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SpaceX bond worth 10% less than issue price – heading for junk bond status

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Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#401

Post by DoesntMatter22 »

Analemma_ wrote: post #395
DoesntMatter22 wrote: post #388

Earlier quoted context omitted.

The United States is far more socialist than capitalist and it’s not close. In the early 1900s the federal tax rate was 0. Now we spend 125% of what we bring in in taxes. That is definitely not capitalism. That’s not a free market, that is the government spending far beyond what’s even feasible

What does the relative level of government spending versus taxation have to do with whether businesses will self-regulate? You're just spewing non sequiturs here.

They said we live under true capitalism right now we I’m clearly showing we do not. Not to mentions the US is far from “self regulating” there are millions of words of regulation in the US.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#402

Post by alistairSH »

HPMOR wrote: post #364
bko wrote: post #350

Earlier quoted context omitted.

I think the rules are there are hard limits unless a multi-trillion dollar company IPOs with a significant absolute float, in which case tracking the "market" obviously includes said company.

Yeah, this is correct. There are so many large multi-trillion dollar companies coming to IPO, which if your are passive index holder and you are trying to track the market it is correct for these companies to be included. And besides SPY has chosen not to fast track where QQQ has. It is a free market, and folks are free to NOT buy QQQ. So I'm not sure why this is a point of debate.

"People" in this instance aren't always informed buyers. Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing.

The normal seasoning period is there for a reason. There is a massive downside to premature inclusion of a stock that is initially overvalued and then settles to a reasonable/sustainable value.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#403

Post by SpicyLemonZest »

MikhailTal wrote: post #45
Maxatar wrote: post #37

Earlier quoted context omitted.

This isn't backed by any evidence though. Jay Ritter maintains an extensive amount of data on IPOs here: https://site.warrington.ufl.edu/ritter/ipo-data/ And his data shows that IPOs for the most part perform about as well as their respective market. That is large multi-billion dollar IPOs perform about as well as the broad market, and smaller IPOs (which constitute the vast majority of IPOs) perform about as well as…

Also, the OP just does not understand how the market works anyway. Surely if it was obvious that investing in fresh IPOs is a bad move, all of the big boys (banks, hedge funds etc) would short them to the point of equalising anyway. Maybe not to the absolute efficient point, but still, why do people think they can see such a huge obvious trend, and also assume that other people cannot see it?

Banks generally cannot make these kind of directional bets, and the Gamestop saga has shown that it's very risky for short interest to get too high against retail excitement. So if an IPO is heavily overvalued, the level of pressure required to bring it down immediately may not materialize for structural reasons. I made a modest amount of money from SPCX falling, and I'm sure some hedge funds made much more than me, but I and I expect they would have stayed far away if short interest had been higher.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#404

Post by names_are_hard »

shermantanktop wrote: post #118
tyre wrote: post #62

Earlier quoted context omitted.

I'm not an investor in SpaceX but I don't think shorting stocks at IPO should be allowed. The market should be given time to settle on a price, and it's unlikely that anyone needs to short it on day 1 for hedging. It's purely price speculation. Yeah, I know why people _want to_ (betting), but it doesn't serve a broader economic purpose.

“Broader economic purpose”? It’s all betting. If someone wants to dress it up in jargon or talk about beneficial second order effects, they can. But if putting money on an outcome you can’t control isn’t gambling, I don’t know what is.

Is buying insurance gambling? Is giving your second cousin 100k some money so he can open up is restaurant gambling if you expect a percent of the profits but won't actively be involved in advising him on running the business?

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#405

Post by alistairSH »

danudey wrote: post #344
wredcoll wrote: post #299

Earlier quoted context omitted.

The term "capitalism" was literally only created for the purpose of writing criticisms of the (then) current system of markets/trading/taxing/investing. Try actually defining capitalism in a way that doesn't apply to basically any random society since the dawn of agriculture. Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society…

Saw an interesting discussion on how capitalism has existed for as long as markets have existed, including ancient Greece, and how it inevitably leads to wealth inequality, monopolistic behavior, unsustainable resource extraction, and all the other negatives we see today. The only difference is that in Greece, all of these negatives would have been applied locally but now they're all being applied globally. Instead o…

Pretty sure Adam Smith captured that in his writings.

Full laissez-faire, free market capitalism generally leads to wealth (and power) imbalance. Regulation is necessary to prevent that (assuming you want to maintain a "fair" democracy of sorts and not regress to oligarchy).

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#406

Post by elbasti »

Havoc wrote: post #91

Which is all sorts of backwards. Debt has liquidation preference over equity. And equity market say spacex has trillion+ of supposed equity buffer before it cuts into debt value

This is incorrect. SpaceX has a trillion in Market Capitalization, not a trillion in Equity. These two concepts are no the same. The equity value is the theoretical intrinsic "worth" of a company, and has a very simple definition: Equity = Assets - Liabilities.

