SpaceX Could Join the Nasdaq-100 Very Soon. Should You Buy the Invesco QQQ Trust Today?

SpaceX's stock is going public this week and will trade on the Nasdaq exchange under the ticker symbol SPCX. Its valuation will be around $1.75 trillion to start. But regardless of how it performs in its early days, it's fair to say that this is going to be one of the most highly valued stocks on the market.

The largest non-financial Nasdaq stocks are added to the Nasdaq-100 index, which the highly popular Invesco QQQ Trust (NASDAQ: QQQ) tracks. With recent rule changes, SpaceX's stock could join the index after just 15 trading days. Should you consider adding the Invesco ETF to your portfolio today, to take advantage of these changes?

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Exposure to SpaceX will add upside and risk

SpaceX's stock could be a hot buy when it becomes available. It's expected to begin trading on June 12. A high-flying stock could help the Invesco QQQ Trust benefit from the excitement, potentially boosting its value. This year, the ETF has risen by 17%, outperforming the S&P 500, which is up by just around 8% thus far.

The danger, however, is that this is already an expensive-looking ETF, with its price-to-earnings (P/E) ratio averaging 36. Adding a massive company like SpaceX, which is still unprofitable and likely to remain so for the foreseeable future, could make things worse, as it increases the overall risk of tracking the Nasdaq-100. Although the index may possess some exciting growth stocks, investors shouldn't overlook the volatility that comes with this type of investment.

Is the Invesco QQQ ETF a good option for your portfolio?

The Invesco QQQ ETF has generated incredible returns for investors over the years, but if there's a downturn and the market goes into a free fall, high-valued growth stocks can incur among the most significant losses. In 2022, the last time the market was in turmoil, the S&P 500 fell by 19%, and the Invesco ETF crashed by 33%.

If you're comfortable hanging on for the long term, then the ETF may still be a good option to consider today, but it's important not to gloss over the risks, because they are significant and can make the fund very unsuitable for retirees and investors who may not be willing or able to simply ride out any adversity in the markets. SpaceX's inevitable addition to the Nasdaq-100 is likely to add more volatility to the index, and if you aren't prepared for that, you may want to hold off on buying the QQQ ETF today.

David Jagielski, CPA has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.