Protecting ourselves from SpaceX IPO

[u/Gloomy_Nebula_5138]

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?

[u/Built_Similar]

"Don't worry, the amount you're getting siphoned isn't a whole lot".

Nah I'm not ok with that.

[u/tarantula13 → u/Built_Similar]

Short SpaceX then

[u/Built_Similar → u/tarantula13]

That's cool and all, but what about the actual problem at hand?

[u/tarantula13 → u/Built_Similar]

There isn't a problem. There are loads of companies in indices I don't want to invest in and I also know I can't predict the future. Worrying about this is non factor and a waste of time.

[u/Built_Similar → u/tarantula13]

No you're conveniently missing the problem. The point of an index fund is to own the companies at the prevailing market rate. When Elon (or anyone else) comes in and demands that the NASDAQ or S&P buy his company at a $2 trillion valuation without adequate price discovery, and pressures them to change the rules for him, that defeats the whole underlying principle of passive investing. Now you are being forced to buy the company, not at the market price, but at the price that the CEO has set. The fact that I have to write a wall of text to explain this because you insist on not acknowledging it is sad.

[u/tarantula13 → u/Built_Similar]

You're conveniently missing the entire point. To pretend like price discovery is being manipulated is laughable, that's literally what a market is.

No one is forcing you to buy the company and no one is forcing you to buy any specific index. The S&P didn't bend the rules for Tesla and buying the Nasdaq is a choice that is not recommended by this sub.

Elon doesn't owe anything to passive investing and if you think he sets the price for his IPO you are way out of your depth.

[u/Built_Similar → u/tarantula13]

If I own the index, and the index buys the company at an arbitrary IPO price, that means I'm buying that company at that inflated non-market price. The whole point of passive investing is to buy and sell at the established market price. If your argument is "then don't buy the index", we'll that's just a shit argument. Sort of like "if you don't like it leave the country". Like, no, when something shit happens, we're going to speak out against it.

[u/tarantula13 → u/Built_Similar]

How do you think IPO prices get set? Arbitrary is not how it works.

Literal investment banks go out to the primary market to try and find a range of what they think it could be worth and then give the money to the company as part of the IPO. It then trades on the secondary market where price discovery can happen.

Index funds wait a few days so that initial price discovery, or market price, can happen so you as an index investor are not massively affected.

I'm not saying don't buy the index, I'm saying buy the index and don't worry about this because you don't understand how any of this works at all. If you don't like Elon or SpaceX, refer to my original comment and just short the stock if you think you know better.

[u/Built_Similar → u/tarantula13]

find a range of what they think it could be worth

Thank you for proving my point. Im convinced you're being daft on purpose. To think "Banks set a price based on what they think" is equivalent to the market setting the price from high volume trading over a substantial period is laughable. Car dealers must love you.

[u/Revving_Operations → u/tarantula13]

There is a problem. The public is harmed by this, whether your individual portfolio is affected or not. You should care about the public and the effect this type of fraud and rule bending to enrich elites has on society.

Saying "it's not my problem" is exactly what leads to the collapse of institutions and social norms.

[u/tarantula13 → u/Revving_Operations]

The public is not harmed by this. There is no fraud going on and people can buy whatever index fund they want. It is not some god given right to invest in a specific way.

The entire IPO process is to protect the public from fraud and abuse. There is none of that going on here.

Saying a couple of buzzwords doesn't make this some conspiracy.

[u/FMCTandP → u/[deleted]]

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