Background: SpaceX is Elon Musk's rocket, satellite and now AI company, best known for its reusable rockets and the Starlink satellite internet network.

What happened: Late last week, SpaceX officially listed on the Nasdaq, debuting at a massive valuation of US$1.77 trillion and making it one of the most valuable companies in the world. This was the largest IPO in history after raising an enormous US$75 billion, more than double the previous record set by Saudi Aramco.

What else: But retail investors won't be the only ones buying the SpaceX stock. Major stock indexes will soon be forced to buy too, which could trigger another wave of institutional demand for the stock.  

What's the key learning?

💡When a company lists on a stock exchange, it doesn't automatically join major indexes like the Nasdaq-100 or S&P 500 - it has to qualify first. One key requirement is called seasoning, which is the mandatory waiting period after an IPO that gives the market time to assess the company and helps the stock price settle.

💡Before this year, stocks had to wait around three months before being considered for the Nasdaq-100. Meanwhile, S&P Dow Jones Indices has kept its stricter 12-month seasoning rule. But as of May 1, Nasdaq introduced a "Fast Entry" rule that allows mega-cap stocks like SpaceX to become eligible after just 15 trading days.

💡Once a stock joins a major index, every ETF and index fund that tracks that benchmark must buy that stock. So it means the more-than 200 investment products that track the fund with over $600 billion in assets under management will need to buy into SpaceX quickly. And that could have a huge impact on its share price.