Space stocks fell Friday after S&P Global ruled out changes to its index eligibility rules, dashing investor hopes that Elon Musk’s SpaceX could quickly join the S&P 500 following its upcoming blockbuster IPO and trigger billions of dollars in passive fund inflows.

S&P Decision Removes Potential SpaceX Catalyst

The selloff followed a Reuters report that S&P Global would make no changes to the eligibility requirements for its major indexes, effectively preventing SpaceX from securing rapid entry into the S&P 500 after its planned initial public offering.

S&P said exceptions to profitability, seasoning, and investable float requirements should not be granted solely because of a company’s size. The decision leaves SpaceX ineligible for inclusion despite its expected valuation of roughly $1.75 trillion, which would make it the largest IPO in history.

The ruling disappointed investors who had speculated that an accelerated S&P 500 entry could force index funds and exchange-traded funds tracking the benchmark to purchase large amounts of SpaceX stock shortly after the offering.

Investors Reassess Space Stocks Ahead Of SpaceX Debut

The declines come as investors reassess space-sector positions ahead of the SpaceX IPO.

The sector’s recent run-up has also drawn increased scrutiny as valuations climbed even as many companies continue to face profitability and execution challenges.

Price Action: Shares of Sidus Space fell 6.9% to $4.38, while Redwire dropped 12.1% to $18.83. Rocket Lab declined 6.2% to $112.48, Intuitive Machines slid 11.0% to $29.92, and AST SpaceMobile lost 10.4% to $96.16 as of publication Friday, according to Benzinga Pro data.

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