If S&P Dow Jones rewrites its listing rules, SpaceX and Anthropic will benefit—investors won’t

To get into the S&P 500, a company is supposed to make some money. The sum of its four quarters of earnings has to be positive—at least GAAP wise—and so does its most recent quarter. That’s a pretty basic rule, decades old and it’s the reason Tesla sat outside of the index until the end of 2020, years after it had become one of the most valuable companies on earth.Soon, that rule will be broken, likely three times. On purpose.Space X, Open AI and Anthropic are all independently preparing to go public, at different speeds; SpaceX has released its S-1, Anthropic filed for IPO on Monday and OpenAI is rumored to next quarter. None of those companies yet make money; in fact, SpaceX lost billions last year, and OpenAI and Anthropic are also not profitable. Yet, when they go public, they will be ranked among the largest companies in America; and quickly begin dominating 401Ks and index funds. A consultation, closed just in time On April 30, S&P Dow Jones Indices opened what it called a “Consultation on the Treatment of MegaCap Companies.” A MegaCap, according to that document, is any company whose total market capitalization is at least that of the 100th-largest name in the S&P Total Market Index; about $112 billion. Surely, even without access to financial data, it is safe to say that SpaceX, OpenAI, and Anthropic all clear that bar with room to spare. The consultation put three of the index’s oldest entry requirements up for questioning, all at once: The seasoning period, normally 12 months of public trading before a company can be considered, would drop to six. Then there’s the aforementioned profitability requirement—the four-quarters-of-GAAP-earnings test—which would be waived entirely for MegaCaps. The final rule they are considering waiving is the minimum float requirement (also known as the 0.10 Investable Weight Factor) which specifies that at least 10% of shares must be actually trading. The timing of the rule changes is auspicious for the t