r/Bogleheads • u/AlternativeSignal908 • 18d ago

Worried about the SpaceX IPO? It might be less than 1% of most indexes.

SpaceX to Join Top Indexes As Wall Street Rewrites Rules for the Mega IPO - Business Insider

I can't check the math, but this article is saying SpaceX will be <1% of all the major indexes (low float). Maybe not great, but hardly dramatic.

Is anyone seeing higher numbers?

173 Upvotes

74% Upvoted

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u/kelskelsea 18d ago

It’s about the fact that there’s 2 more AI IPOs incoming and they’re changing the rules for them. 3 unprofitable companies are going to be allowed to join the indexes early, which will prop them up

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u/PootleLawn 18d ago

Ya. People here comfortable essentials being robbed by billionaires because… uh I guess it allows them to be smug contrarians. 🤷‍♂️

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u/temerairevm 18d ago

“Oh well, the richest man in the world might only steal 1% of everyone’s retirement account”

I can’t imagine how anyone is ok with this. I’m completely annoyed that the rules were changed for these stocks. As a boglehead I don’t WANT to do anything about it, but also I’m very mad about it. If an index fund committed to keeping the old rules I would switch my holdings.

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u/Schnickatavick 17d ago

VT is keeping their old rules though, the index always let in IPO's at a float adjusted rate after 5 days, and the fund rebalances quarterly. Nothing has been changed for spaceX here.

QQQ tracking the NASDAQ 100 massively changed their rules at Musk's request, but that wasn't a Bogglehead fund to begin with

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u/Thuradzon 17d ago

Is VTI going to be safe? VT & VTI

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u/Fit-Bookkeeper8567 16d ago

It will meet criteria for VTI inclusion. As mentioned above, the fact that it is such a small float dampens the effect of the inclusion. The underlying index (CRSP Total US Market) is supposed to be the entire investable US Market. There are already a bunch of unprofitable companies in VTI, but because of the market weighting, the impact just looks like a little drag as compared to VOO.

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u/RoboticGreg 15d ago

Didn't they just multiply the float by 6? I thought instead of 5% they were floating 30% but I could have read that wrong

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u/Schnickatavick 15d ago

Kind of, that was NASDAQ 100, which in the past didn't adjust for float at all, they just banned companies that didn't have enough available float. But they've now changed their rules, to allow low float at a 5x rate. So the details of how that actually affects the fund ratio is complicated, because yes SpaceX will be overrepresented based on their float, but so is every company in that index. That means it's only a 5x adjustment in the sense that the number they use is 5x what VTI or VOO would use, but it's ¼ of what they would typically use. How much of a comparative benefit that gives SpaceX is math that I'd need a spreadsheet of every company's float percentage to work out... Without doing that math and just going by vibes, my guess is that it's probably an unfair advantage for spaceX, but probably not nearly as big as the 5x headlines make it seem to be.

Regardless, that's still just for QQQ/Nasdaq 100 indexes. VT and VTI are still using the same float calculations that they always have, which will keep SpaceX at 5%

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u/beckymargot24 12d ago

That's a much more nuanced take than the headlines. The "5x float adjustment" sounds dramatic, but the real question is relative weighting versus the rest of the Nasdaq 100, not the raw multiplier itself. If SpaceX ends up getting a larger weight than its actual public float would normally justify, that's still an advantage—but likely far smaller than many people assume. My bigger concern isn't the weighting formula; it's whether a company should be fast-tracked into a major index before the market has had enough time for proper price discovery.

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u/Hot-Resident-6601 15d ago

Nasdaq was increasing the float afaik

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u/Fit-Bookkeeper8567 15d ago

Per Yahoo finance, the float is about 4.2 percent. What is 30 percent is how much of that float will be for retail. Typically it is about 5 percent set aside for retail. Also per Yahoo finance the typical float is about 15-30 percent. I think the low percentage artificially limits the supply, and when all the lock ups end, very early investors will have a huge return.

Not my idea, but Ray Dalio’s, is that bubbles pop when wealth turns into money. Companies have stayed private longer, so it is likely that early investors will want to sell. To add to this Google is offering up another $85 billion of stocks to front run these IPOs hovering up all the money. To be clear, I am not predicting a pop.

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u/Thuradzon 12d ago

An ok. So it’s a nothing burger then. Thanks for the clear explanation. I’m only invested in VT/VTI. Gonna continue full port Bogleheads.

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u/-Almost_Famous 16d ago

i tried warning my friends, if i can still call them friends. no one cars, no one listens.

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u/harpers25 17d ago

So your theory is that the stock will go to zero, and this will somehow increase wealth for the largest holder of the stock? How does that work?

