How to get SpaceX stock — without buying the IPO

The upcoming initial public offering (IPO) of SpaceX is set to be a monumental event, drawing significant attention from the investing community. However, financial experts caution that investing in IPOs can be risky for everyday investors. Stocks frequently struggle to maintain profitability in their initial trading phases, which can lead to heightened volatility, especially for those holding individual stocks as opposed to diversified investment funds. Fortunately, there are alternative ways for interested investors to gain exposure to SpaceX without directly buying the stock. Numerous mutual funds and exchange-traded funds (ETFs) are expected to include SpaceX shares in their portfolios shortly after the IPO. This approach allows investors to own a fraction of SpaceX as part of a broader investment strategy, thus mitigating some of the risks associated with direct stock purchases. Experts, including Zachary Evens from Morningstar, affirm that investors can access SpaceX shares through index funds that track major market indices, which typically outperform actively managed funds over the long term. Following the IPO, many index fund investors may see SpaceX incorporated into their portfolios within days or weeks, depending on the index provider’s requirements. For instance, firms like Russell U.S. indexes can add newly public mega-cap companies like SpaceX within just five trading days. However, not all indices share the same timeline. While Russell may act quickly, others like MSCI take ten days, and Nasdaq may take up to fifteen days to include such stocks in prominent indices. The swift inclusion policies have raised concerns among some lawmakers, including Senator Elizabeth Warren, who highlighted potential investor protection issues tied to the fast-tracking of these mega-IPOs. In contrast, investors looking to include SpaceX in the S&P 500 may face a much longer wait, as companies must be public for at least a year and demonstrate profitability before being eligible. Historical examples, such as Tesla's lengthy journey to S&P inclusion, suggest that SpaceX could similarly be delayed due to its current lack of profitability. For those invested in actively managed funds, the path to acquiring SpaceX shares may be more direct, as some funds have already established significant pre-IPO positions. Yet, as demand for these funds grows, the concentration of SpaceX shares could diminish, potentially impacting overall performance. While purchasing SpaceX stock directly after its IPO could offer the most straightforward access, it carries greater risks than investing in diversified options. Historical trends indicate that new stocks often experience initial spikes but may underperform in the following months or years. Thus, investors are advised to weigh their options carefully, as the allure of high returns can be counterbalanced by the risks inherent in individual stock investments. In summary, while SpaceX's IPO presents an exciting opportunity, investors should consider the various avenues available to participate without taking on excessive risk, particularly in the volatile early days of trading.