Global investment firm Morningstar Inc. (MORN) is considering adjusting its market index designs ahead of SpaceX’s highly anticipated initial public offering (IPO). The move underscores how index providers are adapting to a new wave of mega-cap companies entering public markets.
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Trade SPY with leverageNotably, SpaceX is said to be targeting a valuation near $1.75 trillion post-IPO. If achieved, the upcoming listing could reshape how major indexes add newly public companies.
Morningstar Considers Fine-Tuning CRSP Market Index Rules
Reports suggest that SpaceX, the American aerospace company founded by Elon Musk, could be on track for the largest IPO in history. The private company is projected to raise as much as $75 billion in an IPO in a listing that could value it at around $1.75 trillion. Some estimates even forecast a valuation of up to $2 trillion. Whatever the case, SpaceX reportedly plans to float only about 3%-4% of its total equity.
This would be one of the smallest free floats ever seen for a company of its size, creating potential challenges for traditional index inclusion rules. The situation becomes even more complex, as most major stock indexes require a minimum “free-float” threshold before a company becomes eligible for inclusion.
In response, Morningstar has said its CRSP Market Indexes will “undergo enhancements to introduce an alternative liquidity screen” by April 27, 2026.
Currently, the CRSP indexes require about 10% free float for fast inclusion. These indexes support major funds such as the Vanguard Total Stock Market ETF (VTI), which tracks roughly $607 billion in assets. By adjusting these requirements, Morningstar aims to enable the faster addition of mega-cap IPOs without compromising the integrity of the U.S. equity market benchmark.
As the firm explained, “Index providers must evolve eligibility rules” to remain aligned with changing market realities. Morningstar’s move is also in preparation for potential large listings this year from firms such as Anthropic, OpenAI, Databricks, and other notable unicorns.
Industry-Wide Shift Signals New Era for Index Construction
Morningstar is not the only firm reviewing its index rules. Nasdaq (NDAQ), S&P Dow Jones Indices, and FTSE Russell are also studying possible changes. Nasdaq is considering faster entry into the Nasdaq-100 Index. The waiting time for adding large IPOs could drop from several months to about 15 days.
Meanwhile, S&P Dow Jones Indices is reviewing the 10% free-float requirement for entry into the S&P 500 (SPY), while FTSE Russell is considering whether to relax its current 5% threshold.
Morningstar’s analysis using the PitchBook US Modern Market 100 Index suggests that SpaceX could become one of the index’s largest holdings. This could reduce the weight of companies like Nvidia (NVDA) and Microsoft (MSFT), though the top firms would still account for more than half of the index.
However, not all investors welcome these changes. Mark Malek, CIO at Siebert Financial (SIEB), has warned that lowering index standards just to include large IPOs is “concerning” and could be risky.
Is Morningstar Stock a Buy?
Morningstar (MORN) carries a Moderate Buy consensus based on Wall Street analysts tracked by TipRanks. The stock has 0 Hold and 0 Sell ratings. Additionally, analysts have projected a 12-month price target of about $236 for MORN, with a roughly 25% upside.
Meanwhile, investors interested in the upcoming SpaceX IPO can watch for company updates and the latest valuation estimates on the TipRanks Private Company Center.
