This is very smart of these folks because for just three companies, they can't ruin the trust and impeccable reputation they have built over the years.
This decision alone is worth several trillion dollars.
Well, it might be a good decision but I think the possibility of Standard and Poor one day being worth trillions of dollars more than if they had included three companies a year or two earlier than when they inevitably join the index is absolutely zero.
SpaceX needs 4 profitable consecutive quarters to be included. If you have a lot of faith that they will achieve this I recommend you buy day 1 so you can ride the highs when the passive money eventually pours in.
> ... Standard and Poor one day being worth trillions ...
S&P - https://en.wikipedia.org/wiki/S%26P_Global - is a business intel & analytics firm, not an investment firm. Their S&P 500 list just one of many datasets that they manage and sell. Cleverly trying to pick future winners and losers has little potential upside for them, and could put them into direct competition with many of their customers.
It's amazing how many intelligent people don't understand this. People on the internet just like to complain. Not one single person is being denied anything, each and everyone one of us can go fill up on all the high valuation unproven companies we want to, directly or through an ETF that tracks some index that is making exceptions.
Yeah - though I might phrase it "don't want to understand this". Which is, in many ways, a mindset which they are carefully taught. Late-stage capitalism's 0.01% need the 10%, or at least the 1%, to really believe that they should dutifully support the status quo, and "invest" as they are told to - no mental effort required - so that they can magically get richer & richer.
You've used the word "inevitably". Are you sure it's inevitable? SpaceX is launching at a ridiculous valuation, has two bad businesses bolted on to one modestly successful one, and all together the revenue puts the company well behind companies with a market cap vastly smaller than what they're pricing the IPO at.
This is a ridiculous situation, a ridiculous valuation, and a very risky business (data centers in space? c'mon, be serious).
People don't buy the S&P 500 because they buy the index because it spreads risk. That they won't get maximum returns is the intended risk tradeoff they want.
That people consider the S&P 500 as a vehicle for "maximum money" is precisely why it should be considered in a bubble. And why actions like the NASDAQ's fast-track exceptions are so concerning.
The moment you start making exceptions to the rules because "gotta push the stock index higher", it's game over for the entire economy.
At this point, that's what SV has been taught to expect: unlimited runway.
Look at what happened with Uber: they were a giant incinerator that ran on investment cash for years and years and years in a low interest rate environment.
Since we have an at least somewhat-sane fiscal policy for the time being, they can't do that anymore. Now, they have to find other source of cheap cash that comes with few or no strings that could ever make the almighty founder class have to consider someone else.
Could they compete with other investments on the open market by adjusting what shareholders could expect? Sure, but that would mean potentially diluting the equity that the founders and early investors could get, and when you consider that OpenAI thought that the 100x cap wasn't generous enough, I think you get an idea of what kind of greed we're dealing with here.
Passive investors were their target for this: lots of money, not a lot of questions.
It'll be interesting to see what they go for next. I'm willing to bet Trump starts screaming at the Fed to lower rates again.
A large share of invested money is passive, especially in the S&P 500. If some people pull out, it could cause a very damaging cascade. There would be a forced sale of stocks with maybe no buyers.
It’s incredibly dumb that it was ever even under consideration.