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Hacker News Hacker NewsYes it can, since they changed the rules to force over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.
From https://x.com/Hedgeye/status/2060435253928604065:
"Rule changes for the SpaceX $SPCX IPO:
Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5.
This forces over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.
Bloomberg Intelligence estimates S&P 500 funds must absorb 19% of SpaceX's float within 6 months.
Russell 1000 and Nasdaq 100 funds will absorb 24%.
The rules built to protect passive investors:
1. S&P 500 has required 12 months of trading and 4 quarters of GAAP profitability since 2002. Both waived.
2. Nasdaq cut its inclusion window from 90 trading days to 15.
3. FTSE Russell cut its to 5.
All three benchmarks are now structured to buy SpaceX at IPO pricing."
- bubbles are notoriously unpredictable and generally don't happen when they are loudly and widely proclaimed to happen any minute now.
- large scale infrastructure spending tends to be really good for economies. These three companies are creating lots of jobs that are mostly related to construction, energy infrastructure, hardware spending, etc. That's a lot of money flowing to suppliers and regions where that spending happens.
- While overly pessimistic sentiments about AI and space companies are widespread they aren't much more rational than the overly optimistic ones. The realist scenario could actually be that, AI and especially Agentic AI is already quite useful and the total addressable market for that is obviously larger than it is today. The question is how large. Likewise, dropping the cost of launching stuff into orbit by one or two orders of magnitude, should create a much larger market for launching stuff there. Including possibly some AI relevant compute.
The valuations of these companies are probably on the high side and I'd expect post IPO share values to drop quite a bit and would not personally consider buying anything until after that happens. But that won't necessarily trigger a stock market crisis or a collapse of these well financed companies. All the spending these companies are doing is very real and the profits of their suppliers are going to be equally real. So some of those share value losses might be offset by gains for other stocks and economic growth. The stock market and economy aren't zero sum games.
However, there are worrying macroeconomic trends happening at the same time (Iran conflict, Ukraine war) that are disrupting global markets already. But you could argue that dumping tens or hundreds of billions into e.g. energy infrastructure and data centers isn't the worst way to counter those for a country like the US. The big picture might actually be pretty positive. Especially if we can dodge global economic misery via a prolonged Gulf conflict that at this point seems to serve no point whatsoever for anyone except perhaps Israel.
the really interesting thing will be how much will other stocks go down because the passive dollars are chasing the new shares and have to sell to rebalance?
IPOing and getting a bunch of cash, even if your stock subsequently suffers in the crash, is a lot better than being unable to get that capital infusion before the house of cards collapses.
Is there some sort of way I can positively monetise this?
I sometimes try to get people to worry about the catastrophic state of American public finances by pointing out that the net national debt, including unfunded liabilities, is estimated to be $175T [0]. The government could appropriate all the equity from the top 3000 largest companies, and also the entire real estate market, and it still would not be able to pay its debt (RE market is $55T).
[1] https://www.federalreserve.gov/releases/z1/20260319/html/f22... line 16, 2023 to 2025
Maybe getting more of these big private companies public will bring valuations down a bit.
(Just my impression. No math or financial studies behind it :)
> The index demand is not 100% of the stock available in the IPO, or 110%, or even 50%. But it’s plausibly more than 25%. It’s not a short squeeze, but it’s a lot. Add a reported 30% allocation to retail, and arguably a majority of the IPO is being sold to price-insensitive investors. That is one way to get a high IPO price.
Took almost 20 years for someone to find a way to scale up the basic Scam Mechanics and try again.
If you like SpaceX's launch business (the Grade A mortgage that you personally hold and pay), know that you can't get it without xAI (The dogshit that's already delinquent)
LLMs are getting better at a rapid pace and in a year or two, Chinese LLMs should easily catch up with the best of the models. Models have kind of reached a saturation point and that’s why OpenAI and Anthropic are doing an IPO now. Because a year down the line when their lead diminishes even more, they would be worth lesser money.
SpaceX has clients to put payloads into space, but those clients have always looked for good low cost alternatives. It is going to have competition in the future and will lose customers.
I think its a little insane to have the seasoning rule for an index be inside the lockup period
Like Mercedes, Anthropic is not a growth stock because it has already been foisted on everyone.
The money to participate in the IPO has to come from somewhere...
