Not just forcing it into. Forcing the funds to fight for it betting the stock rice higher and higher in a runaway style - the effect created by limited float and high valuation as the funds tracking indexes would try to get the amount reflecting the proportion of the valuation of the company vs. the whole tracked index valuation, and with such huge valuation the limited float leads to the price rise (similar to the short squeeze) and the higher the price on the float the higher the valuation, rinse and repeat...
Do you think people buying the SP 500 are forced to buy Apple? Dell? Workday?
I see headlines like "401k holders forced to by SpaceX" and think "WTF, that is crazy." Then I look at the article and it just says its being added to the SP500.
You may not like that it's being added to the SP500 but no one is saying you are forced to buy any other companies being added to it. I can't believe people are just running with this narrative as-if its logically consistent with what they believe. It's manipulation.
Unfortunately I have very little knowledge of the historical stock market and if this order of magnitude of bullshit valuation has ever occurred before.
>> In space no one can hear you scam
When it comes to dealing with the abuse of power by those who hold power, the question is not "who's allowing them to do this?", it's "who's going to stop them?".
Is it true? I got no idea.
Supposedly, Tesla had some unique money games that vastly blew up their cash flow early on, less a car company and more a sort of tax arbitrage. So maybe it's in character.
I don't know if this is realistic. But I look at these numbers and its like something does not add up here. The numbers are _way_ too high. As Altman said, "someone is going to lose a phenomenal amount of money". I don't want to bet on a specific player, because I don't know who, but I want to bet in general that someone is going to lose their shirt.
I think we're still a ways away from CEOs admitting that AI actually can't cut the cost of human capital in half.
On the contrary, I think it certainly can. In the sense that productivity per person can be doubled. You could fire half your workforce and do nearly the same output.
Trouble is, everyone who does that will get outcompeted by everyone who didn't fore their workforce, and instead doubled their output.
We've seen it before with factories and computerization.
I mean let's look at bitcoin/crypto.
But that's what we do in stock and markets and well whatever we are living through, sometimes bad decisions can have good results because you were right place right time. if it happens more than once, that doesn't mean it was incredible it just means the bias works.
If 1% of the innovators had access to levels of cheap capital Musk has had, we might be living in a different reality.
SamAltman for all his faults brought trillion dollar NLP systems to reality by sheer ability to raise capital.
Everyone believes if things go south Musk can raise another Trillion somehow. And honestly I wouldn't bet against the guy.
Given the IPO, I suspect they're hitting the wall with regards to new starlink signups, and SpaceX is done growing.
SpaceX has $6.6B adjusted EBITDA, which, at a premium multiplier would probably put it somewhere around 80-150 billion as a company.
https://en.wikipedia.org/wiki/Falcon_9
> Falcon 9 first-stage boosters have been landed and recovered 616 times out of 629 attempts, including synchronized recoveries of the side-boosters of most Falcon Heavy flights.
https://en.wikipedia.org/wiki/List_of_Falcon_9_first-stage_b...
https://en.wikipedia.org/wiki/List_of_Falcon_9_and_Falcon_He...
How are you valuating SpaceX?
In the short term the market is a popularity machine but in the long term it is a weighing machine.
If the market can’t actually detect crooks and charlatans until long after they have stolen investors money, its ability to be “correct” is worthless.
This has not been the case for a long time.
What do you suppose is BTC's correct valuation? How about TSLA?
Has this type of phenomenon been studied or formalized in any way by economists? I mean specifically how a cult of personality develops around a single individual causing the market to lose its shit. Or the increasing meme-ification of financial instruments.
These are both uniquely 21st century phenomena. But I'm not familiar enough with finance / economics to know what to read up on to understand what is going on.
SpaceX is on a whole new level of bullshit. I think all these guys know how to do is double down. If the hype isn't working, its not stupid and big enough, so you start talking about transhumanism and singularity and other BS in your SEC filings.
Index funds track an index mechanically. If you run an S&P 500 fund, you have to mirror the S&P 500. If a company gets added to the index, every fund tracking the index must buy it to match the index -- there is no discretion. Pension funds hold a lot of index funds.
So the causal chain is that pension funds track indexes, indexes have to buy the companies in the index, SpaceX got a fast path to the indexes. SpaceX will launch and pension funds will buy the stock, presumably propping up the stock price.
It would take a lot for pension funds to undo this and would be the opposite of index investing.
There are MAJOR rule changes made to allow them to do this (90 day wait-time reduced to 5 days, financial stability requirements lowered or removed), which is why automated rules like that were created ("oh, if they make it to X, they were already vetted for Y, Z").
A lot of people are throwing a lot of trust and reputation on the bonfire to make this happen.
401ks and pension funds have large amounts of money in index funds.
Major indexes like VTI will buy SpaceX after a waiting period as long as it satisfies other rules (and there have been some rule changes in various indexes to make something with low float like SpaceX eligible for inclusion).
However, most indexes are float-adjusted, meaning that they will adjust the amount of shares of a company in the index based on their float, not their total shares. So, they will initially pick up small amount of weight/shares around the IPO.
The NASDAQ-100 has been bending over backwards to cater to SpaceX, which makes some sense because they want it listed on their exchange. They changed their inclusion rules to include a fast-track for IPOs. This type of mechanism isn't uncommon in other large indexes (VTI has had fast-track rules for a long time) but the timing does make it appear that they changed their rules for SpaceX.
