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It's really concerning given how the indexes are changing rules to fast-track SpaceX being forced into index funds. S&P is also working on updates to S&P 500 to

It's really concerning given how the indexes are changing rules to fast-track SpaceX being forced into index funds. S&P is also working on updates to S&P 500 to force it down everyone's throats quickly and algorithmically.

aNoob7000 5mo ago
Add Anthropic and OpenAI to the list. Companies that are bleeding money. Personally, a company should be making money before adding it to the index.
- hparadiz 5mo ago
  [flagged]
  - alpha_squared 5mo ago
    > Because from where I'm sitting it seems like you're just operating on hopes and feels. I hate these flippant comments. Similarly, from where I'm sitting it seems you're struggling to disentangle revenue from profit.
    - hparadiz 5mo ago
      I buy 50 billion of hardware. Make 45 billion back in year 1. My losses are 5 billion. I Pay of all my creditors by year two. Then spend another 55 billion on hardware in the second half of year two. My profit is at this point zero. <you are here> By year three I am printing money. It's not a flippant comment. It's basic math.
      - zzleeper 5mo ago
        Sorry that's confusing cash flow with profits, where things get amortized
      - rchaud 5mo ago
        It's not basic math when the numbers are this big. There's not going to be $50 billion coming in Year 3 if there's a market correction and lenders scale back financing. Borrowed money is how companies are paying for AI, and that's the first thing that disappears in a recession.
      - zdragnar 5mo ago
        In year three your competitors invest in making a better model and crush your business because you have no moat at all. The entire business requires massive ongoing investment because getting massive investments is the only thing resembling a competitive advantage that you can get. The equivalent to anything you can do will be available as an open weight set in six months to a year. Sink or swim.
  - matthewdgreen 5mo ago
    Really depends on the valuation and P/E they plan to list at, and some estimate of their future revenue story. I love Codex and Claude Code but OpenCode/Kimi is wildly cheaper and 90% as good.
  - 43fg 5mo ago
    " But they could just not do anything and continue raking in the money." Hahaha what a fucking bozo. Log out and dont talk about valuation again.
  - tclancy 5mo ago
    Didn't we have a story just yesterday that Anthropic's run-rate now looks like $49 billion/ year and they might have their first quarterly profit? I would suggest if you have billions of dollars coming in the door and aren't breaking even, maybe you do have a small leak somewhere?
    - mrweasel 5mo ago
      Part of that potential profitability is reportedly coming the fact that they get a discount on compute from SpaceX in May and June. Anthropic and SpaceX signing a contract where Anthropic leases datacenter capacity for the low low price of $1.25 billion per month, except for the first two month when they get some sort of discount. Anthropics expected profitable quarter just happens to be the quarter were their cost is artificially low?
  - parliament32 5mo ago
    Because they're doing the fancy equivalent of selling $20 bills for $15 and chirping about how high their revenue is. You, me, and everyone else could generate $inf revenue with that strategy, but that doesn't make it a viable business model.
    - MBCook 5mo ago
      Right. At this point burying money in jars in the back yard and forgetting where some are has a much higher rate of return.
      - hparadiz 5mo ago
        Using Google’s own IPO S-1 / SEC filings: Year Revenue Net income / loss 1998 Not reported 1999 $220k -$6.076M 2000 $19.108M -$14.690M Do you guys not know what a loss lead is?
        parliament32 5mo ago
        I have no doubt there are a handful of positive examples when we ignore the tens of thousands of failed companies along these lines. I have no problem with money-furnaces trading publicly. If people want to invest in those, fantastic, power to them. But they absolutely should not be included in vehicles like pensions and indexes.
        marcosdumay 5mo ago
        You seem to be ignoring that a loss lead is supposed to lead people into doing something profitable.
        logifail 5mo ago
