SpaceX's impending inclusion in major exchange-traded funds (ETFs) like the Vanguard Growth Index Fund ETF (VUG) is drawing significant attention due to its $2.7 trillion market capitalization, making it the fifth largest company globally.
This move follows a rule change by Nasdaq and other index providers, which has sparked criticism from financial advisors like Ayman Saidi, who argue that this forces passive investors into a volatile asset without their consent.
SpaceX's implied volatility was reported at nearly 120, significantly higher than that of the iShares bitcoin ETF (IBIT), indicating that it will be the most volatile stock in the S&P 500 and Nasdaq 100.
Analysts like Kevin Kelly suggest that investors averse to volatility may prefer bonds, while others, such as Noel Smith, believe that being part of an index could help stabilize SpaceX's volatility over time due to increased liquidity from high-frequency trading and passive investment flows.
This situation highlights the challenges faced by passive investors who may now find themselves holding a stock that embodies both extreme volatility and a lack of traditional financial metrics like earnings