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Americans express unease over SpaceX's influence on retirement savings

theguardian.com

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Re: Americans express unease over SpaceX's influence on retirement savings

#41

Post by keernan »

loeg wrote: post #19
ribosometronome wrote: post #12

Earlier quoted context omitted.

Moving to have 401ks investing in it when 5% of the stock is publicly available versus 30-40%+ that would have been available on the previous timelines seems like it could have pretty dramatic effects on its price.

The relevant indices (S&P500, Vanguard) buy in proportion to available float -- i.e., its market cap is weighted by 5%. Only Nasdaq 100 ignores float, stupidly, but almost no money, especially 401(k) money, is in that.

Musk tried mightily to get S&P to change their 12 month rule to 15 days but they refused. Nasdaq, however, caved to Musk and agreed to change the rules of its Index - from a 12 months wait to 15 days - in exchange for Musk agreeing to list SpaceX on Nasdaq's exchange.

There are ETFs that were issued tied to the Nasdaq 100 which are therefore legally bound to buy SpaceX. But the biggest immorality is the SEC allowing Musk's attempt to manipulate the market by: 1. Setting an IPO price for SpaceX (which absorbed xAi and its money guzzling losses) at unsustainable, incredibly inflated prices; and then 2. Putting incredible pressure on SP500 and other index makers to change their rules to force the purchase of SpaceX at those sky high prices (in an IPO, company gets to set the IPO price).

It's legal. At least in the eyes of the SEC which, of course, is an institution that is controlled by the wealthiest who control the markets, so of course it's legal.

But it is outrageous market manipulation that is fraudulent in its intent to enrich the wealthiest man on earth at the expense of ever wage earner putting her money into Index Funds.

Thank goodness the S&P and CRSP refused to change their rules. Otherwise the shifting of risk from Musk onto the shoulders of every working American would have been complete.

Re: Americans express unease over SpaceX's influence on retirement savings

#42

Post by wolvoleo »

mattmaroon wrote: post #2

Everybody is upset about the rule change, but to be honest, they would’ve just ended up in the same position a few months later. Elon has kept Tesla’s market cap at 5-10x what any reasonable investor would think it should be for the better part of a decade. It’s not like SpaceX is going to tank in the next 3 months and they’ll be left holding the bag. It’s not like it wasn’t going to end up in every index in a year.…

Bubbles always blow. Maybe not in 3 months but eventually someone will figure that those trillions can't possibly be made back ever again.

And then the fall down is hard.

Re: Americans express unease over SpaceX's influence on retirement savings

#43

Post by akkartik »

dehrmann wrote: post #33

Matt Levine's take was essentially that if you're in the index fund game, you want the market. You don't pick and choose what parts of the market you want--that's active management. SPCX mostly isn't an issue because most indices include the float in the weight, so it isn't really even a $1T company.

TIL about float for stock, thanks.

Re: Americans express unease over SpaceX's influence on retirement savings

#44

Post by Zigurd »

skizm wrote: post #39
dehrmann wrote: post #33

Matt Levine's take was essentially that if you're in the index fund game, you want the market. You don't pick and choose what parts of the market you want--that's active management. SPCX mostly isn't an issue because most indices include the float in the weight, so it isn't really even a $1T company.

To the same point I also don't want the index itself picking and choosing which companies to apply which rules to.

Except they did pick and choose SPCX and did special favors by giving them a multiplier on the float and an exceedingly short interval before including it in indices.

Re: Americans express unease over SpaceX's influence on retirement savings

#45

Post by [deleted] »

whiplash451 wrote: post #34
anotherhue wrote: post #3

What exactly can an individual do? For many their accounts have limited fund choices and if you don't want to pay high ER for fund manager's pedicures then you end up on an index, which (S&P500 excluded) have now bent the knee. Mine are on russel indexes so I have no choice. Short spacex is the only answer I've heard but I'm wise enough to know I don't have the mentality for derivatives.

You can buy the companies making up the index instead of the index itself. It was proven to be a good strategy on the SP500 [1, 2] With 500 companies, it's work. But you can probably approximate it with a top 100. [1] https://rodneywhitecenter.wharton.upenn.edu/wp-content/uploa... [2] https://www.tandfonline.com/doi/full/10.1080/0015198X.2023.2...

[deleted]

Re: Americans express unease over SpaceX's influence on retirement savings

#46

Post by richwater »

ojbyrne wrote: post #30
loeg wrote: post #21

Earlier quoted context omitted.

Nasdaq isn't super relevant.

Also CRSP, which is the index used by US Total Market funds and many Target Date funds.

float adjustment results in any CRSP tracking fund/etf having a $10,000 investment being approximately $17 worth of SpaceX. This isn't a real problem the media is trying to push it as.

Re: Americans express unease over SpaceX's influence on retirement savings

#48

Post by Terr_ »

glimshe wrote: post #6

This isn't investment advice etc etc but there are many options that can capture large sections of the stock market without being exposed to the tech bubble (assuming there is one). Many people say you should stay invested in the SP500 anyway and I won't argue against that. But funds like VTV, DGRO, VIG, SCHD etc don't have the same level of exposure to tech, as well as international funds like VEA. Many 401ks allow…

> exposed to the tech bubble

Aside, I think many people forget to account for their own job/career when thinking about diversification.

Just working "in tech" means that industry is already an oversized part of my financial future by default, even before talking about investment stuff.

Re: Americans express unease over SpaceX's influence on retirement savings

#49

Post by petilon »

SpaceX is being valued as an AI company and yet they don't have a frontier AI model. Goldman Sachs is predicting 100x growth in 4 years for xAI, but it is a failed company with no frontier model. Top employees have left, and the company is renting out datacenter capacity.

Satellite launch business has $4.1 billion in revenue, but only growing 8% annually. Most of the revenue is from Starlink. It has $11.4 billion in revenue, with around 50% growth. Blue Origin will offer them competition soon.

X, formerly Twitter, has around $2B revenue, limited potential.

The massive 2030 projections ($474B total, $144B Starlink, $322B AI) are Goldman Sachs' IPO roadshow model. The projections are so aggressive they feel scammy.

SpaceX's 2025 revenue is $18.7 billion. A typical premium valuation for a top-tier tech company might be around 10x to 14x revenue, which would imply a strong IPO valuation of roughly $187 billion to $262 billion.

The reason for the outlandish valuation is because of naive retail investors who believe Elon Musk has never failed at anything.

Re: Americans express unease over SpaceX's influence on retirement savings

#50

Post by rayiner »

pclmulqdq wrote: post #20
Retric wrote: post #7

Earlier quoted context omitted.

Without rapid purchasing by indexes SpaceX’s stock would likely to tank as ever more people would be able to sell over the first year. It’s a 24 year old company with a current high flying stock price based on very questionable numbers.

We all said that about Tesla for years, and a lot of people got burned on the trade. This time may be different, but it also may not be.

I also remember lots of people saying Uber wasn’t a $100B company.
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