Posted by maltalex 14 hours ago
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 setting up its index funds simply to be the last buyer in a Ponzi scheme.
There is no guarantee that the market will find the “true value“ of SpaceX in the 12 month interval. Markets are frothy and speculative already, and they now have a built in exit liquidity provider.
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.
The point isn't that the impact would have been minimal. It's that changing the rules to suit the rich and connected is the literal definition of crony capitalism. Why should SpaceX get exemptions from entry requirements to the S&P when every other company before it didn't?
Trying to justify it based on an argument that it would have been 'just' $200 billion, is absurd since that $200 billion is coming largely from the public via index funds that would have been forced to buy SpaceX shares.
The rules have never been set in stone and changed a number of times since the S&P 500 was created. The current set of rules are based around the old way of companies IPOing and growing into something that could be included. Now, companies are staying private longer and IPOing with huge valuations.
Take AI/Elon emotion out of it for a second, and there is a rational debate to be had if multiple 1T+ market cap companies should be accommodated for in an index that's supposed to represent the 500 largest/most influential US companies. If these companies are still in the 1T+ ranges a year from now, I suspect the S&P may change some rules to get them in with the idea that the market has spoken.
The S&P grandfathers in loads of shit. Google and Berkshire got to be the only special babies with multiple classes of stock for a few years.
The S&P tries to represent large cap American stocks. There was a genuine debate around whether SpaceX et al represent large cap stocks. Elon et al tried to put their thumbs on the scale, of course, but that wasn't the driving concern, this has been a debate that has been happening for a while.
The weird thing is linking it to Elon is absolutely titillating. So that's what influencers did. It's a maddening story. But it really isn't true, and it was even less true when the S&P rule changes were being misrepresented as faits accomplis.
Wasn't this after their entry into the index?
Yes. Then rules were changed. Then they were unchanged.
S&P is explicitly a committee-based index. It's not hard and fast rules driven. (Russell markets itself as being super duper rules based. It's a good niche. It's also so wildly complicated as to be, in practice, at least to me, indistinguishable from the committee-based method.)
Elon undoubtedly tried to corrupt this process. But there were loads of non-corrupt reasons to look at a few trillion dollars of market cap hitting the market and ask how that should impact how various indices are calculated. The answer we've come to, that the tech and total-market indices should reflect the change while large caps should not, is a pretty good one.
I could give you a lot of non-stocks related examples of why rules should not be set in stone.
Anthropic is becoming "profitable" while burning a series H of 69 bns usd. Does it count as profitable?
I'm curious if someone well versed in finance can answer, because from my uneducated perspective, it's not profitable to burn billions in order to make a billion.
https://www.cnbc.com/2026/05/20/anthropic-revenue-explosive-...
S&P requires profitability (i.e. net income) according to GAAP. That definition incorporates both ROA and operating income.
S&P requires GAAP profits, i.e. net income. EBITDA is above that.
These are just some somewhat recent IPOs that come to mind, I am sure I am forgetting some.
In the case of GPRO, look up their first quarterly reports after the IPO. Pure comedy gold.
Doomers gonna doom
*People who justify stealing from others by lazily giving a small pittance away according to a list some other guy showed them and they thought about for 5 minutes.
But I assume at least it's based on the free-float market cap?