        > Do you guys not know what a loss lead is? We don't know which of today's companies will be successful and/or highly-valued in N years' time. Check Cisco's valuation on March 27, 2000; it was briefly the most valuable publically traded company in the world. Almost everyone believed it was worth it. Then it fell 88% over two years. Full disclosure: some of us are old enough to have held stocks during the dot-com boom. Fortunately I was still a student and therefore too poor to have had any significant amount of money to lose :)
  - LarsDu88 5mo ago
    This is a fallacy. OpenAI and Anthropic would not continue to make money indefinitely by simply sitting still for the simple fact that their models can easily be distilled by competitors. Their value is contingent on sitting at the top of the leaderboards and staying there such that the marginal value of their AI is better than the mostly Chinese competitors. And b/c these chinese competitors are open weight, the layer below frontier class AI is totally commoditized. If there were a recession, the first thing enterprise customers would do is setup Kimi or Deepseek rigs. It would be a race to the bottom and no one would be profitable. A similar phenomenon happened with rail lines in the 1850s where irrational exuberance led to a massive overbuild of rail lines, followed by a race to the bottom and the bankruptcy of almost all players. In the end, banks ended up absorbing the few companies that survived.
- parliament32 5mo ago
  Interestingly, these are the exact rules they're working to overturn: currently, no matter how many stupid accounting tricks you pull off, you need to actually be profitable to be included in the S&P 500.
mohsen1 5mo ago
There is a market for an S&P 500 ETF without those companies. I'll immediately switch over
- zzleeper 5mo ago
  Let me know if you find one! I'm at a loss. (And even then, if I switch I have to pay $$$ taxes on capital gains)
  - _delirium 5mo ago
    Any of the direct indexing providers will let you blacklist individual stocks from the index. The intended use is to exclude stocks you hold elsewhere (or receive as stock grants) to avoid causing wash sales, but it can also be easily used to make a custom "S&P 499".
    - zzleeper 5mo ago
      I'm looking at Schwab (and saw a few others) and couldn't find anything: https://www.schwab.com/learn/story/primer-on-wash-sales https://www.schwab.com/learn/story/primer-on-wash-sales I would assume this is not an ETF but sth else?
      - zparky 5mo ago
        https://www.schwab.com/direct-indexing https://www.schwab.com/direct-indexing
  - stouset 5mo ago
    You can sidestep this entirely with a total-market fund like VTSAX/VTI, which hold the entire market and should be more resistant to being gamed. They’re free-float adjusted so entities like SpaceX are valued only by what’s available on public markets. And Vanguard (and its funds) are owned by its investors, which makes it seem implausible that the rules would be rewritten in a way that would damage investors.
SilverElfin 5mo ago
The same rules are now affecting other big IPOs. I think Cerebras was confirmed as getting fast listing too even though they’re much smaller. It’s one big act of dumping on retail markets
- radicalbyte 5mo ago
  They learned from the failure of crypto and have found their bag holders.
rchaud 5mo ago
Waiving profitability requirements to join the S&P 500 and trigger auto-buys from index funds is DEI for corporations.
root_axis 5mo ago
And accelerating the schedules for insiders to dump shares.
philwelch 5mo ago
Almost all of the YoY growth in the S&P500 is in a very small number of tech companies. If one of those fast-growing tech companies isn't in the S&P500, the index as a whole becomes obsolete.
epistasis 5mo ago
I'm usually a Boglehead, with some exceptions, and one exception I'd love is some sort of trade that would eliminate my exposure to SpaceX for the next few years. I'm sure there's some combo of options that would do it. Probably finding an ESG-focused ETF would do it. ESG basically meant "good governance, we follow laws" which translated into better governed public companies that therefore had better returns, as one would expect. Really weird how it was politicized into something entirely different...
- xenospn 5mo ago
  Stock markets are ruled by hype and fomo. Good corporate governance has little to do with returns, unfortunately.
