SpaceX Joins the Nasdaq-100 on July 7. Here Is What This Means for QQQ and QQQM Investors.

Space Exploration Technologies (NASDAQ: SPCX) is finally a publicly traded company. Now the process begins for stock indexes to add SpaceX shares to their holdings. Each index has its own rules for inclusion. Some require that a stock only be publicly traded for several days. Others, like the S&P 500 (SNPINDEX: ^GSPC), require a full year of trading before adding.

The Nasdaq-100 index -- which tracks 100 large non-financial stocks -- recently announced new "fast track" eligibility criteria designed to address mega initial public offerings (IPOs), such as the SpaceX IPO. Under those criteria, new stocks can be added on their 15th trading day. The exchange announced on June 26 that SpaceX will be added before markets open on July 7.

For investors in the Invesco QQQ ETF (NASDAQ: QQQ) and Invesco Nasdaq 100 ETF (NASDAQ: QQQM), which track the Nasdaq-100 index, that means they will soon own a piece of SpaceX. If you're one of them, here's what you should know ahead of its addition.

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SpaceX's addition will be a one-time event

There was speculation at one time that, due to its size, SpaceX stock might be added to the Nasdaq-100 in phases. That won't be the case. The Nasdaq-100 construction methodology indicates that stocks are added as a single event, and no provision is made to add large IPO shares in pieces.

SpaceX's inclusion in the Nasdaq-100 could result in $4 billion of passive fund buys

The Invesco QQQ ETF and its twin, the Invesco Nasdaq 100 ETF (NASDAQ: QQQM), manage a combined $570 billion in assets. These funds are going to need to buy a significant amount of SpaceX stock in order to track the index properly.

JPMorgan estimates that SpaceX's inclusion in the Nasdaq-100 could result in $4.3 billion of buying. With fund buying of this magnitude, expect SpaceX stock to be volatile.

SpaceX's weight in the Nasdaq-100 will likely be around 1%

You might be asking how SpaceX will likely have only about a 1% weighting in the Nasdaq-100, even though its $2.3 trillion market cap is comparable to Amazon's, which has a 4% weighting.

The answer is that the index's weighting is based on free float market capitalization, which excludes shares held by insiders or restricted from the market. Only a relatively small percentage of SpaceX shares are publicly traded, which reduces the potential weight the stock can carry. If more shares become publicly available, the stock's weight will likely rise.

Anthropic and OpenAI are probably next

The Nasdaq-100's new fast-track inclusion policy paves the way for the next big IPOs to be added quickly. In all likelihood, that's likely Anthropic and OpenAI, which pundits think will probably go public either in 2026 or 2027. Once that happens, index-tracking ETF shareholders will begin owning those stocks, too.

David Dierking has positions in Invesco NASDAQ 100 ETF. The Motley Fool has positions in and recommends Amazon. The Motley Fool has a disclosure policy.