This feels like massive news that general public won’t ever hear.
SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
81–90 of 542 posts
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#82Earlier quoted context omitted.
> What's the urgency to bend the rules? If you’re buying into a tech-marketed fund like the NASDAQ 100 and it doesn’t include a large chunk of the tech market, you’re no longer passively investing in tech. You’re investing in an actively-managed fund. Historically, companies like SpaceX would have gone public earlier and grown into the index. Recognizing that has changed with multiple $1+ trillion IPO contenders make…
“ Historically, companies like SpaceX would have gone public earlier” Could woulda shoulda. Mate they didn’t. Moreover if they had, the existing investors would’ve got a shittier exit.
Yes, they did. In the wake of Enron, Sarbanes-Oxley was passed, for which the 2nd order effect was that companies take years and years longer to IPO. 10-17 years on average since 2010 (it used to be lower). (There are other reasons, it's not purely due to SOX.
The existing investors don't have liquidity. I can't buy a house or pay my bills with shares I'm not allowed to sell. A better exit later is worthless if I starve to death before the exit.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#83This seems a sensible thing to do. If you change the rules on how things end up on your index, you force everyone using that index to reevaluate it. Your index is now perceived as more volatile (and probably is), and all the finance people need to reevaluate the risk of their index funds and decide if it is now 'growth', 'high growth' or whatever bucket it belongs in based on the new risk profile. And then all the po…
At a fundamental level, an index is supposed to reflect the market. If the current market is IPO-ing unprofitable companies at absurd multipliers, the index should reflect that. Because that is the market. The longer major indexes exclude these companies, the further the index strays from representing the market, and the worse they do their core job of tracking it. It's not the index's fault that market is pushing ou…
Indices are supposed to reflect a part of the market. That's why you have all of S&P500, the Dow, NYSE Composite, and Nasdaq Composite (and several others) in the US — They each reflect different attributes of the market as a whole.
As it stands, it's clear that the users of S&P500 are not interested in the performance of the parts of the market made up of overpriced (and potentially highly volatile) IPOs.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#84Earlier quoted context omitted.
The market cap of the S&P 500 according to Google is ~$65T. Anthropic, OpenAI and SpaceX could well amount to $4T+ in market cap. That's ~6% of the entire index. It's like adding another NVidia. That's a big deal. The rules around index inclusion exist for a reason. Too much control in one person's hands (which SpaceX has), too small a float (so you don't get price discovery), lack of a history of financial performan…
except $4T is a made up number, a complete fantasy not rooted in any reality. it us more like $750bn (this is also made up number) :)
All valuations are “made up” numbers.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#85Note that Nasdaq and Russel did put in place fast entry rules. S&P is the only one that didn’t. https://www.nasdaq.com/articles/new-fast-tracks-account-olde...
Yea, this is great but I'm not sure how much this helps since it's just 1/3 keeping their wits about them. Nasdaq clearly did it for the big bucks and getting the listing, why did Russell bend the knee?
Russell tries to represent what investors are actually buying and selling, a larger swath of the economy than S&P Dow and Nasdaq do
so they get a little bit of a pass for me, but Nasdaq doesn't
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#86Paywalled.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#87Earlier quoted context omitted.
[flagged]
were you trying to reply to someone else?
No, I'm saying they are hyping up some random podcast while saying sweet nothings. I really don't like empty hype. I want some actual content to posts that actually says something, not just links breathlessly encouraging me to go spend an hour listening.
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#88Earlier quoted context omitted.
> Anthropic, OpenAI and SpaceX could well amount to $4T+ in market cap. That's ~6% of the entire index. It's like adding another NVidia. This is a common misconception. The S&P 500 weights allocation by float-adjusted market cap, not by total market cap. In the case of SpaceX, they are planning to float ~4% of shares at IPO. Even if SpaceX was added to the index, its index weight would be based on that tiny float, an…
Nasdaq "solved" that problem by including a 5x float multiplier for stocks with less than 20% of shares available to the public...
That's misleading.
Before the changes, the Nasdaq-100 index was total market cap-weighted not float-weighted. Once a company crossed 10% floated shares, the company was added to the index at full weight.
Nasdaq's new system is a hybrid of float-weighted and cap-weighted. If a company has below 33.3% float, its weighting is 3x float. Above that, it's cap weighted. This allows a gradual fade-in of the company into the index.
It's a better system than the previous one, and in Nasdaq's own words, more conservative.
For the Nasdaq-100, SpaceX at 4% float gets 3 x 4% = 12% of its market cap counted, which is $210B not $1.75T. Still Also, the multiplier is 3x, not 5x. Nasdaq proposed 5x, but after feedback, this was reduced to 3x. The new thresholds are 3x and 33%, not 5x and 20%.
https://www.nasdaq.com/newsroom/nasdaq100-index-methodology-...
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#89This seems a sensible thing to do. If you change the rules on how things end up on your index, you force everyone using that index to reevaluate it. Your index is now perceived as more volatile (and probably is), and all the finance people need to reevaluate the risk of their index funds and decide if it is now 'growth', 'high growth' or whatever bucket it belongs in based on the new risk profile. And then all the po…
At a fundamental level, an index is supposed to reflect the market. If the current market is IPO-ing unprofitable companies at absurd multipliers, the index should reflect that. Because that is the market. The longer major indexes exclude these companies, the further the index strays from representing the market, and the worse they do their core job of tracking it. It's not the index's fault that market is pushing ou…
Why do index inclusion rules exist in the first place….?
Go do a google search
Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
#90Earlier quoted context omitted.
The market cap of the S&P 500 according to Google is ~$65T. Anthropic, OpenAI and SpaceX could well amount to $4T+ in market cap. That's ~6% of the entire index. It's like adding another NVidia. That's a big deal. The rules around index inclusion exist for a reason. Too much control in one person's hands (which SpaceX has), too small a float (so you don't get price discovery), lack of a history of financial performan…
except $4T is a made up number, a complete fantasy not rooted in any reality. it us more like $750bn (this is also made up number) :)
The 409a has a lot of words and numbers to justify a particular valuation. It's not made up from the ether based on nothing. You can disagree with their reasoning and come to a different number, but you need to show your work if you want anyone to give a shit about your made up number. How many satellites have you launched this year? What's the going rate for a kilogram to LEO? Who are the competitors and what do they charge? Things like that which aren't magic made up numbers.