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SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

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Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#101

Post by jkestner »

fragmede wrote: post #90
bdangubic wrote: post #50

Earlier quoted context omitted.

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 the…

The valuation is actually mostly about AI. Satellites, like electric cars, don’t have quite the growth story (and I do mean “story”).

https://bsky.app/profile/patigallardo.bsky.social/post/3mnhc...

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#102

Post by kccqzy »

JumpCrisscross wrote: post #25
karp773 wrote: post #22

Earlier quoted context omitted.

What's the urgency to bend the rules? It is not like SpaceX is banned for good. It will be included as soon as it meets the requirements.

> 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…

> You’re investing in an actively-managed fund.

Nitpick: It’s still a passive fund, just that the index constituents are decided actively by a committee rather than by a simple criterion. As you no doubt already know, S&P500 isn’t just taking U.S. companies publicly traded on an exchange, sorting them by market cap, and then truncating the list to the first 500.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#104

Post by acdha »

queuebert wrote: post #35
WarmWash wrote: post #29

Earlier quoted context omitted.

Yeah, but is SpaceX actually worth $1T or does Elon just think that because of how Tesla investors value Tesla?

Historically a $1T market cap with a PE of 20.0 would be achievable with a $50B/yr profit. That seems easily achievable eventually for SpaceX, as it has actual hardware and services and IP.

It does have real hardware, but it’s not in wild growth areas. They’re making their most consistent money from Starlink, which is a solid product but has growth limited by competitors from conventional ISPs with far-superior fiber networks, and the space launch business is similarly not the kind of thing where you get Google/Facebook-level growth curves. That’s not a slight, it’s just different industries: advertising companies can grow rapidly because scaling customers is so much easier than launching cargo into orbit.

The wildcard there is AI, and that seems especially dangerous to project long-term revenue from their current performance: xAI is barely in the market except renting capacity to Anthropic, so you’re gambling that they’ll continue to pay $1¼B/month for what is largely a commodity offering. Even if you’re bullish on Anthropic, that doesn’t mean xAI gets part of their profits, and given the way they blindsided the local authorities there’s a substantially greater than zero chance that they’ll get a major setback if the neighbors win their lawsuits. That doesn’t mean they’re doomed, but anyone estimating their future performance has to factor in some real risks.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#105

Post by themafia »

JumpCrisscross wrote: post #23
stubish wrote: post #9

This 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…

> sensible thing to do is to create a new index with the new rules It depends. Indices aren’t funds. They aren’t meant to balance investor interests. They’re meant to communicate some metric about the market. The S&P tells you how big companies are doing in an index optimized to balance representation against trading cost. So in 2005, float was taken into account for weighting (versus just market cap). This made sens…

> They’re meant to communicate some metric about the market.

Is that why people spend time, money and effort creating and maintaining them? They're just broadcasters? That seems dubious.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#106

Post by JumpCrisscross »

lmm wrote: post #96
JumpCrisscross wrote: post #62

Earlier quoted context omitted.

> absolutely does balance interests - namely, its own - beyond simply being an academic vehicle for communication of a stable thesis As a business, sure. As a committee, it’s still a deeply technical process. I can say with a lot of confidence that optics weren’t considered in any of this, possibly to a fault. > and a nontrivial portion of the U.S. economy This vastly overstates the amount of assets tied to the S&P 5…

> I can say with a lot of confidence that optics weren’t considered in any of this, possibly to a fault. How can you possibly know that? Do the people on that committee have a cast-iron tenure guarantee?

> How can you possibly know that?

I know folks who have been on these. They don’t have tenure. But they’re basically emeritus. If S&P wanted to do something that would cause chaos, it would be fucking with those folks because they made a decision that looks bad.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#107

Post by JumpCrisscross »

themafia wrote: post #105
JumpCrisscross wrote: post #23

Earlier quoted context omitted.

> sensible thing to do is to create a new index with the new rules It depends. Indices aren’t funds. They aren’t meant to balance investor interests. They’re meant to communicate some metric about the market. The S&P tells you how big companies are doing in an index optimized to balance representation against trading cost. So in 2005, float was taken into account for weighting (versus just market cap). This made sens…

> They’re meant to communicate some metric about the market. Is that why people spend time, money and effort creating and maintaining them? They're just broadcasters? That seems dubious.

> Is that why people spend time, money and effort creating and maintaining them? They're just broadcasters?

Yes. There are more indices than there are stocks. Publishing an index is, business wise, a game of getting funds to license them.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#108

Post by riffraff »

fragmede wrote: post #90
bdangubic wrote: post #50

Earlier quoted context omitted.

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 the…

You do realize SpaceX valuation is completely detached from the space business at this point?

Their S1 cites (by memory) a 370B addressable market for space stuff and a 27 trillion for AI.

And for AI they counted all Twitter accounts as grok users.

The Spaces eXploration company was a cool company, but it's not what's being sold to the market now.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#109

Post by JumpCrisscross »

fragmede wrote: post #90
bdangubic wrote: post #50

Earlier quoted context omitted.

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 the…

409As are absolutely made-up numbers. Management writes a number on a sheet and a 409A consultant signs it.

Re: SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P

#110

Post by HWR_14 »

tristanj wrote: post #66
jmyeet wrote: post #45

Earlier 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…

> 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…

SoaceX plans to continually unlock float for the first six months of being listed. So the percentage of the index would continue to rise.
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