Some of the biggest bets in your portfolio are ones you never placed. When you buy an index fund, you hand the stock picking to a rulebook, and that rulebook changes more often than most savers realize.
Most of the time, that’s fine, and it’s a big reason index investing works for busy people. A broad fund spreads your money across dozens or hundreds of companies, so no single stock can sink your retirement plan.
This year, though, one rule change fast-tracked a record-setting IPO into one of the most popular funds in America. Millions of savers picked up shares of a rocket company without lifting a finger, and many of them have no idea it’s in their 401(k).
Those savers just watched that company pull off its biggest technical win to date. Oddly, the stock slipped anyway, which tells you something about how much optimism was already baked into the price.
SpaceX (SPCX) put its Starship rocket into orbit for the first time on Sept. 28. Now, Bank of America says the flight strengthens its bullish case, which affects you whether you bought at the IPO or simply own a Nasdaq-100 fund.
How a rocket company landed in your retirement account
SpaceX priced its IPO at $135 a share on June 11 and began trading on Nasdaq the next day, raising about $75 billion, according to the company’s pricing announcement. The stock closed its first day at $161, up 19%, CNBC reported.
Under a Nasdaq rule that took effect May 1, SpaceX joined the Nasdaq-100 on July 7, just weeks after its debut. That forced funds tracking the index, including the Invesco QQQ Trust (QQQ), to buy shares.
A SpaceX slump “could bring down the value of people’s retirement accounts,” Fast Company warned in June. Many 401(k) plans and pension funds hold Nasdaq-100 funds, so the fast-track put a brand-new stock in front of everyday savers.
The ride has been bumpy since. Shares have traded between $104.83 and $225.64 over the past 52 weeks, according to a BofA note shared with TheStreet.
Starship reached orbit and deployed 26 Starlink satellites, while SpaceX shares fell 2% to $145.47.
Bank of America sees 60% upside after Starship reaches orbit
BofA Securities analyst Ronald Epstein reiterated his buy rating and $235 price target in the Sept. 28 note. That target sits about 61% above the $146.24 reference price in the report.
Flight 14 checked several boxes that earlier flights did not, according to the note:
- The first successful orbital flight of Starship’s upper stage
- Deployment of 26 operational Starlink V3 satellites through the ship’s “Pez dispenser” door
- A controlled reentry from orbit and splashdown in the Pacific Ocean
- A soft landing of the Super Heavy booster, an improvement on Flight 13
It wasn’t flawless. An unplanned engine shutdown cut the mission several hours short, and engine relights remained a hiccup, BofA said.
The flight lasted about three hours instead of the planned 10, and both the booster and the ship had engine problems, ABC News reported. Epstein still called the mission “a key demonstration of Starship’s ability to reach orbit.”
Heat shield data is the real test for rapid reuse
Reaching orbit grabbed the headlines, but reuse is the business model. A rocket you can fly again spreads its build cost over many launches, which cuts the price of every satellite SpaceX puts in space.
BofA views the upper stage’s heat shield as the key technical factor in proving rapid reuse. SpaceX didn’t recover the ship, but it may get heat shield data from camera images captured by the Starlink satellites it deployed, the note said.
More SpaceX News:
- SpaceX stock starting to reward investors who stuck around
- SpaceX reaches orbit as Elon Musk sets bigger Starship goal
- Vivian Tu’s IPO warning lands as SpaceX buyers split by $1,851
BofA expects Flight 15 could attempt the first return-to-launchpad landing of the booster, the upper stage or both.
In my analysis, that’s the milestone to circle, because a ship that survives reentry and lands intact is the proof the $235 target leans on.
Why SpaceX shares fell on a record-setting day
The stock slipped about 2% to close at $145.47 on Sept. 28, Benzinga reported. Deepwater Asset Management’s Gene Munster argued on X that “the market is underappreciating the significance of the launch.”
Part of the answer is valuation. At roughly $1.9 trillion in market value, based on BofA’s figures, SpaceX already trades on expectations that stretch decades out.
Related: SpaceX reaches orbit as Elon Musk sets bigger Starship goal
BofA’s own target comes from a discounted cash flow model running to 2045. The firm averages a bull, base, and bear case, using discount rates from 14% to 28%, which shows how wide the range of outcomes is.
Supply adds to the swings. Only about 11.3% of SpaceX shares float freely, per BofA, so relatively small trades can move the price a lot.
What this orbital milestone means for your money
If you own QQQ or a Nasdaq-100 fund inside a 401(k), you own some SpaceX. Your fund’s holdings page shows the exact weighting, which is worth checking before you add more tech exposure on top.
If you bought at the $135 IPO price, you’re up about 8% as of the Sept. 28 close. If you bought near the 52-week high, you’re sitting on a loss of roughly 35%.
One more thing to weigh: BofA Securities was a lead underwriter on the SpaceX IPO, according to the pricing announcement, and its note discloses that the firm seeks to do business with companies it covers.
BofA’s downside risks are worth reading, too. These include production delays, regulatory limits on launch cadence, capital spending on space and AI projects, and setbacks to Starship itself. When I weigh a stock like this, those risks decide position size more than any price target does.
Rockets make headlines in minutes, but wealth builds over years. The smart move is holding only as much SpaceX as you can live with through the next flight, whichever way it goes.
Related: Mizuho makes bold call on SpaceX stock before key launch
