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Why? An index fund represents the market (usually top 100 or 500 companies), and SpaceX will certainly be in the top few companies. I would argue it's a lot ris
by guywithahat 4mo ago
Why? An index fund represents the market (usually top 100 or 500 companies), and SpaceX will certainly be in the top few companies. I would argue it's a lot riskier to buy it after the IPO price (if you're buying it secondary it would be easier to spike prices by accident), plus then it's not representative of the actual market until you've purchased the stock.
Unless I'm misunderstanding this, buying at the sale price is the least risky way of purchasing the stock, which is what index funds should do. They should pursue the least risky way of indexing the market
- stingrae 4mo agothey should wait for the major lockups to pass, there by skipping some of the inevitable volatility they will likely cause.
- fourside 4mo agoWhy does SpaceX warrant a change of existing trading rules?
- 21asdffdsa12 4mo agoBecause this time we did learn our lesson is almost 15 years ago? Its a good time to get out of the ride
- toasty228 4mo ago[flagged]
- camillomiller 4mo agoStop downvoting the only person that talks reason. We have reached a point where Musk and its tech pals must be stopped with all means possible, because government oversight, democratic processes, and the judicial process clearly do not apply to them anymore.
- toasty228 4mo agoSadly that's what happens when people have a "high" technological culture with absolutely zero political nor ethical education. They see all the cool gadgets while being completely blind to the political and social side effects
- 3form 4mo agoIt's not only a question of _ethical_ education; the magical claims should also be refuted on rational grounds. Seems that's difficult, too.
- camillomiller 4mo agoThis is a good point. It's like a strange form of selective magical thinking, or maybe it's really just a global psychosis. Tech people without a background in humanities (not academic, even just because of personal interest) are the most prone to this in my experience.
- frankacter 4mo ago>Why does SpaceX warrant a change of existing trading rules? They don't, while timing certainly benefits, and potentially was triggered by them and OpenAI and Anthropic IPOs, these rules are not specific to only apply to SpaceX. FTSE Russell (Russell 1000/2000 etc.) Adopted "fast entry" for large IPOs. Eligible companies (investable market cap above Russell Top 500 cutoff) can join after 5 trading days (previously quarterly rebalances). Also eased float rules with carve-outs. https://www.lseg.com/en/media-centre/press-releases/ftse-russell/2026/ftse-russell-introduces-ipo-fast-entry-enhancements-for-russell-us-indexes https://www.lseg.com/en/media-centre/press-releases/ftse-rus... Nasdaq (Nasdaq-100): Effective May 1, 2026, top ~40 market-cap companies can enter after 15 trading days (previously 3+ months). Adjusted low-float handling. https://spotgamma.com/spacex-ipo-index-changes-spotgamma/ https://spotgamma.com/spacex-ipo-index-changes-spotgamma/ S&P Dow Jones (S&P 500): Reducing seasoning from 12 months to 6 months for megacaps and waiving the 4-quarter GAAP profitability requirement for large issuers. https://www.wsj.com/finance/stocks/stock-indexes-are-contorting-themselves-to-include-spacex-and-openai-92136b13 https://www.wsj.com/finance/stocks/stock-indexes-are-contort...
- gwerbin 4mo agoThis is not a "why".
- lostlogin 4mo ago> >Why does SpaceX warrant a change of existing trading rules? They don't, while timing certainly benefits, and potentially was triggered by them So the question remains, why do they warrant a rule change?
- frankacter 4mo agoThe answer remains, these rules do not specifically apply to only SpaceX, they apply to a range of companies that fit specific profiles. Timing happens to favor SpaceX, but will equally favor OpenAI, Anthropic and others within the same qualifiers. The links above provide specifics as to the what's and the why.
- 4mo ago
- jjav 4mo ago> Why does SpaceX warrant a change of existing trading rules? It does not, of course, but when oligarch corruption runs supreme, it is whatever they want.
- rvba 4mo agoBecause twitter helped elect those who set the rules now.
- realusername 4mo ago> SpaceX will certainly be in the top few companies. I'd argue that it certainly isn't.
- hagbarth 4mo agoBecause 5 days is not enough for the market to discover the price of SpaceX. And the rules were changed so the float is weighted as if it was much much larger than it is.
- gizajob 4mo agoAre you sure? It discovers it within seconds following a bad earnings report. It seems hard to know right now whether five days might actually be sufficient or not, seeing as the cat is out of the bag about how unprofitable and debt laden this trillion dollar enterprise is.
- randbyte 4mo agoIf price is fully discovered right after ER then you will see price stabilized right after ER. But in fact post ER prices can wildly differ from the next minute, next day and next week price. It’s speculation and anticipation.
- HereBeBeasties 4mo agoNo, it's not long enough. You need long enough for the initial investors to get past their lock-up period and either sell their shares, or not, which is typically 90-180 days. Otherwise, index fund investors will pick this up at basically peak overvalued initial pricing, only to potentially take a bath on it three months later. Additionally with SpaceX they are issuing only a very small percentage of stock compared to a usual IPO, with an unprecedented valuation. Couple that with a much larger than usual amount of the IPO being issued through retail investment platforms rather than to professional institutions (30% rather than a more typical 5%) and it looks pretty unsettling.