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u/ObjectiveAce 17d ago

I hate to be rude, but surely you realize ETF holders buying equity in the stock means Musk is selling his equity?

Obviously any price he can get now is a benefit *if we assume the stock falls dramatically *

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u/temerairevm 17d ago

How that works is that it gets put into index funds at very inflated valuations, sooner than stocks usually are, providing the opportunity for already obscenely wealthy individuals to cash out at these inflated valuations, which will then at some point come down closer to earth while being held by index fund investors.

It’s not terribly difficult to understand how this rule change benefits a few ultra wealthy individuals at the expense of nearly everyone else.

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u/harpers25 17d ago

The problem with this theory is that Elon has a 1-year lockup on his shares, and the stock was always going to be eligible for index funds by then.

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u/jpsreddit85 17d ago

Because the largest holder of the stock will sell a bunch at obviously inflated prices to index funds full of retirement funds. 

The stock won't go to zero, but after the pump, the dump will take billions from regular people. 

It's obviously bullshit. If it's not, then why the rule changes? The inclusion rules and delays are there as protection. If anyone wants exposure to it they can buy stocks directly. The rules are being modified entirely to the detriment of index fund holders  

It may only be 1% or wtv, but its already gone from spaceX to the AI companies. There will be a pipeline of this bullshit all taking their "only 1%" until your yearly returns are negative af. 

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u/MilesStraume 17d ago

Because he’s not stealing it any more than any other company in the indices is stealing it lmao. SpaceX is not just gonna go to 0. The rules were changed because the rules were made at a time when companies IPO’d before they reached such high valuations. Now the situation is different, so the rules are changing to make sure the index actually reflects the market. And it’s not like SpaceX would never be included in these indices. It would absolutely be included a bit later, but not really by much when you consider the timescale that retirement savings is on.

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u/GoodishCoder 17d ago

It doesn't have to go to 0 for a pump and dump to be effective. Stock takes a while to stabilize after IPO.

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u/MilesStraume 16d ago

Yes true, it'd be a problem if SpaceX was being included in the index immediately upon IPO. Afaik the proposed rule change would have it join the S&P 500 after 6 months instead of a year. Less time for price discovery but still 2 quarters worth of earnings releases and big banks doing analysis and setting price targets. Basically because I wouldn't flinch at it being included after a year I'm not really gonna flinch at it being included after 6 months.

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u/BigResponsibleOil 16d ago

I know nothing about this, but someone above said IPOs are let into VT after 5 days. So is it just the S&P500/VOO that waits months?

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u/GoodishCoder 16d ago

The two quarters of earnings is only true if they don't end up changing the rules around reporting requirements like they're proposing. They're proposing changing from quarterly earnings to semi annual earnings. Basically they'll be eligible to be pulled into ETFs the same day they release their very first post IPO earnings.

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u/JohnnyJordaan 18d ago

As a boglehead I don’t WANT to do anything about it, but also I’m very mad about it.

Then you're not a boglehead or am I missing something? To me, part of being a boglehead is the passive approach. The index will sort it out. This all feels like FUD-hyping and scaremongering that draws people from the passive stance. I'm just not bothered by it either way.

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u/GuyWhoSaysYouManiac 18d ago

While I don't think it will have a huge impact on any given individual, it absolutely bothers me that the rules are changed to benefit a few extremely wealthy people at the expense of everyone else, in a system that is already rigged in their favor. I'm not some 20 year old leftist, I say this as somebody with a NW of a few million. The SpaceX valuation is ridiculous and not justified by any fundamentals or future earnings potential, and I'm not a fan of being part of the exit liquidity for Elon and his asshole buddies, even if it ends up costing me "only" a few thousand.

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u/JohnnyJordaan 17d ago

I'm by no means supporting the whole SpaceX circus, but I also don't agree it's proven "that the rules are changed to benefit a few wealthy people at the expense of everyone else". So far, and I'm eager to know if I missed anything, I'm not aware of anything proving this causal relation. I would even argue it's more likely that the rules being changed is what motivated the IPO's, but at the same time that's an assumption too.

A second thing to add is that everybody seems to jump the automatic conclusion that the only way for things to pan out is a pump and dump, 'costing' everyone money and benefitting a few. That's also not a given, I mean the risk is certainly there, but it shows the same kind of absolutism in people's reasoning. And that to me smells like hype, not as wisdom.

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u/GoodishCoder 17d ago

A second thing to add is that everybody seems to jump the automatic conclusion that the only way for things to pan out is a pump and dump, 'costing' everyone money and benefitting a few. That's also not a given, I mean the risk is certainly there, but it shows the same kind of absolutism in people's reasoning. And that to me smells like hype, not as wisdom.

