essentially making him unfireable without his own consent,” the CEO of California Public Employees' Retirement System, the New York state comptroller and the New York City comptroller wrote in their letter.
If an investor doesn't like certain companies in the index
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Index funds track indexes. And if a stock is in an index, the index fund will buy it, even if investors may not like it.
Tesla has remained in the S&P 500 even though critics called it overvalued for years, for example, and Musk's electric-vehicle company has grown to become one of Wall Street's 10 biggest companies.
Some indexes say they will not include companies that have poor corporate governance standards or other narrowed criteria, but investors need to look for them.
The S&P 500 ESG index famously kicked Tesla out in 2022, for example.
New York | Elon Musk, the world's richest man and now first-ever trillionaire, controls a lot of different businesses.
Electric vehicles. Brain implants. Underground tunnels. A social media platform once called Twitter. And a rocket maker that blasted off its trading from Wall Street this week.
Over time, more and more of these ventures have found themselves under the same roof. Musk merged SpaceX — which went public on Friday — with his artificial intelligence company xAI just earlier this year. But he still holds the CEO role at several corporations today, in addition to other various executive titles or ownership stakes.
Here's a look at Musk's vast business empire.
SpaceX
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Musk is CEO of SpaceX, which he founded in 2002. The company has grown far beyond rockets. It owns satellite communications service Starlink, a big source of cash for the company that generated USD 4.4 billion in operating income last year.
SpaceX also houses social media platform X, formerly known as Twitter, which Musk bought for USD 44 billion in 2022 and parked it under xAI, the maker of the Grok chatbot.
Both xAI and X are money losers (the AI business lost USD 6.4 billion in operations last year). Nonetheless, SpaceX — which lost USD 2.6 billion overall from operations last year — was able to whip up enough market hype to debut with the biggest initial public offering in history on Friday, closing at just below USD 161 per share, or a total market value of USD 2.1 trillion.
Some think that price tag significantly overvalues the company. SpaceX has promised it will become a leader in AI and one day help make human life multiplanetary — with lofty, and at times sci-fi sounding, goals that range from putting data centres in space to colonising Mars. But the bulk of that hinges on unproven technology and massive capital needs.
Tesla
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Musk is also CEO of Tesla, a role he has held at the electric car maker since 2008.
Tesla has struggled with rising competition in the EV space. Last year, the company lost its crown as the world's largest EV maker to China's BYD.
Sales were also bruised during boycotts over Musk's politics. Those numbers have since rebounded some, but Musk has repeatedly shrugged off troubles — emphasising that Tesla's future lies less in car sales than getting people to take rides in them as self-driving taxis.
Beyond the road, Tesla has been upping production of robots for homes and businesses. And it's also been in the solar energy business for about a decade with it purchase of SolarCity, which was founded by Musk and two of his cousins.
Tesla went public in 2010, and went on to join the trillion dollar club on the S&P 500. Its market cap currently stands around USD 1.5 trillion.
Neuralink
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Musk has also the CEO title at Neuralink, a brain-computer interface company he co-founded in 2016.
Neuralink is one of many groups working to connect the human nervous system to machines. It's launched clinical trials for people who have spinal cord injuries, ALS and other conditions. The company (and sometimes Musk himself ) has announced a handful of brain implants over recent years. In January, Neuralink said it had 21 trial participants worldwide.
The Boring Company
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Musk also founded The Boring Company, a decade-old tunnel digging and underground transportation business.
The Boring Company is behind projects like the “Vegas Loop” — a network of underground, Tesla-hailing tunnels that first opened around around the Las Vegas Convention Centre in 2021.
It's promised to deliver a network of high speed transit — with plans to also make tunnels in Dubai and Nashville. Still, pushback has piled up along the way.
The company has been accused of breaking multiple safety and environmental requirements in Las Vegas, where its full route is still unfinished, and other criticism from some local officials in Nashville.
Paypal and other previous endeavours
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Musk made his initial fortune by creating two companies, Zip2 and PayPal ( once X.com ). Those then-startups were sold to new owners decades ago — but netted him about USD 200 million at sale, which Musk used to later start SpaceX and invest in Tesla.