I don't know why they should even consider, all have IPOs that are valued too high compared to their revenues.
S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
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Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#412That's nice, but there's more to it:
> However, the S&P Dow Jones Indices did “carve out one concession” by changing the investable weight factor rules for “lower-profile benchmarks” such as the S&P Total Market Index and Dow Jones US Total Stock Market Index, according to Quartz. That could allow an IPO faster entry into those indexes.
I think these total market indexes are used as benchmarks for US total market ETF's and funds?
Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#413Big relief for me. As a passive investor, I want the indices to follow the same passive strategy they always have, and specifically not make exceptions for specific companies like SpaceX wanted. Plenty of ways to get exposure to that stock without it going into the indices it is not qualified for.
Agreed. S&P 500 needs to be seriously gatekeeped. We need safer boring companies in there thatbhave been peoven over a long period of time. Nothing against these companies but they are not proven and ready for S&P 500.
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Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#414If they're having trouble accumulating more capital, perhaps SpaceX/OpenAI/Anthropic's major shareholders could just try to compete with other investments on the open market instead of trying to soak index funds.
Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#415This is very smart of these folks because for just three companies, they can't ruin the trust and impeccable reputation they have built over the years. This decision alone is worth several trillion dollars.
Calling this “smart” is like calling the decision not to shoot yourself in the face at close range with a shotgun “smart.” It’s incredibly dumb that it was ever even under consideration.
This is the US financial system.
"Smarts" has nothing to do with anything there and never has, so at least IMO, it's noteworthy that they didn't just sell out the index.
Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#416Earlier quoted context omitted.
> just that nobody knows I don't understand. Guilty until proven innocent, because they... are too successful? What could possibly be the generalizable idea here? Should we have a speed limit for too successful companies, even if they might be doing super valuable work? Who would we trust to be the judge of the potential havoc that bad capital allocation in such a moment might cause? EDIT: To be more clear, I don't h…
they aren't being specially punished. they are being made to follow the rules that quickly to every other company that IPOs. These rules aren't arbitrary. They exist because without them, retirement accounts would be vulnerable to companies doing all sorts of nonsense to manipulate the indexes.
That might be a valid motivation for keeping the rule, but as far I can tell it can't be the original reason for this rule as it predates passive indices in retirement accounts being that popular.
Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#417Earlier quoted context omitted.
Agreed. S&P 500 needs to be seriously gatekeeped. We need safer boring companies in there thatbhave been peoven over a long period of time. Nothing against these companies but they are not proven and ready for S&P 500.
Let's say Alphabet shifts further to ~become a 100% AI company in the same way that Anthropic and OpenAI are. Should they be removed from the index? If not, why not?
The logic isn’t the same. We’ve had plenty of history to judge Alphabet’s financials. It’s less about AI and more about allowing the market to appropriately price the stock after seeing their filings for a period of time.
Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#418This is very smart of these folks because for just three companies, they can't ruin the trust and impeccable reputation they have built over the years. This decision alone is worth several trillion dollars.
Well, it might be a good decision but I think the possibility of Standard and Poor one day being worth trillions of dollars more than if they had included three companies a year or two earlier than when they inevitably join the index is absolutely zero.
A large share of invested money is passive, especially in the S&P 500. If some people pull out, it could cause a very damaging cascade. There would be a forced sale of stocks with maybe no buyers.
Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#419Earlier quoted context omitted.
Well, it might be a good decision but I think the possibility of Standard and Poor one day being worth trillions of dollars more than if they had included three companies a year or two earlier than when they inevitably join the index is absolutely zero.
Their job, EXPLICITLY , isn't to maximize returns. People don't buy the S&P 500 because they buy the index because it spreads risk. That they won't get maximum returns is the intended risk tradeoff they want. That people consider the S&P 500 as a vehicle for "maximum money" is precisely why it should be considered in a bubble. And why actions like the NASDAQ's fast-track exceptions are so concerning. The moment you s…
At this point, that's what SV has been taught to expect: unlimited runway.
Look at what happened with Uber: they were a giant incinerator that ran on investment cash for years and years and years in a low interest rate environment.
Since we have an at least somewhat-sane fiscal policy for the time being, they can't do that anymore. Now, they have to find other source of cheap cash that comes with few or no strings that could ever make the almighty founder class have to consider someone else.
Could they compete with other investments on the open market by adjusting what shareholders could expect? Sure, but that would mean potentially diluting the equity that the founders and early investors could get, and when you consider that OpenAI thought that the 100x cap wasn't generous enough, I think you get an idea of what kind of greed we're dealing with here.
Passive investors were their target for this: lots of money, not a lot of questions.
It'll be interesting to see what they go for next. I'm willing to bet Trump starts screaming at the Fed to lower rates again.
Re: S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic
#420I’m seeing a lot of naive optimism about this decision. The risk S&P takes by doing this is that they will still be forced to buy SpaceX, but a year after everybody else. Given that there is a massive amount of capital that you know will have to buy this stock in 12 months, that itself provides speculative reasons to buy it now. The indices are in an unenviable position: a race to the bottom. The S&P 500 may be setti…
The only decision they are making is to maintain their existing rules. Which is what a slow-moving, conservative financial instrument should do.
S&P may very well end up buying SpaceX, but it will be through the standard mechanism they have been using for decades. Not in a last second bum-rush deal that NASDAQ made to grant special favors.
One year from IPO, the insider lock-up periods will have expired, so insiders who want to get out will have had an opportunity to dump their shares in a risk-based approach without a guaranteed payout from index funds.