SpaceX Joins the Nasdaq-100 Today. History Says the Stock Will Do This Next.

Space Exploration Technologies (NASDAQ: SPCX) held its historic initial public offering (IPO) on June 12. The rocket company went public with a record market value of $1.7 trillion at its IPO price of $135 per share.

SpaceX will be added to the Nasdaq-100 before the market opens on July 7. Its inclusion is unprecedented because the index has traditionally considered only stocks that have been public for at least three months. But the seasoning period was reduced to 15 days earlier this year to fast-track the entry of large IPOs.

Historically, stocks have delivered strong gains during the 12-month period post-inclusion in the Nasdaq-100. Here's what investors should know.

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History says SpaceX stock will increase 18% in the next year

The Nasdaq-100 tracks 100 of the largest non-financial companies listed on the Nasdaq Stock Exchange. The index excludes financial companies to focus on more innovative market sectors with higher growth potential, particularly technology. For that reason, the Nasdaq-100 is widely regarded as a benchmark for growth stocks.

During the last decade, 92 stocks were added to the Nasdaq-100. Those stocks returned an average of 10% during the six-month period post-inclusion and 18% during the 12-month period post-inclusion. Put differently, history says SpaceX stock will increase 10% by January 2027 and 18% by July 2027.

Why do stocks go up after joining a major market index? Funds that track that index must purchase the stock to accurately reflect the benchmark. That influx of capital can push the share price higher, at least temporarily. Of course, how SpaceX actually performs in the months ahead depends primarily on the company's financial results and investor sentiment.

SpaceX stock trades at an extremely expensive valuation

SpaceX has revolutionized space travel by developing reusable rockets that dramatically reduce per-launch costs by spreading manufacturing expenses across multiple missions. "The company's core strength is its ability to deliver payloads to orbit at unmatched scale, frequency, reliability, and cost efficiency," writes Nicolas Owens at Morningstar.

SpaceX has leaned on that advantage to deploy communications satellites at an unprecedented pace. Its Starlink constellation comprises about 10,000 satellites that serve more than 10 million subscribers, making it the largest satellite internet service by a wide margin. And adoption is happening quickly; subscribers doubled in the past year.

SpaceX currently earns the vast majority of its revenue from Starlink, but artificial intelligence infrastructure could become an even larger source of revenue in the future. SpaceX recently agreed to rent data center capacity to Anthropic and Alphabet for monthly fees of $1.25 billion and $920 million, respectively.

Beyond that, SpaceX plans to deploy orbital AI compute satellites (i.e., space-based data centers) as early as 2028. "We believe these AI compute satellites in sun-synchronous orbit will be able to handle energy-intensive AI workloads, such as inference demand, at far greater scale and efficiency than terrestrial alternatives," the company wrote in its Form S-1.

In total, SpaceX values its addressable market at an astronomical $28.5 trillion, with $26.5 trillion of that figure attributed to AI products. However, future revenue streams tied to AI products (such as orbital data centers) are highly uncertain, which makes the current valuation of 110 times sales very difficult to justify.

For context, Rocket Lab is currently the second most richly valued stock in the Nasdaq-100, with a price-to-sales multiple of 88. SpaceX is 25% more expensive. The premium is unsustainable, in my opinion. I think investors should either avoid SpaceX or, at the very least, keep positions in the stock small.

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Rocket Lab. The Motley Fool has a disclosure policy.