- disillusioned 4mo agoBecause nothing about the IPO price has any resemblance to a fair market valuation, and if it's being propped up by this forced inclusion, even less so? The rules existed to fundamentally protect against a Potemkin village situation where an underwriter and some early round investors whip the valuation into a froth and raise against a rabid corps of retail investors who don't necessarily care about a PE ratio of 1,000+ because they're buying the hype. More importantly, it allowed organic price discovery to occur. This eschews that process because the indexes are _forced_ to participate essentially at _any_ price, so rather than the market writ large having the opportunity to reward or punish the underwriter pricing of the IPO and determine any true idea of price, they're forced to buy the banker's narrative, which will intrinsically prop up the stock to some degree, but at what cost, and based on what underlying?
- Bombthecat 4mo ago[flagged]
- watwut 4mo agoThen there is no reason to change the rules, right?
- karmakurtisaani 4mo agoBut this is like Elon's other products. It's so good that it doesn't have to follow rules!
- lostlogin 4mo agoCareful. If you disagree with him, he might brand you a paedophile.
- OtherShrezzing 4mo agoWill those things not still be true after the standard 12mo trading window and GAAP profitability?
- oblio 4mo agoSpaceX financials are a mess outside of the actual SpaceX part. xAI is losing money hand over fist, other random bits in there are doing the same. The valuation makes no sense. It's basically a money transfer from the average person to the poor richest person on the planet. The true Great Filter is mental illness, apparently.
- XorNot 4mo agoMoreover their filings on the matter basically correctly weight their space launch business and then go "and xAI will obviously be worth a bajilion dollars more".
- philipallstar 4mo ago> xAI is losing money hand over fist I wonder how much better Anthropic is doing.
- oblio 4mo agoWell, apparently Anthropic became "profitable" last month, because of some 1-time deal with xAI. I wouldn't bet on either Anthropic or OpenAI being profitable, we'll find out soon enough what this house of cards has inside, as they both want to IPO. Though with the current US administration, as proven by the SpaceX IPO, laws are mere recommendations.
- loandbehold 4mo agoAnthropic is paying xAI, not other way around.
- oblio 4mo ago> That’s $15 billion a year in compute costs, but reduced to an indeterminately-discounted level for the precise months that Anthropic is using to tell investors and the media that it has an operating profit. That operating profit is a result of accountancy rather than any improvements to its business model. > While I wouldn’t say this is cooking the books, it’s definitely a shiatsu-grade massaging of the numbers. Anthropic has deliberately leaked a quarterly “profit” where it knows it can suppress its costs https://www.wheresyoured.at/anthropics-profitability-swindle/ https://www.wheresyoured.at/anthropics-profitability-swindle... It turns out, there are many ways to skin a financial cat.
- sehansen 4mo agoIndex funds are largely synonymous with passive, long term, buy-and-hold investors. That kind of investors are best served by slower changes to the index, especially since index funds are intended to piggy back on the price discovery that happens in public trading. An IPO price, which is the result of a private negotiation, is exactly what you don't want to buy stocks at if you're a passive, long term investor.
- Ekaros 4mo agoIf it is actually growing company with growing valuation being a year late is not big deal over say 10 or 20 years. It is actually the smart move.
- aswegs8 4mo agoHow is that the smart move? It's exactly what OP stated as undesirable for index fund investors. The price discovery of the public markets hasn't taken place yet.
- eru 4mo agoThere's lots of different indices with different rules, and lots of different funds to implement these. Pick one that works with your preferences.
- mcherm 4mo agoI did. Then the rules were changed.
- SwellJoe 4mo agoBecause it's a scam by the richest people in the world to steal from the retirement accounts of everyone else.
- vintermann 4mo agoAnd when it happens, I suspect we'll end up having to eat austerity to avoid inflation again. Under new leadership from the Responsible Party, whoever that is where we live.
- csomar 4mo agoAsk yourself this question: Why were the rules there in the first place? SpaceX being big doesn't make this okay, it actually makes it more dangerous since more and significant money could be funneled.
- matwood 4mo agoYou shouldn't be downvoted because your point is completely valid. Matt Levine made the same point in the last Money Stuff podcast. These indexes are supposed to contain the largest, most significant, and in some cases all companies so people shouldn't be mad at the indexes for pulling in a company that's going to have a 1.5T market cap at IPO. Given the market cap, it would actually be weird to not have it in an index like the S&P500 or QQQ. Instead blame the bankers and market who are putting buying in at 1.5T valuation. If people really don't want SpaceX in their S&P 500 tracking ETF, we should see a S&P-ex SpaceX in short order.
- oulipo2 4mo agoSo then, why change the rules?
- watwut 4mo agoThe whole point of original rule was to have market discover price over time before adding a company. It is absurd to blame "market" that did not had enough time to settle. "Bankers" are to blame for making this rules change happen. It is entirely valit to blame people who changed the rules to allow this to happen.
- matwood 4mo ago> The whole point of original rule was to have market discover price over time before adding a company. IPOs and indexes were not really built to handle companies that stay private as long as we are now seeing. SpaceX is trading at crazy levels in the private market right now. Even if it prices down to something ~1T, it would be silly for an index that is a total market or the biggest 500 companies to ignore it. With that said, it'll be float weighted and have about as much impact on the s&p 500 as something like DoorDash.
- whattheheckheck 4mo agoScam company with no revenues
- 4mo ago