Market capitalization takes into account the future value of the business, while equity (an accounting concept) only looks at present day cash & liabilities.

When a company gets liquidated, the future growth/value of the business is, pretty obviously, zero, so the "market cap" is irrelevant. What matters is what is left over once all debts are liquidated.

SpaceX's equity at the time of their IPO was $34 Billion (it's in the S1!). You can also see in their S1 that their cash decreases by about $8B a year, so unless things change they should be underwater in about 4 years.

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#407

Post by rkuodys »

fluoridation wrote: post #336
Ekaros wrote: post #170

Earlier quoted context omitted.

Getting a very popular stock on their exchange. Directly making money from it.

But on the other hand, it burns trust to change the rules on the fly.

I think that is the problem with concentrated markets. You can do whatever and younare actually never "punished" by the market. Ie market htpothesis does not work

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#408

Post by ceejayoz »

somenameforme wrote: post #384
ceejayoz wrote: post #223

Earlier quoted context omitted.

> It's crazy to believe that stopping the funding of US backed NGOs directly kills people. Why? Have US-backed NGOs never saved a single life with their spending? You can argue it's not worth the spending, perhaps, but you really can't argue that it's not happening somewhere. > This is a reason why the US is trillions in debt. This is a tiny, tiny, nearly invisible fraction of that reason.

Gotta hit on a few things there in no particular order: - USAID's final budget was $34 billion. That's already very real money, but it came from the discretionary budget - that giant bill of spending where the government decides what to spend money on: schools, roads, housing, and so on. The entire discretionary budget for 2025 was $1.9 trillion, so USAID made up almost 2% of all the US' federal discretionary spendin…

> so USAID made up almost 2% of all the US' federal discretionary spending!

So, tiny; a fraction of what we spend on much less useful things like the Iran war or huge gifts to ICE.

30 years of that level of USAID funding would only get us to a single one of those trillions in debt.

> The vacuum their exit has created is being rapidly filled by a wide mix of other interests.

Yeah, we don't really want China vacuuming up all of Africa. It was already looking like a growing problem before the USAID cuts (https://www.congress.gov/crs-product/IF11304).

> So in your calculus you need to account for deaths caused by USAID as well.

I mean, your one example cited didn't work and resulted in zero deaths. If we get to count that sort of thing, we'd have to start accounting for the soft power benefits of USAID (and those the CIA gets from the trade), too. Goodwill, intel, not having a bunch of polio infections come into the country via air, etc.

> Teach a man to fish and you feed him for life, give a man a fish a day and you now control that man because he's dependent upon you.

How does "deplete their fishing grounds (and other resources) for hundreds of years" figure into the analogy?

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#409

Post by floren »

DesiLurker wrote: post #332
floren wrote: post #262

Earlier quoted context omitted.

I've started telling basically that to the solar salesmen who come by every few days: if it was so great, you wouldn't have to pretend to be from PG&E or tell a bunch of half-truths about how utilities work.

problem with solar is that in itself it is great, but here in US if you look at the cost per watt produced it is heavily inflated with permitting and marketing costs. which is basically their margins till it becomes barely profitable to you. otherwise most of solar system cost has been fallen quite a bit for last decade plus. dont believe me, look up how much a open loop DIY system costs.

Oh yeah solar is getting good but the guys who come to your door and say they'll give you a $0 electric bill just sign here are peddling something that's maximally profitable for them

Re: SpaceX bond worth 10% less than issue price – heading for junk bond status

#410

Post by names_are_hard »

wredcoll wrote: post #327
tyre wrote: post #62

Earlier quoted context omitted.

I'm not an investor in SpaceX but I don't think shorting stocks at IPO should be allowed. The market should be given time to settle on a price, and it's unlikely that anyone needs to short it on day 1 for hedging. It's purely price speculation. Yeah, I know why people _want to_ (betting), but it doesn't serve a broader economic purpose.

I'm not certain you're right, but I think this opinion deserves considerably more (fair) discusson than it's getting. Lots of replies either personally benefit or just assume the "way things are" is the best, but the stock market has gotten highly abstracted from the original intention of providing capital to grow companies via means other than bank loans. I get the argument that shorts and friends help make the pric…

Well the idea that the price of a stock represents the actual value of the company can be complicated but the realization that it's super hard to figure out what the actual value of a company really is, because figuring that out really requires a crystal ball, because you need to know exactly how much money the company will earn in the future, among other things.

None of us have that crystal ball, so market participants try to guess at the future. It's not difficult to believe that those guesses can swing a lot in a single day. Just trying to figure out whether or the Hormuz will be open next week can give you whiplash.

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