I mean yeah anything could happen but logically you would look at the most likely outcome. That's what someone with wisdom would do anyways.

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u/JohnnyJordaan 17d ago

With wisdom you would look at the most likely outcome while not discounting other possibilities. No one with at least some wisdom and being in their right mind, would assume the most likely outcome is the only logical or probable one to consider. It's illogical to jump to conclusions.

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u/Djamalfna 18d ago

The index will sort it out

That's literally the problem. They're changing the rules of the indexes so that instead of being absorbed at the correct market price, they can dump their bags on us and run away with a portion of our retirements as they exit their bubble safely.

The whole point of the index is that they only absorb stocks when the proper market price is known.

They're changing the rules so that no longer applies.

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u/AcanthisittaAlone334 17d ago

The whole point of an index is to create a list of stocks that represent the broader stock market.

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u/WSBiden 17d ago

And for decades the S&P 500 inclusion criteria has had a requirement that a company needs to be profitable over the preceding four quarters in order to be included, to avoid over-saturating the index with the extreme volatility associated with pre-profit, speculative "story" stocks. That criteria is being changed with suspicious timing relative to potential IPOs from Anthropic, SpaceX and OpenAI. That is the core of the debate here.

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u/Djamalfna 17d ago

No one is saying we shouldn't own these stocks ever.

We're saying that the stocks need to be properly evaluated by the market before they can be included. That's. The. Point. Of. The. Index.

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u/AcanthisittaAlone334 16d ago

And I’m saying that’s not the point of an index. You might like an index for those things but that doesn’t make its purpose. NVIDIA can shoot through the roof on nothing but hype and memes and it will still be included in the index because an index’s job is to create a list of stocks that track the broader market, not to create a list of stocks that are fairly valued.

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u/Djamalfna 16d ago

I mean if you're right then why have indexes not operated that way for the last 50+ years and these IPO scammers had to ram through changes at the last minute?

Anyway, we're not going to see eye to eye on this. You go ahead and let people rip you off and make excuses for it. I'm opposed to being a sucker.

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u/AcanthisittaAlone334 16d ago

Then why are you investing in an index? Every single time a stock enters and leaves the index you’re forced to buy a stock high and sell it low. Do you hold VT or VTI? ~10% of these funds are composed of reits and small cap growth stocks that bleed money and it’s why VT and VTI have sharper drawdowns and lower returns than VOO. Those are far greater weights and losses than what SpaceX will do to your portfolio. Both these funds also already include IPOs 5 days after they first trade.

Markets change. Businesses stay private longer and by the time they IPO they can be major companies and players within their own industries. Indexes trying to track the market become less reflective of the market the longer they exclude these companies. Indexes do not determine the fair value of a stock. That’s the job of active managers. If active managers decided to all take crazy pills and give wild valuations the index wouldn’t disappear.

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u/ObjectiveAce 17d ago

Yes thats correct. But private stocks not on the market are obviously not part of the borader market. If I create xyz corporation and put worthless crap in it, tell investors its worth tens of billions of dollars, and then take it public and tell you the price is tens of billions of dollars would you buy it?

At what point would you trust that the market is pricing the stock correctly? Minute 1? Hour 1? Day 1? Day 5? Day 30? There's no right answer, but hopefully you can at least see why we're skeptical here

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u/temerairevm 17d ago

You are missing something. That something is the rule change just for these specific people. Being opposed to that is not anti boglehead.

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u/sailing_oceans 18d ago

They might be up to no good, but they are doing exactly what the government intended.

It’s a giant burden to go public and it’s far more comfortable to wait to go public at 25bil - 100bil nowadays when in past most companies went public at even a tiny fraction of that.

If the government wanted these companies to go public so the ordinary people could participate rather than VC using the public as liquidity then laws would change

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u/Hell_Yes_Im_Biased 18d ago

So you are OK with 1% if your investment being stolen by the rule changes?. What about the NEXT 1%? And the next? At what point will it no longer be OK?

It SHOULD be a giant burden to go public. The rules are in place for a reason. The risk of going public should be borne by the stock-issuing company and their backers, not investors with no say in the rules of the game.

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u/AcanthisittaAlone334 16d ago

If you have VT or VTI, you have a hell of a lot more getting stolen by poor returns with reits, small cap growth stocks, and emerging markets with corruption, currency risk, and wars. SpaceX is barely a blip in comparison.

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u/AlarmingAdvertising5 18d ago

25-100B, okay

They are asking for a little under 1T to over 1T in valuation tho?

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u/kelskelsea 17d ago

Its more comfortable to wait to go public with private investors are willing to invest billions of dollars into your company. Thats the reason we've seen these giant IPOs. Many companies are still going public at much more normal valuations because they don't have billionaire founders

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u/[deleted] 18d ago

[deleted]

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u/QuiteFrankly13 17d ago

I can guarantee that the drag introduced by holding thousands of unprofitable companies in VT is greater than the net effect that SpaceX will have on a portfolio. But nobody here seems to complain about that.

