The financial world is abuzz with anticipation for a trio of monumental Initial Public Offerings (IPOs) slated for 2026, featuring industry titans SpaceX, OpenAI, and Anthropic. These companies, each representing a frontier of technological innovation and significant market valuation, are signaling their intent to transition from private entities to publicly traded corporations. As of early 2026, SpaceX has taken the most concrete step, filing documents for an IPO scheduled for June 12, 2026. OpenAI and Anthropic have followed a more discreet path, submitting confidential filings with the U.S. Securities and Exchange Commission (SEC). Industry observers anticipate Anthropic’s public debut around October 2026, while OpenAI’s exact IPO timeline remains under wraps.
What sets these potential IPOs apart is their sheer scale, challenging the very definition of a "mega-IPO." SpaceX is reportedly targeting a staggering valuation of $1.75 trillion, a figure that dwarfs most existing public companies. OpenAI and Anthropic are not far behind, with private valuations hovering around the $1 trillion mark. The successful listing of any one of these entities could easily claim the title of the largest IPO in history, fundamentally altering the composition and dynamics of major stock market indices. However, this unprecedented growth comes with a caveat: profitability. Despite their immense valuations, none of these companies are currently profitable, though reports suggest Anthropic is on the cusp of its first profitable quarter. This financial reality, coupled with their anticipated rapid inclusion into major indices, has ignited discussions about the potential impact on index investors and portfolio risk.
Navigating the Waters of Index Inclusion
The prospect of adding such colossal, high-growth, and currently unprofitable companies to established stock indices raises pertinent questions for investors. How does index inclusion work for newly public companies? What are the potential implications for investment portfolios? And should index investors be concerned about this wave of mega-IPOs? Understanding the mechanisms of index construction and eligibility criteria is crucial to addressing these concerns.
Major stock indices, such as those tracked by investment platforms like Wealthfront, operate on two fundamental principles: eligibility criteria for inclusion and the weighting assigned to each included stock. While market capitalization is a primary driver for many indices, the specific methodology can vary. A key concept in this regard is "free float," which refers to the number of shares of a company that are available for public trading, as opposed to those held by insiders, governments, or other non-tradable entities.
Market capitalization is calculated by multiplying the share price by the total number of outstanding shares. However, free-float market capitalization, a more refined metric, multiplies the share price by only the free-floating shares. This distinction is critical, especially for companies that might retain a significant portion of their equity privately. For instance, established blue-chip companies like IBM often have a very high free-float percentage, with nearly all outstanding shares available for trading. In contrast, recently IPO’d companies may have a lower free-float percentage, meaning a smaller proportion of their total value is accessible to public investors.
Shifting Rules and the "Low Float" Phenomenon
The upcoming IPOs from SpaceX, OpenAI, and Anthropic are all anticipated to exhibit "low float" characteristics. SpaceX, for example, plans to sell approximately $80 billion worth of stock at its $1.75 trillion valuation, resulting in a free-float percentage of roughly 4.57%. This figure falls below the traditional free-float requirement of 10% that many indices have historically maintained for eligibility.
However, index providers have been adapting their methodologies. Nasdaq, a key index provider, has recently adjusted its rules. Previously, companies seeking inclusion in the Nasdaq-100 Index® were required to have a minimum free float of 0.1% of the index’s market capitalization. This threshold has been modified, and while specific details of the recent adjustments are subject to proprietary index methodologies, the broader trend suggests a greater openness to accommodating larger, albeit lower-float, companies.
Similarly, CRSP (Center for Research in Security Prices), which manages indices used in many broad market investment products, has relaxed its rules. A new provision allows for IPO eligibility if a company’s free-float market capitalization meets a minimum threshold relative to the total free-float capitalization of the entire index-eligible universe – in this case, 0.005%. For SpaceX, this adjusted criterion is expected to be met. CRSP’s IPO rules typically dictate that a newly eligible stock will be added to its indices, such as the CRSP US Total Market Index, five trading days after its IPO.
These evolving rules mean that companies with substantial overall market capitalization but a relatively small percentage of tradable shares can now qualify for index inclusion, and potentially much sooner than before. Crucially, this does not automatically translate to an outsized weight within the index solely based on sheer corporate size. Weighting methodologies, predominantly based on free-float market capitalization, ensure that a company’s influence on the index is proportional to the portion of its value that is actually traded in the public markets.