Other providers have made changes to float requirements for inclusion.
The NASDAQ-100 (QQQ being the popular ETF tracking it) is also not float adjusted and, instead, has some capping rules for low-float securities. I haven't done any projections but it seems that NASDAQ-100/QQQ will pickup more shares than the float-adjusted indexes.
in theory, people that do this for a living know this? shouldn't they all be raising the red flags on this, as opposed to say just people on hackernews?
The AI IPOs are broadly in the same ballpark, and if they IPO at less than the last private valuation (a real possibility absent a perfect setup) that triggers a whole bunch of other messes.
The window to get all these things closed before it all comes crashing down is closing, hence the sudden rush to IPO.
Aswath Damodaran recently (pre S-1) valued SpaceX at $1.2T [1] - yeah I was shocked as well. Unfortunately, I haven't had time to dig into his numbers. But yeah, there's your _financial reality_.
To be clear, the Space X prospectus seems to claim it IS an AI IPO.
Then there’s all this other hype and nonsense tacked on to make a franken-company that’s just making a circus of the core story.
What I object to is all the rule changes by NASDAQ to essentially fix the IPO so massive pension funds and index funds are forced to invest in it. There have been multiple submissions about this but in short small floats are normally prohibited for index inclusion (not anymore), the trading days required for price discovery have been dropped to almost zero, the voting share structure would be an issue, the insider lockouts have been fixed and on it goes.
There should be extra scrutiny for a trillion dollar company.
SpaceX does have the Falcon 9, which is the completely dominant launch platform and first-stage reusability gives it an almost unbeatable advantage. Starlink has a lot of potential if satellite handsets can get small and cheap enough to compete with 5G effectively. Obital data centers are bullshit. Starship is going to be a significant drain on finances and the program as a whole faces significant headwinds.
The big problem is xAI. It's a significant drain on SpaceX (costing allegedly $1B+/month). SpaceX would be a better company without it. But it's only there to rescue Elon from his disastrous Twitter purchase and the xAI investors from Elon's first bailout (of himself).
There's almost no point in trying to figure out what a valuation should be because in many cases, nobody cares. Tesla is the posterchild for that.
I looked into the how the rule-changing works. NASDAQ is what's called a Self-Regulating Organization ("SRO") in the legislation so it has a lot of power. Were it a government agency, it would be more difficult. Technically, the SEC has to approve all rule changes by SROs but in this administration in particular, that's just going to be a rubber stamp. By the way here's a speech the head of the SEC previously gave about deregulation of capital markets [1].
I was also curious if Loper Bright had changed anything here but it appears not. The sstatuory language here is clear rather than intentionally or unintentionally ambiguous.
So the funds can technically challenge any such rules. They have standing. But the bar is difficult and I don't see it happening.
But if this goes badly, what I think you'll see is changes in governance by pension funds that'll be reflected by Vanguard and Blackrock, which is "index-like" funds that have stricter governance with rules closer to what was the case before these rule changes were rammed through. I could be wrong. I hope I'm not.
[1]: https://corpgov.law.harvard.edu/2026/04/22/speech-by-chair-a...
a) SpaceX is currently trading at ~>1.5T in secondary markets
and
b) most of what the market is reacting to is the _chance_ that SpaceX goes on to become one of the largest companies in the world.
Remember the reaction when Facebook IPOed? It was hilariously overpriced (at the time, on paper, based on existing revenues) and yet here we are. A 1% chance of earning a trillion dollars is worth 10B - SpaceX can more accurately be thought of as a 10% chance of earning 10T rather than a nominal everyday business.
Michael Burry says neither SpaceX nor Anthropic is worth $1T
While all IPO valuations rely on forward-looking expectations, IPOs this large don't usually rely this much, on this many forward expectations for which there are so few real-world comps or priors to inform estimates. In short, when the error bars are in danger of swamping the signal, wild swings are likely. I expect more than one of these three to drop at least 10% relative to the overall market at some point in their first 18 months. All the potential upside (and probably much more) is already priced in. So taking this bet at the IPO price requires valuations most worry are already too high not only being correct but too low by quite a lot. To paraphrase Alice in Wonderland, these valuations require 'believing as many as six unlikely things before breakfast.'
That said, I'll also predict that one of them will be trading >50% higher than its first year low ten years later (vs the overall market). Basically, they are all hugely overvalued in the ~3 year time frame but one may turn out to have been undervalued in 10 years. So, regardless don't buy any of them at IPO. If you're interested in one or more of them, wait for it to drop >10% vs the market and then re-evaluate for early indicators it might be 'the one'.
If the bait and switch of xAI quotas continue, I would not expect their inference services to succeed.
Before getting SuperGrok I had a premium subscription.
After forking over $300 payment (annual) for SuperGrok, my quota was drastically cut immediately. As soon as I paid. This is for going from premium ($8 / month) to Super; the way cheaper premium counterintuitively had a much higher quota. Much. Versus $30/month, SuperGrok has a much lower quota and it’s been getting worse, even as xAI has surplus inference capacity to sell to Anthropic. I want Premium back, but I fear they have cut it back. To talk numbers: 35 videos every 90 minutes in premium versus after paying $$, around 30 videos per DAY in “Super” lol Grok. Granted a paltry 10 or so… it varies… of the videos are higher resolution than premium but that doesn’t matter because premium had unlimited upscaling, now gone. I’ve complained. Silence.
Do not, do not, subscribe to xAI services.