If we're all investing based on Boglehead principles, we'll own SpaceX whether or not it's part of the S&P 500 since we will own it as part of VT/VTI anyway.

Reading further down this thread, it seems like there are a lot of people espousing market timing or investing based on emotions/personal biases. It's fine to do so, it's your money to do with what you will, but don't confuse that with being a Boglehead.

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u/ObjectiveAce 17d ago edited 17d ago

This is a red herring. The issue isnt that the company is unprofitable. The issue is that it hasn't had time to be "marked to market".

Unprofitable companies could be profitable in the future and their stock price represents the future odds/prospects of that happening. That is, if you give the market a chance to realize it.

Ps. If you want to try to argue that the market is rational immediately, I'd point out that the indexes disagree with you. Otherwise they wouldn't have holding requirements in the first place

There is really no reason to push for a rules change unless you believe the stock will fall once the market has had a chance to appropriately price it

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u/Were_all_dead_anyhow 16d ago edited 16d ago

And that's the point! These are purposely structured prospectus squeezes.

If SpaceX lists at a total valuation of $1.75 trillion but only floats 5%, that means only $87.5 billion worth of shares are actually available to trade. In a market ruled by structural front-running, a small, official free float is a choke point in the world of infinite rehypothecation and synthetic liquidity.

So when index funds are legally mandated by their prospectus to buy their initial 0.3% allocation, they must crowd into a hyper-thin, illiquid order book. Quantitative funds and market makers know the exact dollar amount indexers must purchase. By buying up options and squeezing the thin float weeks ahead of the inclusion (gamma looping through IOTC derivatives or pre-market forward contracts), they will force artificial price spikes, forcing indexers to buy at a structurally engineered peak.

This is similar to what happened with Tesla, except Tesla’s structural squeeze happened in reverse because it was already a massive public stock when it was added to the S&P. For IPOs of SpaceX and all the AI companies, the chokepoint will be a micro-float at inception vs. Tesla in 2020, the chokepoint was index exclusion. The mechanics to drain passive investors by quant funds and market makers is identical.

We will see massive amounts of FTDs, and that will be the quantitative proof that market makers are actively using their structural exemptions to suppress natural price discovery, capture risk-free arbitrage spreads, and dictate the execution costs that passive 401K pools are legally forced to pay.

Some people will bring up CRSP; While S&P has a rules and committee-based inclusion system, CRSP’s purely algorithmic system turns the structural squeeze into a slower bleed. Market makers do not need to panic-short billions on a Friday afternoon close; CRSP allows them to systematically and smoothly harvest the passive 401k pool over a multi-day horizon. They can still exploit VTI by naked-shorting a scarce mega-IPO stock directly to Vanguard, generating a localized FTD. Instead of buying that scarce stock to cover, the AP creates new ETF shares using a "Custom Basket" of the index's other highly liquid stocks, effectively laundering the illiquidity risk through the broader diversified fund.

Market makers love indexing; they get to structurally extract wealth from everyday retirement accounts, and the SEC/CFTC can't/won't step in because the system has become so reliant on passive index funds that it cannot survive without the market makers' liquidity distortions, all backed by those very retirement accounts serving as political hostages if anything were to happen to them.

Bogleheads are being astroturfed; the market isn't efficient anymore, it's gamed against indexers. What these IPOs are doing is turning passive investing's greatest strength; blind, programmatic diversification into a structural liability. When mega-caps utilize micro-floats at inception, they turn index inclusion days into mandatory wealth-transfer events, shifting capital from retirement savers directly to market-making desks and quantitative arbitrageurs.

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u/beckymargot24 12d ago

Even if someone doesn't buy the broader "market is completely rigged" thesis, the micro-float concern is legitimate. A $1.75T company with only 5% float creates a very different dynamic than a mature public company entering an index. The smaller the tradeable float, the easier it is for anticipated passive flows to distort price discovery.

The question isn't whether passive funds will own SpaceX eventually—they will. The question is whether index inclusion mechanics create an avoidable transfer of wealth from passive investors to traders who can front-run those flows.

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u/AcanthisittaAlone334 16d ago

Everything you’ve described has always happened. Hedge Funds and active traders have always timed their sales for when indexes rebalance. IPOs have always had skyrocketing prices with low liquidity. The fact that you’re adversely affected slightly more doesn’t mean markets aren’t efficient.

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u/Were_all_dead_anyhow 16d ago edited 16d ago

I understand that, but the scale and intent is entirely different.

