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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

#301

Post by throwaway2037 »

Spooky23 wrote: post #54
queuebert wrote: post #35

Earlier quoted context omitted.

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.

Yet, I, a relative peasant financially has been hit by 3 different brokers that I'm eligible to participate in the offering. I would hazard a guess they are not getting the uptake in institutional money they were hoping for.

    > I would hazard a guess they are not getting the uptake in institutional money they were hoping for.
I would say exactly the opposite. They (really, Elon) want more retail uptake. This follows a similar strategy that Tesla used. Also, retail ownership is much less likely to be disruptive during shareholder meetings (proposals, objections, etc.).

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

#302

Post by bregma »

baobabKoodaa wrote: post #266
iririririr wrote: post #193

Earlier quoted context omitted.

why go that far? herbalife moto is probably "we're a pyramid scheme scam" and they are 45% vs sp500 25% for last 12mo. you'd better of investing scam500 than sp500 nowadays.

Crime pays. But when you go that far, why stop at investing in scams? Surely you can make money faster by robbing old ladies at knifepoint?

It's a matter of latency vs. throughput.

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

#303

Post by expedition32 »

I am currently reading a book about the post war history of the Amsterdam stock exchange and it's quite funny reading about the booms and busts.

Although I am in my 40s I had already forgotten a lot- but yeah I was there in the 1990s. Repressed traumatic memories. Dutch consumers really soured on stocks when that house of cards collapsed.

I would say "it is happening again" but at least now we have bots who trade for us in milliseconds (although those didn't save anyone in 2008).

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

#304

Post by onion2k »

tristanj wrote: post #270
onion2k wrote: post #260

Earlier quoted context omitted.

this benchmark has to follow the market and reflect current market conditions Sure, but right now they don't know how the market will react, so changing the index rules before there's any data would be a measure of their heuristics (e.g. what they believe the market will do), not a measure of what the market is actually doing.

The core issue is that S&P requires companies to be profitable for 12-months to get included in the index. Yet all of SpaceX, OpenAI, and Anthropic are highly unprofitable, because they are prioritizing investing all free-cash-flow into growth instead of returning money to shareholders. These companies likely will not be profitable for years, and without a rule change it's unlikely they will be included in the index…

Given these large-cap companies currently represent ~5% of the U.S. stock market capitalization, it's difficult to justify why these companies are excluded from a large-cap index.

It's not outside the realms of possibility that the price of the shares post-launch could collapse if the market decides they're over-priced. Shares in companies have been known to settle on valuations far below the IPO price in the past. At that point they won't represent ~5% of the total. Changing the index rules immediately before finding out what's going to happen feels like putting the cart before the horse.

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

#305

Post by rsynnott »

d--b wrote: post #174
rchaud wrote: post #112

Good. Indexes are supposed to be slow-moving, precisely due to their entry requirement of sustained profitability that skews towards mature companies. All that an inclusion of these new companies would accomplish is a bailout of their stockholders by pension funds and ETFs where millions of regular people shoulder all the downside risk. SpaceX and OAI stock will be available through Robinhood, Questrade and all the o…

It’s important to note that index funds will eventually get in, so it’s not like 401k will never be holding these stocks. It would be silly to assume that the stock is going to tank that much on day 1, on the asumption that there are not enough investors to buy the big three IPOs that are coming out this year. There is plenty of money in the market, and everyone knows index funds will buy these stocks when the compan…

> It’s important to note that index funds will eventually get in

S&P500 at least requires profitability, so these stocks may not make it in anytime soon.

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

#306

Post by ChrisMarshallNY »

hnav wrote: post #134
rtpg wrote: post #130

Earlier quoted context omitted.

what's the argument for it being a scam?

shady debt offloading onto its sibling financing entity, which is run by Carvana CEO's father, a man convicted of fraud

> financing entity, which is run by … a man convicted of fraud

I didn’t think that was allowed.

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

#307

Post by Applejinx »

tristanj wrote: post #153
majormajor wrote: post #138

Earlier quoted context omitted.

> If a significant percentage of the market is excluded from the index because they don't meet index inclusion criteria, then then index stops being a useful benchmark. So what's the reason for fast entry specifically? If it's a significant portion of the market and will remain so, it doesn't need an accelerated entry. A benchmark should be conservative about new entrants so that it doesn't turn from a market benchma…

Because the index needs accuracy. If a company is 1-2% of the total US market cap and not included in the index, then the index is wrong right now. The longer this company is not in the index, the longer this error compounds. In the coming few months, multiple giga-cap companies (SpaceX, OpenAI, Anthropic) are all planning to IPO. These companies will likely never meet S&P profitability inclusion criteria for the nex…

If they're doomed, they're bad companies. This isn't complicated. You can run a fraud and double down real aggressively and as long as you're not called on your bullshit you look incredibly good, until you don't.

If they're doomed, they're bad companies. You can make the argument they're not doomed, but that's a separate argument.

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

#308

Post by SecretDreams »

tristanj wrote: post #188
usef- wrote: post #145

Earlier quoted context omitted.

S&P500 is not a total market index. It tracks a specific kind of large firm, with certain filters. Fast tracking means that the market likely wont have enough time to find the settled price (especially with the knowledge that passive funds are about to buy), and including a mispriced thing does not necessarily make the benchmark more accurate.

Those filters for S&P 500 inclusion criteria have changed many times. They are not sacred nor set in stone. The question is, do those filters, which were designed for GAAP profitable traditional companies & discriminate against fast growing cash-flow-reinvesting startups that prioritize growth over profit, unnecessarily exclude major players in the U.S. stock market? The S&P inclusion criteria reward companies that p…

Thank absolute Christ none of the companies you just listed will enter SP500 by default. The Risk/Reward is not functionally there to fast track companies and all of the examples you listed are too big to keep coasting on venture capital. Let them be public for 6+ months and let's see where they are at in the eyes of the public markers and then their inclusion can be re-evaluated.

What's the downside for the average pension holder with a 30 year horizon if they miss 6 months of Elon's newest scheme?

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

#309

Post by WhrRTheBaboons »

l23k4 wrote: post #179
vannevar wrote: post #124

Earlier quoted context omitted.

>All that an inclusion of these new companies would accomplish is a bailout of their stockholders by pension funds and ETFs where millions of regular people shoulder all the downside risk. Carvana is the poster child for this. It's astonishing that a company with a history of shady practices, and that has yet to offer a convincing explanation for why it is not a scam, is part of the S&P 500.

Ah, so you'd like the passive broad market index which contains the 500 biggest good companies? Do tell us if you find one I guess.

ESGV

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

#310

Post by visha1v »

very mature decision by s&p, but at the same time will this not hurt spacex and other big IPOs? i thought the reason these mega IPOs are coming is because investors have run out of money and they companies need access to broader market capital to sustain. without 401k and other funds, won't this just hasten the bubble burst? am i missing something?
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