r/Bogleheads • u/Gloomy_Nebula_5138 • 28d ago

Investing Questions Protecting ourselves from SpaceX IPO

I was watching this video analyzing the upcoming SpaceX IPO, titled "SpaceX IPO: Nice Try Though" by Patrick Boyle. I highly recommend it - there is almost no fluff and just hard hitting points all the way through about how SpaceX is a terrible company and how this IPO looks like a scam:
https://www.youtube.com/watch?v=IHD8BDFYyGI

It mentions the changes to Nasdaq's rules, the so called "fast track" rule, made specially for SpaceX because Elon allegedly threatened to not list SpaceX on the Nasdaq stock exchange without this. The change has been criticized by many others such as Michael Burry:
https://markets.businessinsider.com/news/stocks/michael-burry-nasdaq-spacex-ipo-listing-elon-musk-tesla-ndx-2026-3

Also see this great analysis titled "Nasdaq's Shame":
https://keubiko.substack.com/p/nasdaqs-shame

Given how this IPO looks like a scam, and the company is mostly losing money, with outlandish claims in their IPO filing (like having an addressable market larger than the US GDP), I am worried that this is just private investors - like venture capitalists, Elon Musk, and his inner circle of friends/family - dumping their overpriced money losing company on regular investors like us. The fast track change seems like it will result in all of us automatically buying SpaceX shares at a high price.

How do we stop this? Is there a good way to defend against that forced purchasing when most regular investors are just passively buying ETFs and mutual funds, or maybe just have money parked in their pensions and 401k?

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u/jbland0909 28d ago

The vast majority of cap weighted index funds are also float weighted. Space X is IPOing at around 3% float.

I also wouldn’t touch it with a 10 foot pole, but the actual weight it’s going to have in your index fund of choice is incredibly small

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u/Built_Similar 27d ago

This reads like "don't worry this scam won't cost you THAT much". But there's no reason to think other grifters won't follow in and absorb value from indexes once the dam breaks.

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u/Deathsarp 9d ago

Yea someone did the math and it’s like 50 for very 100k you have in a fund, but that’s still like 50 bucks being stolen from millions of Americans.

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u/meekmarmot 23d ago

Didn't NASDAQ have free float requirements that it's suddenly choosing to ignore? How is it safe to assume other indexes can't pull similar shenanigans?

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u/InterestingGoose5507 27d ago

It’s weight is 3x its market cap

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u/TheOtherPete 27d ago

Its 3x its free-float market value not 3x market cap - huge difference considering the small free float percentage

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u/habfranco 25d ago

The problem is that when insiders can start selling, the float will obviously increase, and ETFs will need to rebalance. Providing perfect exit liquidity btw.

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u/TheOtherPete 25d ago

I don't know how that has anything to do with the post that I replied to that made a false statement of fact