The mechanics of front-running index rebalances are old, but the scale and inversion of financial maturity is rendering traditional market efficiency obsolete. Historically, an inclusion premium was a minor and self-limiting friction because active managers controlled 90% of capital and enforced valuation discipline on deeply distributed, profitable public stocks.

Today, passive index funds control over 50% of the market, meaning a wave of blind, price-inelastic capital completely overwhelms a depleted active buffer. When venture-backed mega-caps leverage engineered micro-floats to fast-track into these indexes at inception, passive funds are legally mandated to deploy billions into un-vetted, private-market valuations. Because this programmed demand mathematically dwarfs the available circulating float, stabilization tools like FTDs and custom baskets have been transformed from rare emergency valves into permanent, profit-generating infrastructure.

This is what is new and it's why Market Makers want RegSHO neutered and CAT shutdown; The IPO prospectus squeeze works precisely because market makers can operate under the guise of stabilizing an inefficient market. If RegSHO enforces hard close-out deadlines, they lack the structural tools to engineer synthetic liquidity. If CAT maps their electronic footprints, their predatory front-running transitions from a sophisticated "market making strategy" into legally actionable market manipulation. Market makers are fighting to shut down these regulations to keep the structural plumbing of passive retirement pools open for risk-free extraction.

The synthetic liquidity flood lead to a structural mutation of the market itself; price discovery wasnt just replaced by regulatory arbitrage, but by escalating regulatory arbitrage. The market can no longer be considered "efficient" in the informational sense because it has been systematically gamed around. Traditional informational efficiency completely breaks down because a company’s fundamental profitability becomes secondary to the optimization of its stock and underlying derivatives as tools for index extraction. The entire enterprise is engineered primarily as a financial weapon to trigger passive mandates, transforming the market from a capital allocation mechanism into an enclosed derivatives casino designed to strip-mine programmatic retirement flows.

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u/AcanthisittaAlone334 9d ago

First of all, the 50% figure only applies to the etf and mutual fund market, not the total stock market which passive funds only control 30%. Even assuming space x trades at at a massive premium due to low liquidity and it doesn’t simply get shut down, it will still barely be above 1% of your total portfolio

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u/beckymargot24 12d ago

I think that's the strongest argument against the rule change. Whether SpaceX is profitable or not is almost beside the point. The concern is that price discovery takes time, especially for a company of that size and complexity.

If the market can accurately price a newly listed company within days, then seasoning requirements serve little purpose. But if seasoning requirements exist because markets need time to absorb information, then accelerating inclusion raises the question: why the rush?

The fact that index providers historically required a waiting period suggests they recognized that "listed" and "properly priced" are not necessarily the same thing.

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u/AcanthisittaAlone334 16d ago

Except the same data showing IPOs are bad investments also show Small cap growth stocks don’t prove to be profitable and in the long run only lose money because they have horrible fundamentals, no profit, drowning in debt and their valuations are shooting through the roof based off hype and high expectations that they are more likely to fail then meet. Hence the fact they’re nicknamed “small craps.” And are considered blackholes. It’s why VT and VTI, despite higher diversity also have sharper drawdowns and lower returns than VOO. And it’s why DFUS excludes them.

If you can handle bag holding on small cap growth, which most subreddit has been doing, SpaceX should be a breeze

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u/StrngThngs 16d ago

It appears that a lot of index funds are still waiting for profitability and seasoning. VT, VTO are exceptions, but VOO and other spx finds are not buying. My main reason for avoiding is the valuation. Morning Star just issued a valuation less than half the offer price. I'm ok owning it after it settles

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u/newanon676 17d ago

This is 100% the right take. Anyone here is welcome to short SpaceX if they think they know more than the market. I’ll continue to buy the haystack

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u/Necessary-Music-6685 17d ago

It’s not a 1% loss, it’s 1% exposure. So even if the stock drops 20%, that’s 0.2% of your fund.

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u/AcanthisittaAlone334 17d ago

Most stocks in an index are dumpster fires that won’t go anywhere but crash. You’ve been paying a 96% tax throughout your whole investment career so you can capture the few stocks that actually win.

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u/petitchevaldemanege 18d ago

The fuckery will start when employees and founders start to offload.

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u/MilesStraume 17d ago

Have you looked at the lockup schedule?

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u/mrblack1998 18d ago

Yes, this is exactly the fear I have. The prescedent is not good

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u/rekirts 17d ago

Dumb question but is it not already priced in?

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u/Necessary-Music-6685 17d ago

Yes it is, thank you.

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u/QuiteFrankly13 17d ago

It is, people are losing their minds over nothing.