It is important to note that free float calculations also account for "lock-up" periods. These are contractual agreements that typically prevent pre-IPO investors from selling their shares for a specified period after the IPO, often around six months. As these lock-up periods expire, and with subsequent earnings releases or milestone dates, the percentage of free-floating shares can increase, consequently impacting the company’s weight within indices where it is included. For SpaceX, its lock-up provisions allow for phased selling of restricted stock, which will gradually increase its free-float percentage and, therefore, its index weight. For the Nasdaq-100®, SpaceX’s weight will continue to grow as long as its free-float percentage remains below a certain threshold, reportedly 33.3%.
In contrast, S&P Dow Jones Indices (S&P), another major index provider, has indicated that its eligibility rules will remain unchanged. Consequently, low-float IPOs will continue to be ineligible for indices like the S&P 500®. Beyond the free-float requirement, S&P also mandates positive net earnings in the most recent quarter and over the trailing year, along with a twelve-month "seasoning" period, effectively excluding unprofitable and newly public companies from its flagship indices.
Implications for Wealthfront Portfolios
The inclusion of these mega-IPOs into indices will directly impact investment portfolios that track those indices. For Wealthfront clients invested through its Direct Indexing products – specifically those tracking the USDI, Nasdaq-100, or S&P 500 – the purchase of these newly public stocks will occur automatically if and when they are added to the respective indices. Wealthfront emphasizes that these purchases are typically executed in a tax-efficient manner, utilizing cash from deposits, dividends, or tax-loss harvesting, rather than triggering capital gains by selling other holdings. Clients also have the option to place specific stocks on a "restricted list" if they wish to avoid holding them in their Direct Indexing portfolios. Wealthfront aims to incorporate IPO stocks into its systems promptly, providing ample time for clients to make such customization.
For clients utilizing Wealthfront’s Automated Investing Account, the impact will depend on the underlying ETFs they hold. The core U.S. equity ETFs in Wealthfront’s recommended allocations, such as VTI (Vanguard Total Stock Market ETF) and ITOT (iShares Core S&P Total U.S. Stock Market ETF), track indices from CRSP and S&P, respectively. VTI, by tracking the CRSP US Total Market Index, is expected to include SpaceX following the index’s rule changes. ITOT, tracking an S&P broad market index, will likely adhere to S&P’s more stringent free-float requirements. Both indices, it’s worth noting, utilize free-float market capitalization for weighting purposes.
Investors can also customize their Automated Investing Accounts with a wider selection of ETFs. For example, ETFs tracking the Nasdaq-100 Index®, such as QQQM and QQQ, are expected to purchase SpaceX once it is added to the index.
For clients with a Stock Investing Account, direct purchase of SpaceX stock is anticipated to be available on its first trading day. Similar accessibility is expected for OpenAI and Anthropic should they proceed with their IPOs. These ETFs are also available for direct purchase within this account type.
A Measured Perspective on Mega-IPOs
While the prospect of SpaceX, OpenAI, and Anthropic going public is undeniably significant, the immediate impact on most equity indices may not be as dramatic as some headlines suggest. The eligibility rules of many major indices mean that these companies may not be included for a considerable period, if at all. For index investors, the prevailing advice is to remain steadfast in their investment strategy. The long-term benefits of index investing, characterized by diversification and broad market exposure, are unlikely to be fundamentally altered by the inclusion of even these mega-cap companies. If they are added, portfolios will simply reflect a broader diversification across the stock market.
The focus on potential overexposure to these IPOs is one perspective. For investors considering direct participation in these upcoming offerings, it is crucial to acknowledge the inherent volatility and speculative nature of newly public companies. Single-stock investments should ideally form only a small component of a well-diversified portfolio. Wealthfront’s stance, and indeed a widely accepted principle in finance, is that investing in a diversified basket of index funds typically offers a more robust and less risky approach than attempting to predict the trajectory of individual, albeit highly publicized, IPOs. The excitement surrounding these companies is palpable, but a grounded, long-term investment strategy remains the most prudent path for most investors.