  - epistasis 5mo ago
    Short term gains are hype and fomo, but if you're holding index funds long like I am, then returns have a lot more to do with performance. And given the lack of hype around ESG, it seems like an exceptional time to buy in to it.
    - JumpinJack_Cash 5mo ago
      Bro the index is about riding the hype and fomo and when the phenomenon progressively loses track it gets less and less quota
      - epistasis 5mo ago
        I don't understand the lingo in your comment but my best possible guess is that I disagree vehemently with it. Long term dollar cost averaging is not about hype and fomo. Overall pricing in equities does vary according to alternative investment routes, which is why I'm diversified into those as well. Stonks go up. Stonks go down. Averaging over decades, ownership is about owning a share of productive output of a large portion of our entire economy, an amazing restructuring of social relations that presents an amazing opportunity for the common person, unseen throughout the history of humanity.
wg0 5mo ago
We're going to witness bigger blast than the great depression, dot com bust and 2008 crisis combined. These greedy capitalists are after the pension funds + retail investor (ETFs in particular) through IPOs but there's no profitability in sight.
ngriffiths 5mo ago
In addition to covering the IPO in general last week, Matt Levine also wrote about this specific question Tuesday[1]: > Historically index providers were in the business of making these sorts of quality decisions, so that index funds were not forced to buy stocks they didn’t like. > These rules create some tension between the idea that an index is a list of all the stocks and the idea that an index is a list of all the good stocks. Historically, it didn’t matter all that much: The point of the stock market is to tell you which stocks are good, so a company with a high stock valuation should be a very good company, so it should get a high weighting in both the Index of Good Companies and the Index of All the Companies. > But SpaceX — and also maybe OpenAI and Anthropic in their coming IPOs — will probably break that link. SpaceX will probably (1) do all sorts of stuff that index funds hate and that index providers have specifically tried to exclude and also (2) be gigantic, because the market loves it. [1]: https://www.bloomberg.com/opinion/newsletters/2026-05-26/index-funds-can-t-say-no-to-spacex https://www.bloomberg.com/opinion/newsletters/2026-05-26/ind...
daft_pink 5mo ago
Apparently, the index funds are based on free float and since the number of free floating shares is limited, the total exposure to the index will be very small.
Dig1t 5mo ago
They will only be added to those indexes if they are actually trading at a value that places them in the top 100 or 500 companies in the US. If they fall below that price then they will be kicked out of the index just like any other company. What exactly is the risk to normal investors if that’s the case? If it’s all a big scam then they will trade lower and they’ll naturally be kicked out of the index. This is a rule that will apply to all new companies. When Anthropic and OpenAI go public they will also benefit from the rule. Do you think the media/public will be just as outraged when they do it? The goal of the S&P 500 is to keep the index representative of the US market. They have in fact changed rules in the past when market conditions have changed. These mega IPOs are an entirely new market condition, as private companies have never been this big before listing in history. So large that they immediately fall into the top 100 or 500 largest companies in the country. There’s also the fact that Nasdaq is a private company and it now has competition from the new Texas exchange. SpaceX is actually dual-listing on TXSE and Nasdaq. Nasdaq needs to keep these giant IPO companies happy because if they don’t they will list on the competitor exchange which would be disastrous for Nasdaq (supercharging their competitor). These things affect each other as well. Nasdaq wants to make sure they get the IPO on their exchange, so they include them in the Nasdaq 100. S&P 500 doesn’t want to be outdated by missing a trillion dollar company from their index, while other exchanges like the Nasdaq 100 include them. There’s a real case to be made that this is just self interest on the part of the exchange and the other index providers.