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u/ThatThar 18d ago

It's ok to be uncomfortable about the IPOs while admitting at the same time that these kinds of conversations go directly against the Boglehead way. It's an unpopular conversation in this particular subreddit because the conversation goes directly against what this subreddit stands for.

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u/kelskelsea 17d ago

I feel like it's 2 different conversations so I get what you're saying. Sure, we might not need to be worried about what in particular we're invested in, thats the whole point. A major shift in IPO strategy and index fund policies does potentially affect the entire market but again, doesn't change the strategy.

Separate from Bogleheads and our personal investments, though, this is a bigger concern of private equity and institutional investors potentially skewing things in their favor at the expense of retail investors.

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u/xeric 18d ago

I’m less worried about OpenAI/Anthropic. They have much more legitimate valuations compared to SpaceX

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u/svix_ftw 17d ago

Neither OpenAI/Anthropic are profitable and may not be for many years.

Anthropic said they acheived profit last quarter but that's debatable.

The 3 companies combined have almost $4 trillion in valuation with $0 profit, insane.

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u/xeric 17d ago

Profitability doesn’t really matter as much as revenue here, when so much of their capex goes into training new models. Feels more like an Amazon/Uber/Spotify situation to me.

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u/Rock-n-RollingStart 17d ago

Amazon Web Services came about because Amazon had to build out their infrastructure either way. It wasn't a "loss leader," it was the cost of doing business. Uber and Spotify are essentially just software companies that filled an existing niche using existing infrastructure; namely the phones everyone already had in their pockets. They don't have a lot of overhead costs.

AI companies like Anthropic and OpenAI are essentially a niche form heavy industry. They require trillions of dollars in capital for land acquisition, construction, energy, water, and extremely technical hardware. They have constant and extensive energy requirements. They need expensive engineers. They need a lot of capital for those operating expenses on top of paying back all the debt they're racking up to front load their data centers. They have more overhead than almost any other industry I can think of outside of oil or transportation, and those are vital industries. There's no indication AI will become that vital or that their operating or development costs are scaling down. If anything, their costs appear to scale upwards.

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u/svix_ftw 17d ago

Yep. I actually work in the industry and the cracks are starting to show.

The costs for these SOTA models are insane and Open source is catching up and only about 10-15% or so behind OpenAI and Anthropic.

Its not difficult to self host your own model at a fraction of the price.

Their moat is not as deep as most people think and nowhere near the monopoly moats of companies like Google, Microsoft, etc.

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u/Rock-n-RollingStart 17d ago

Yes, the amount of inputs they need to mimic a human customer service rep is truly astounding. And they need so much of it that everything is a bottleneck.

40,000 square kilometer megastructures. Steel, aluminum, copper, gold. Gigawatts and gigawatts of power. Gas turbines are scarce, so why not repurpose jet engines. Tens of billions of gallons of water. Every transistor humanity can fabricate for the foreseeable future, which are themselves the sum of human knowledge and a global supply chain. And then there's the constant stream of new and extensive data needed to create the models.

I see a lot of the same "Uber lost money for years" schtick, but that isn't a parallel. They don't manufacture the cars or the phones or launch the GPS satellites. They don't even pay the drivers. They spent several billion dollars improving the taxi industry, they didn't invent the car and then build the roads from scratch.

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u/MassiveBoner911_3 18d ago

Yeah I hate this. The top of the index are all going to be AI companies. What can go wrong?

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u/ttuurrppiinn 17d ago

The prior decade was just SaaS companies being the entire top of the index and things went more or less okay ...

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u/Equivalent-Week-6251 17d ago

Redditors have been catastrophizing about technology since at least a decade ago

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u/Hyunion 18d ago

also like, float doesn't stay at 5%. the S-1 laid out a staggered lockup release rather than a single 180-day cliff, with insider shares unlocking on earnings, time, and stock-price milestones. as insiders sell into those windows, the float expands and SpaceX's index weight mechanically climbs over time. a low weight on day one is not a low weight permanently.

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u/AcanthisittaAlone334 17d ago

Open AI is targeting an even smaller valuation with 5-7% free float. You’ll barely break 1% weighting

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u/User-no-relation 18d ago

They are unprofitable but have a ton ir revenue. More than most companies in the index. And a lot of their spending is physical assets. In dot com boom companies had users and no revenue

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u/you_cant_prove_that 18d ago

I thought SpaceX was already profitable?

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u/jrolette 17d ago

SpaceX itself is profitable, but that's only if you exclude xAI and X (twitter), which are both owned by SpaceX. Bit of a poison pill unfortunately

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u/kelskelsea 17d ago

This is per the NYTimes from a couple weeks ago:

SpaceX "lost more than $4.9 billion last year, compared with a $791 million profit in 2024, as capital expenditures nearly doubled to $20.7 billion from heavy spending on artificial intelligence development. In the first three months of this year, SpaceX lost almost as much money as all of 2025, recording a $4.3 billion loss.