Remember they arent selling the entire floats of these companies. I cant read the article because Im not willing to pay for the Economist, but 400-500b in equity issuance is not a big deal to the global financial markets even though it sounds big.
Is the text of the waiver and its reasoning anywhere? I guess I'll read tfa.
And then after all that, the public have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up these overpriced stocks. You have a space company that also acquired a failing social media platform and failing AI company with little revenue justification for the valuation, and a lot of other obligations that make it financially a disaster (like payments owed for spectrum). And two frontier labs with no real moats, each looking for regulatory capture based on safety or ethics or whatever.
To the everyday person, the stock market after the fast listing rule, these three IPOs, and AI job loss, will feel no more legitimate than prediction markets or crypto.
- Trailing P/E: 1929 peak was 32.6 vs. 32.67 today.
- Shiller PE (CAPE): 1929 peak was ~30 vs. 42.66 today (2nd highest in history).
- Buffett Indicator: Market cap was 124% of GNP in 1929 vs. 259.6% of GDP today.
- Margin Debt to GDP: 3.0% in 1929 vs. 4.1% ($1.304T) today.
- Systemic Risk: 1929 margin debt was 10-12% of total market cap vs. 1-2% today. Modern leverage has structurally shifted from retail to sovereign debt and shadow banking.
It will be in the history books.
The big story is that that is happening at all. It wasn’t that long ago when Facebook had to get special permission from the government to stay private until they got to $100 billion.
The issue here is that public investors are missing out on so much upside.
Not if anyone is cheating or scheming or being a rules lawyer, but is it good?
Do we finally see the mechanism?
As far as I can tell it is in machines they cannot make work, servicing markets that do not exist for a service that will not matter for 20-years.
That and a third rate AI company that no body wants, except to get rid of.
This will probably go swimmingly at the start - but as time goes by and they raise more capital, Musk snorts more K and the glory fades, what then?
The only company I'm confident will survive this hardware crunch and still be relatively successful in this space is Google.
OpenAI in particular is a bet that there will be an AI moat and that OpenAI will "win". I don't think there will be a moat and China is a big reason why (eg DeepSeek).
SpaceX is a little different. Yes, launching rockets is a business but it's not a trillion dollar business. 100 Falcon 9 launches doesn't even break $10 billion in revenue. Plus, Starship faces cost overruns, delays and significant headwinds.
But the real kicker is that SpaceX was used to bail out Elon from the Twitter purchase and the xAI investors from the first Twitter bailout. That's a problem because xAI is burning $1 billion a month in a company where that really matters and I don't think Grok will "win" here. Like, at all. SpaceX would be a significantly more attractive company without xAI.
The big potential growth area is Starlink. For that to justify this valuation I think you need handheld Starlink phones. That requires a lot of satellites at a relatively low orbit, which also means they have a relatively short life (because they burn up in the atmosphere). And for that Starship must succeed.
All the AI data center in space stuff is complete bullshit. It makes no sense. It'll never be viable. It's not going to happen.
EDIT: let me clarify because I was careless in my wording. So, Anthropic individually has not spent "trillions". That was more of a general statement on AI spending. Anthropic has raised ~$100B, the last round of which was $65B (at $965B post-money IIRC). This industry as a whole needs to recoup trillions.
Anthropic seems to be in a better position (as a business) than OpeNAI is but I do think the it's a race to cash out before depreciating assets, well, drepreciate and there's the real risk as compute becomes cheaper and the AI craze wears off, Claude just may not have the growth trajectory that is built into the price.
You really think they are going to hold off against selling for multi-millions for another year, especially SpaceX?
OpenAI (and especially) Anthropic are at risk from being undercut by the Chinese labs and their open-weight models and may cause their valuations to be questioned.
If that doesn't cause a correction, then SpaceX will do it for them. There is no lock up for the 5% of shares being available.
The AI companies IMO are fucked. In the next few years computer hardware should advance to the point that local LLMs are good enough for everyday workloads. Not everyone needs top of the line flagship models in a cloud to see productivity gains. Companies will actually save money just buying employees top of the line laptops for AI enabled work than blowing that same amount on tokens every month.
There will be chaos and potential stall for another 2 years following the elections and if the democrats win. There will be natural vested interest in showing economic decline or bad things to win next elections.
Both parties do it.
This is the best time to get to a safe place for all these companies.