aNoob7000 5mo ago

Add Anthropic and OpenAI to the list. Companies that are bleeding money. Personally, a company should be making money before adding it to the index.

hparadiz 5mo ago
[flagged]
- alpha_squared 5mo ago
  > Because from where I'm sitting it seems like you're just operating on hopes and feels. I hate these flippant comments. Similarly, from where I'm sitting it seems you're struggling to disentangle revenue from profit.
  - hparadiz 5mo ago
    I buy 50 billion of hardware. Make 45 billion back in year 1. My losses are 5 billion. I Pay of all my creditors by year two. Then spend another 55 billion on hardware in the second half of year two. My profit is at this point zero. <you are here> By year three I am printing money. It's not a flippant comment. It's basic math.
    - zzleeper 5mo ago
      Sorry that's confusing cash flow with profits, where things get amortized
    - rchaud 5mo ago
      It's not basic math when the numbers are this big. There's not going to be $50 billion coming in Year 3 if there's a market correction and lenders scale back financing. Borrowed money is how companies are paying for AI, and that's the first thing that disappears in a recession.
    - zdragnar 5mo ago
      In year three your competitors invest in making a better model and crush your business because you have no moat at all. The entire business requires massive ongoing investment because getting massive investments is the only thing resembling a competitive advantage that you can get. The equivalent to anything you can do will be available as an open weight set in six months to a year. Sink or swim.
- matthewdgreen 5mo ago
  Really depends on the valuation and P/E they plan to list at, and some estimate of their future revenue story. I love Codex and Claude Code but OpenCode/Kimi is wildly cheaper and 90% as good.
- 43fg 5mo ago
  " But they could just not do anything and continue raking in the money." Hahaha what a fucking bozo. Log out and dont talk about valuation again.
- tclancy 5mo ago
  Didn't we have a story just yesterday that Anthropic's run-rate now looks like $49 billion/ year and they might have their first quarterly profit? I would suggest if you have billions of dollars coming in the door and aren't breaking even, maybe you do have a small leak somewhere?
  - mrweasel 5mo ago
    Part of that potential profitability is reportedly coming the fact that they get a discount on compute from SpaceX in May and June. Anthropic and SpaceX signing a contract where Anthropic leases datacenter capacity for the low low price of $1.25 billion per month, except for the first two month when they get some sort of discount. Anthropics expected profitable quarter just happens to be the quarter were their cost is artificially low?
- parliament32 5mo ago
  Because they're doing the fancy equivalent of selling $20 bills for $15 and chirping about how high their revenue is. You, me, and everyone else could generate $inf revenue with that strategy, but that doesn't make it a viable business model.
  - MBCook 5mo ago
    Right. At this point burying money in jars in the back yard and forgetting where some are has a much higher rate of return.
    - hparadiz 5mo ago
      Using Google’s own IPO S-1 / SEC filings: Year Revenue Net income / loss 1998 Not reported 1999 $220k -$6.076M 2000 $19.108M -$14.690M Do you guys not know what a loss lead is?
      - parliament32 5mo ago
        I have no doubt there are a handful of positive examples when we ignore the tens of thousands of failed companies along these lines. I have no problem with money-furnaces trading publicly. If people want to invest in those, fantastic, power to them. But they absolutely should not be included in vehicles like pensions and indexes.
      - marcosdumay 5mo ago
        You seem to be ignoring that a loss lead is supposed to lead people into doing something profitable.
      - logifail 5mo ago
        > Do you guys not know what a loss lead is? We don't know which of today's companies will be successful and/or highly-valued in N years' time. Check Cisco's valuation on March 27, 2000; it was briefly the most valuable publically traded company in the world. Almost everyone believed it was worth it. Then it fell 88% over two years. Full disclosure: some of us are old enough to have held stocks during the dot-com boom. Fortunately I was still a student and therefore too poor to have had any significant amount of money to lose :)
- LarsDu88 5mo ago
  This is a fallacy. OpenAI and Anthropic would not continue to make money indefinitely by simply sitting still for the simple fact that their models can easily be distilled by competitors. Their value is contingent on sitting at the top of the leaderboards and staying there such that the marginal value of their AI is better than the mostly Chinese competitors. And b/c these chinese competitors are open weight, the layer below frontier class AI is totally commoditized. If there were a recession, the first thing enterprise customers would do is setup Kimi or Deepseek rigs. It would be a race to the bottom and no one would be profitable. A similar phenomenon happened with rail lines in the 1850s where irrational exuberance led to a massive overbuild of rail lines, followed by a race to the bottom and the bankruptcy of almost all players. In the end, banks ended up absorbing the few companies that survived.
parliament32 5mo ago
Interestingly, these are the exact rules they're working to overturn: currently, no matter how many stupid accounting tricks you pull off, you need to actually be profitable to be included in the S&P 500.

mohsen1 5mo ago

There is a market for an S&P 500 ETF without those companies. I'll immediately switch over

zzleeper 5mo ago
Let me know if you find one! I'm at a loss. (And even then, if I switch I have to pay $$$ taxes on capital gains)
- _delirium 5mo ago
  Any of the direct indexing providers will let you blacklist individual stocks from the index. The intended use is to exclude stocks you hold elsewhere (or receive as stock grants) to avoid causing wash sales, but it can also be easily used to make a custom "S&P 499".
  - zzleeper 5mo ago
    I'm looking at Schwab (and saw a few others) and couldn't find anything: https://www.schwab.com/learn/story/primer-on-wash-sales https://www.schwab.com/learn/story/primer-on-wash-sales I would assume this is not an ETF but sth else?
    - zparky 5mo ago
      https://www.schwab.com/direct-indexing https://www.schwab.com/direct-indexing
- stouset 5mo ago
  You can sidestep this entirely with a total-market fund like VTSAX/VTI, which hold the entire market and should be more resistant to being gamed. They’re free-float adjusted so entities like SpaceX are valued only by what’s available on public markets. And Vanguard (and its funds) are owned by its investors, which makes it seem implausible that the rules would be rewritten in a way that would damage investors.