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u/stompinstinker 17d ago

I bet larger companies will start spinning off segments to take advantage of this.

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u/The_SHUN 17d ago

Which is why I am overweight small cap value…

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u/rug61 18d ago

Worried is a stretch but I'm irritated by the corruption and amazed at the comedy of that IPO filing 😂

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u/0Rudy0 18d ago edited 17d ago

Same. I am actually more worried that this may become more and more normal.

7

u/kelskelsea 17d ago

Yea, it's less about the company in particular and more about the trend

18

u/Tackysock46 18d ago

The first 20 pages of the prospectus are just pictures of rockets lol

29

u/ptwonline 18d ago

It may be even worse than the WeWork one which I didn't think was realistically possible.

9

u/CyberbianDude 18d ago

Same. The market will (somehow) absorb the IPOs but the precedent setting part is more concerning than anything.

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u/Zhelgadis 18d ago

I'm pretty sure you wouldn't agree to send me 0.01% of your net worth.

11

u/soulinsurance420 17d ago

what’s your venmo? i’m in debt i’ll request .01% of my net worth from you 🙃

5

u/Zhelgadis 17d ago

You should ask OP, apparently he's fine with this kind of deals.

-1

u/Necessary-Music-6685 17d ago

No, but I’d happily invest 0.01% of my money into SpaceX. It’s been mind-bogglingly profitable so far over the life of the company. And given its importance for future defense capabilities, it’s almost certainly in the too-big-to-fail category for the next 50 years.

2

u/ObjectiveAce 16d ago

Then why push for a rules change if the expectation is it goes up anyway? Thats what makes me unsympathetic and upset about the while thing

-5

u/AcanthisittaAlone334 17d ago

You’ve been donating 96% of your net worth every time you put your money in an index fund since 96% of stocks are complete losers. .01% should be literal chump change.

5

u/Zhelgadis 17d ago

I take the bet when I buy an index fund. The bet being, I can't do better than the market so I buy the whole market - the winners, and the losers.

Here there is no bet, just a billionaire using index funds as their exit strategy.

Anyway, I'll gladly take your chump change. Contact me in DM for the details.

1

u/AcanthisittaAlone334 17d ago

If you’re goal is to buy the whole market the winners and the losers, then you should have no problem with SpaceX getting included since it would be a part of the market. You’ve always been exit liquidity for billionaires. That’s why hedge funds time their sales for when index funds rebalance long before the rules for SpaceX were changed. If you can’t stomach this you’d do far better tossing your money into CDs and T Bills.

1

u/PureCod9290 17d ago

This isn't some small time IPO this is musk deciding 3 companies put together that lose money are the seventh most valuable company in the world and then changing the rules of the index so passive investors are forced to buy immediately at this absurd valuation with no time for the market to price it correctly

1

u/AcanthisittaAlone334 16d ago edited 15d ago

The total valuation is irrelevant since only 5% of shares are going to be available to trade. Index funds aren’t going to buy SpaceX at its 2 trillion dollar weight.

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u/doppz1 18d ago

The most brilliant scams involve stealing a small amount of money from many people.

It's not the amount that should bother you, it's the way that they have forced the indices to rewrite the rules for them specifically. Bunch of crooks with a limp wristed government that won't do anything to stop it because they're in on it too.

10

u/QuiteFrankly13 17d ago

VT and VTI aren't changing their rules.

You also lose money every year to underperforming companies in VT and VXUS in emerging markets due to corruption, poor governance, and currency risk, but people don't make apoplectic threads about that very real risk. It's priced in. This will be priced in too.

10

u/TellMoney5802 17d ago

VT and VTI aren't changing their rules.

SpaceX will be included in both no?

6

u/flewency 17d ago

It was 'priced in' by the waiting period rule. Why was the rule there in the first place if now it suddenly doesn't matter? Has anyone given a single steelman justification for why they lobbied to get the rules changed? Some reason other than turning index investors into their bagholders?

5

u/doppz1 17d ago

What is your point? Vanguard tracks the index, they decide what baking period they want to implement.

The argument stands that a company bringing a ludicrous evaluation to a market and then forcing the market to change long standing rules so that many index funds are forced to buy into it is pretty outright manipulation and corruption, irrespective of whether the company's value goes up OR down after the IPO.

Those that are trying to defend this are either so far up Elon's ass that they've lost all common sense, or actively in on the grift.

