[guywithahat]

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

[disillusioned]

Because 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?

[eru]

You know that short selling is possible? And index funds are traditionally some of the keenest participants to lend their shares out to short sellers in return for a bit of extra return (over the raw index).

[HWR_14]

Can you short a company that quickly after it's IPO? I thought there was a period when that was impossible.

[mlyons1340]

Short the index to short the IPO by proxy is what eru is saying.

[eru]

Sorry, that's not what I was saying.

As far as I can tell, there's no minimum period you have to wait after an IPO to be able to short shares. Legally, you can do it from day one.

And instead of a classic short where you have to borrow the stock, you can also write single stock futures. Futures don't require you to borrow the underlying. You just need enough collateral, but that can be anything, like T-bills or whatever.

Or you can write call options, or buy put options, to bet on a falling stock price.

[sehansen]

Index 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.

[eru]

There's lots of different indices with different rules, and lots of different funds to implement these. Pick one that works with your preferences.

[mcherm]

I did.

Then the rules were changed.

[Ekaros]

If 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]

How 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.

[oblio]

SpaceX 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]

Moreover 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".

[Alex-Programs]

XAI is now printing revenue thanks to the Anthropic compute deal. Moreso than SpaceX itself.

[sportsracersss]

They're still deep in the hole because the DCs were built on debt.

The IPO will hand those heavy debt bags to the public.

[oblio]

A lot of people are "printing revenue" in the current LLM economy, including, Nvidia, Azure, AWS, etc, the people selling shovels.

We have 0 proof that selling shovels is a sustainable business strategy since none of the gold prospectors are bold enough to publish GAAP + audited financial numbers.

Right now we have lots of people spending lots of money at the lower layers and none of the end-game companies, the ones selling to actual customers, private or companies, publishing any quarterly or yearly numbers that show that the end-state of current LLMs is profitability.

Keep in mind that Nvidia, Azure, AWS can't really pivot to something else once they can't stop selling shovels. Nvidia goes back to being a $10bn company selling GPUs to gamers and Azure/AWS probably see their earnings drop by a quarter or more if the AI bubble pops. At least shovel sellers during the gold rushes could cash in and invest in land or cattle or something and have long term sustainability.

[philipallstar]

> xAI is losing money hand over fist

I wonder how much better Anthropic is doing.

[oblio]

Well, 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]

Anthropic is paying xAI, not other way around.

[oblio]

> 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...

It turns out, there are many ways to skin a financial cat.

[philipallstar]

> Though with the current US administration, as proven by the SpaceX IPO, laws are mere recommendations.

Are they breaking laws?

[oblio]

If you can write the laws, nothing is illegal. This argument isn't as strong as you think it is.

[philipallstar]

I'm asking a question, not making an argument.

[WarmWash]

I think there are around 7 people who pay for a grok subscription.

[plaidthunder]

I don't find this reassuring, because Elon's playbook is to force the public to purchase anything of his which doesn't do well on its own. Maybe a nice $1.776 trillion dollar tax funded investment into "unwoke" AI. :D

[arppacket]

Yeah, his current playbook is to get the public to fund his Nazi propaganda machine of X + Grok. Letting a billionaire tie that heinous stuff to critical space infrastructure and use 401k money from all Americans to fund it is a criminal indictment of our entire system!

[SwellJoe]

Because it's a scam by the richest people in the world to steal from the retirement accounts of everyone else.

[vintermann]

And 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.

[fourside]

Why does SpaceX warrant a change of existing trading rules?

[frankacter]

>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-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/

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-contort...

[lostlogin]

> >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]

The 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.

[baobabKoodaa]

The rules were changed with these 3 specific companies in mind. Stop weaseling about it.

[lanstin]

And prior to that Elon did float the idea of IPOing on a non-NYC exchange, some Texas exchange. So a bit of a stick and some honey in the IPO fees and early access.

[dboreham]

Because the people who can decide the rule change were bribed.

[s1artibartfast]

What is a Bribe? These indexes are all for profit companies with no obligation to you.

[whattheheckheck]

Steal from everyone and shove their faces in the dirt and the social contract breaks down further

[otikik]

"Bought" is probably more correct, but honestly discussing semantics is just distracting from the main issue.

[gwerbin]

This is not a "why".

[skeptic_ai]

We all know they get paid by musk to load up on overvalued stocks so musk can get some cash from pension funds, the pay off a bit Russell’s for bending the rules. No one in their right mind would change rules to buy space x. What profit must have to compensate the valuation?

[21asdffdsa12]

Because this time we did learn our lesson is almost 15 years ago? Its a good time to get out of the ride

[rvba]

Because twitter helped elect those who set the rules now.

[jjav]

> 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.

[hagbarth]

Because 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]

Are 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.

[HereBeBeasties]

No, 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.

[randbyte]

If 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.

[csomar]

Ask 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.

[stingrae]

they should wait for the major lockups to pass, there by skipping some of the inevitable volatility they will likely cause.

[realusername]

> SpaceX will certainly be in the top few companies.

I'd argue that it certainly isn't.

[matwood]

You 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.

[watwut]

The 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]

> 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]

Scam company with no revenues

[bluecalm]

>>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.

"People" don't know much about finance to put it mildly. ETFs are created by market demand. Even "factors" ETFs are often based on completely irrational things like dividends, P/E ratios and other meaningless metrics. This happens because people are easily seduced by narratives ("solid dividend paying stocks", "low P/E ratio - good returns") which are plainly wrong but tempting to an average person.

Most people realized they don't know anything about finance and would like to pay someone (their fund manager) to make responsible decisions and expose them to wide market while avoiding blatant manipulations. Unfortunately the incentives are misaligned here. The managers' incentives are somewhere else. They are not paid by long term performance of their fund and they are disproportionally penalized for taking contrarian decisions.

People being force feed those mega IPOs losing money on them is bad for others as well - there will be less wealth for productive investments and more in hands of "players" (or scammers if you want to call it out). There might be a crash. Trust in financial market will plummet and hostile regulation might arise which other market participants will pay for even though they are not to blame.

I will not have exposure to those mega IPOs but I am in privileged position because:

-My understanding of financial markets is much better than that of an average person.

-I have quite a bit of time to follow all of it and react in time

-I pay 0% capital gain tax and use a broker with nearly 0 fees which allows me to rotate for free (almost)

-I know where and how to move my money so I don't lose advantages of wide market exposure

It took me a lot of effort to set it all up like that. An average person falls short on all of the above and is not in position to avoid donating part of their pension fund to Musk and Altman though. It is still bad for me for reasons mentioned above.

[wucke13]

> I pay 0% capital gain tax and use a broker with nearly 0 fees which allows me to rotate for free (almost)

How so?

[oulipo2]

So then, why change the rules?

[pbhjpbhj]

What's really clever is that Musk could pull his Nazi salute at the inauguration of the president he bought, and the ensuing 'voting with your dollars' against him doesn't matter because he was able to orchestrate forcing people to pay him by cutting them out of the loop. I mean it's absolutely evil, but it's pretty clever - his team proved they can't run a country (they probably could, but don't want to), but they're incredibly adept at stealing.

I wonder if Musk chose rocketry solely because of the ability to use it to drain money from government?