Sure, it'll only be ~2% of the index if it opens where they want to. But in the downside case where it meanders long enough for significant amounts of its stock to make it in to public hands and then goes to 10x revenue (i.e. down 90%) , you've allowed a company to engineer dramatic changes in index rules resulting in a transfer ~1% of S&P 500 market cap from index funder holders to its bagholders^W privileged insiders^W^W investors.

Yes a -1% day should be nothing to a long term holder. Yes they're buying the market; if the market is wrong they shouldn't really have any recourse. But one can also understand that a -1% day that accrues ~entirely to the benefit a small group, who appear to have engineered that outcome has much more emotional valence than a typical down down. It doesn't feel like a bad day on the market, it feels like a heist.

> I think this is poor advice. Its share of the index will be relatively small and if it is indeed a dud, the index will organically rebalance.

If a 1 to $1.5t IPO that was fast tracked onto the S&P500 and then hoovered up a bunch of index fund money becomes a dud, the organic rebalance is going to start with a full reassessment of if index funds and the S&P can be TRUSTED.

Its very possible it will be more than a blip, although to be fair if it isn't it's going to be the sort thing you aren't going to dodge.

Nothing wrong with finding a low-cost large cap ETF that matches your investing preferences.

If one wants to gamble on the grift, that is what options are for. Otherwise, we might as well start adding NFTs to the indexes if fundamentals do not matter. Luck for some, risk management for others. Regardless, informed consent is important imho. Relevant precedence is ETFs that exclude Big Tech.

https://www.defianceetfs.com/xmag/ ("XMAG, the first ETF designed to provide investors with exposure to the S&P 500, excluding the “Magnificent 7” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla). XMAG offers a unique opportunity for investors to access the broader market while reducing concentration risk in these dominant tech stocks.")

https://www.aboutschwab.com/mss/story/how-investing-and-gamb... ("Investing and gambling can both be fun. But they are not the same.")

(none of this is investing advice, educational purposes only)

Also given how the S&P weights, it'll have about as much sway as DoorDash.

Annoying they pushed it into the indexes, but like you said, we've also never had a company come out in the 1T range or even the x00B range. These indexes are supposed to represent the market and can't ignore a 1T market cap company for very long.

EDIT

One other thing to add, is that we still do not know what the stock will price at. It's already come down once, and as more information comes out it can continue to come down until it's finally priced the day before the first trading day.