SilverElfin 5mo ago

The same rules are now affecting other big IPOs. I think Cerebras was confirmed as getting fast listing too even though they’re much smaller. It’s one big act of dumping on retail markets

radicalbyte 5mo ago
They learned from the failure of crypto and have found their bag holders.

rchaud 5mo ago

Waiving profitability requirements to join the S&P 500 and trigger auto-buys from index funds is DEI for corporations.

root_axis 5mo ago

And accelerating the schedules for insiders to dump shares.

philwelch 5mo ago

Almost all of the YoY growth in the S&P500 is in a very small number of tech companies. If one of those fast-growing tech companies isn't in the S&P500, the index as a whole becomes obsolete.

epistasis 5mo ago

I'm usually a Boglehead, with some exceptions, and one exception I'd love is some sort of trade that would eliminate my exposure to SpaceX for the next few years. I'm sure there's some combo of options that would do it. Probably finding an ESG-focused ETF would do it. ESG basically meant "good governance, we follow laws" which translated into better governed public companies that therefore had better returns, as one would expect. Really weird how it was politicized into something entirely different...

xenospn 5mo ago
Stock markets are ruled by hype and fomo. Good corporate governance has little to do with returns, unfortunately.
- epistasis 5mo ago
  Short term gains are hype and fomo, but if you're holding index funds long like I am, then returns have a lot more to do with performance. And given the lack of hype around ESG, it seems like an exceptional time to buy in to it.
  - JumpinJack_Cash 5mo ago
    Bro the index is about riding the hype and fomo and when the phenomenon progressively loses track it gets less and less quota
    - epistasis 5mo ago
      I don't understand the lingo in your comment but my best possible guess is that I disagree vehemently with it. Long term dollar cost averaging is not about hype and fomo. Overall pricing in equities does vary according to alternative investment routes, which is why I'm diversified into those as well. Stonks go up. Stonks go down. Averaging over decades, ownership is about owning a share of productive output of a large portion of our entire economy, an amazing restructuring of social relations that presents an amazing opportunity for the common person, unseen throughout the history of humanity.

wg0 5mo ago

We're going to witness bigger blast than the great depression, dot com bust and 2008 crisis combined. These greedy capitalists are after the pension funds + retail investor (ETFs in particular) through IPOs but there's no profitability in sight.

ngriffiths 5mo ago

In addition to covering the IPO in general last week, Matt Levine also wrote about this specific question Tuesday[1]: > Historically index providers were in the business of making these sorts of quality decisions, so that index funds were not forced to buy stocks they didn’t like. > These rules create some tension between the idea that an index is a list of all the stocks and the idea that an index is a list of all the good stocks. Historically, it didn’t matter all that much: The point of the stock market is to tell you which stocks are good, so a company with a high stock valuation should be a very good company, so it should get a high weighting in both the Index of Good Companies and the Index of All the Companies. > But SpaceX — and also maybe OpenAI and Anthropic in their coming IPOs — will probably break that link. SpaceX will probably (1) do all sorts of stuff that index funds hate and that index providers have specifically tried to exclude and also (2) be gigantic, because the market loves it. [1]: https://www.bloomberg.com/opinion/newsletters/2026-05-26/index-funds-can-t-say-no-to-spacex https://www.bloomberg.com/opinion/newsletters/2026-05-26/ind...

daft_pink 5mo ago

Apparently, the index funds are based on free float and since the number of free floating shares is limited, the total exposure to the index will be very small.

Dig1t 5mo ago

They will only be added to those indexes if they are actually trading at a value that places them in the top 100 or 500 companies in the US. If they fall below that price then they will be kicked out of the index just like any other company. What exactly is the risk to normal investors if that’s the case? If it’s all a big scam then they will trade lower and they’ll naturally be kicked out of the index. This is a rule that will apply to all new companies. When Anthropic and OpenAI go public they will also benefit from the rule. Do you think the media/public will be just as outraged when they do it? The goal of the S&P 500 is to keep the index representative of the US market. They have in fact changed rules in the past when market conditions have changed. These mega IPOs are an entirely new market condition, as private companies have never been this big before listing in history. So large that they immediately fall into the top 100 or 500 largest companies in the country. There’s also the fact that Nasdaq is a private company and it now has competition from the new Texas exchange. SpaceX is actually dual-listing on TXSE and Nasdaq. Nasdaq needs to keep these giant IPO companies happy because if they don’t they will list on the competitor exchange which would be disastrous for Nasdaq (supercharging their competitor). These things affect each other as well. Nasdaq wants to make sure they get the IPO on their exchange, so they include them in the Nasdaq 100. S&P 500 doesn’t want to be outdated by missing a trillion dollar company from their index, while other exchanges like the Nasdaq 100 include them. There’s a real case to be made that this is just self interest on the part of the exchange and the other index providers.