Over the past year Nasdaq, S&P, and Russell have each loosened their rules so very large new companies can join their indices quicker than normal. Because this is expected to be one of the largest IPOs ever, SpaceX is expected to enter the Nasdaq-100 at a very large weight almost right away. Every index fund tracking it then has to buy a matching amount of the stock, simply because of their rules.
The question is where the money to buy all those shares comes from. Funds have to sell a piece of almost everything else they hold to pay for SpaceX. The bigger SpaceX is, the more they have to sell. Since the rules dictate what the funds must trade and when, their market activity is very easy to predict. Earlier traders can step in ahead of the funds and obtain better prices. The net effect is upward pressure on SpaceX, and downward pressure on everything else in the index. Research has found that this kind of forced, predictable trading quietly costs index investors a little return every year. On top of that, the stock is expected to list with a rich valuation and very optimistic expectations. Newly public companies have tended to underperform in the years after listing.
Everyday workers saving in a 401(k) are broadly exposed to this. Target-date funds are now the most popular option in 401(k) plans, and they are only getting more popular. Those funds rely heavily on equity indices, so a typical saver is likely to end up buying SpaceX automatically. A manager who is not bound to an index has more options. The freedom to use one's own judgment can avoid buying too much SpaceX at the wrong price. For the many investors who simply hold index funds, the listing adds a risk they cannot control.