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Good thing is that index funds don't hold stocks at market capitalization but only at free float value. So a company whose shares are mostly held by founders, e
by mnicky 4mo ago
Good thing is that index funds don't hold stocks at market capitalization but only at free float value. So a company whose shares are mostly held by founders, employees, and strategic investors gets a weight well below its headline valuation.
- BoggleOhYeah 4mo agoMost don’t. The one that is the center of much of the controversy around these IPOs, NASDAQ-100, doesn’t use float adjustments. A lot of people have been using it to passively invest in AI (via QQQ). It’s nonsensical for a variety of reasons but we live an era of the stock market just being another casino…
- mnicky 4mo agoI believe it's the opposite :) All major indices (S&P500, MSCI, FTSE...) use free-float adjustments. And recently also NASDAQ - they've changed to cap of 3x the value of free-floating shares.
- BoggleOhYeah 4mo agoYou are correct. That’s what I intended to say but I see that worded that comment unclearly.