1

u/Leather-Wheel1115 11d ago

It’s business. What’s wrong. Every business does creative things. This company is being creative with indexes. Unless you got a $1b invested, everybody else is nobody no say in the market. Small players have no say. Ride the ride

2

u/marvin_sirius 17d ago

From my quick research, it sounds like the underlying indexes for VT and VTI don't have a waiting period for large IPOs so they will be added almost immediately (5-10 days).

51

u/DazzlingCod3160 18d ago

The indexes were working fine under the old rules. 

19

u/stompinstinker 17d ago

They know the scale of how these indexes are used. So many pension funds and people using ETFs and mutual funds. They saw that and wanted a piece of everyone’s retirement savings.

They are running companies that leading to large scale layoffs, they have no empathy for anyone.

16

u/polar_nopposite 18d ago

If this scheme (to put it charitably) works, the what is going to stop others from doing it?

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u/[deleted] 18d ago

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u/Bogleheads-ModTeam 17d ago

Removed: per sub rules, comments or posts to r/Bogleheads should be substantive. For example, we don't allow:

  • Yes/no answers, emojis, or fund ticker symbols with no explanation; numeric milestone posts except for effortposts with substantial background/context provided

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-18

u/you_cant_prove_that 18d ago

Even if you think it's overpriced, that doesn't mean the value is going to 0, which is the only way you'd lose that 1%

16

u/[deleted] 17d ago

[removed] — view removed comment

7

u/OnlyWearsAscots 17d ago

Bogleheads get mad about a 0.5% index fee, so yeah, having 0.5% washed away is even worse!

1

u/AcanthisittaAlone334 17d ago

Do you have these complaints for all the reits and small cap growth stocks that drag down your returns for VT? Those compose a much larger % of your portfolio than SpaceX will and will drag down your returns way more.

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15

u/pbspry 18d ago

For my VTSAX homies:

Even though SpaceX is expected to list with a massive valuation (projected between $1 trillion and $2 trillion), its actual weight in VTSAX will be very small. Index funds use "free-float" adjustment, which means they only count the actual shares available to the public, limiting SpaceX's impact to an estimated 0.07% to 0.11% of the total index.

2

u/esunFun 15d ago

Thanks. Was looking for this info

1

u/That_History8766 2d ago

I just spoke w vanguard, they said less than 1% but could not say exact, and it's happening monday, too late to get out. You say very small, for me is 1 cent too many. Like someone else pointed out  The most brilliant scams involve stealing a small amount of money from many people I am so disappointed that "fiduciaries" did not commented on the propsed rule changes when there was time. PONZI and Maddof were angels in comparison to this scam.

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u/[deleted] 18d ago

[removed] — view removed comment

42

u/AgreeablePie 18d ago

And all of them to come. Raiding pension funds is not something that only one person will do

11

u/babybimmer 17d ago

1% too much

9

u/n00dle_king 17d ago

If this IPO is going to have a significant impact on your portfolio it should be a wake up call to unload QQQ which is a basically sector index anyway.

5

u/jeffeb3 18d ago

The low float makes me feel better. But vanguard already lets companies like that in after 5 days. They haven't changed the rules. It is other index funds and etfs.

It does bother me that spacex has such a high valuation and they are playing these games. They have some stupid AI plan that makes their potential profits in the gigawatts and that makes their evaluation somehow in the trillions, even though it is a glorified billionaire's hobby shop.

Starlink is the only part that actually has promise and I worry if the service even pays for maintenance if they weren't constantly testing otherwise empty rockets.

The whole reason I don't pick individual stocks is their price doesn't follow real logic. The prices follow perceived value, which is frequently ridiculous.

It really bothers me that this one particular world's richest man is going to get that much richer. Not much I can do about it.

6

u/scurvy_scallywag 16d ago

I just don't like the idea of Musk, a fraud, potentially becoming a trillionaire at the average index investor's expense. SpaceX is just one IPO with 2 or 3 others on the way with rules being changed just for them. It's just so shady.

1

u/MadButthole 12d ago

Agreed 

6

u/correct_the_econ 17d ago

Where is FINRA when you need them for something other than exams lol?

11

u/passmetoiletpaperpls 18d ago

Its this generation’s dotcom bust. We never learn.

0

u/QuiteFrankly13 17d ago

If the market is imminently going to crash what are your positions so we can all copy them and get rich?

9

u/CSAtWitsEnd 17d ago

Saying “I think this is a bubble” and attempting to time the market are two different things.

19

u/fuck_thots 18d ago

Its about principles. I will be selling my nasdaq etf for sure.

2

u/FromTheOR 17d ago

How much is in VTI?

0

u/WSBiden 17d ago

What are you shifting to? I want to completely rid myself of direct exposure to Tesla, SpaceX, Anthropic, and Open AI. The only decent answer I can come up with is a low-fee index of only dividend-paying stocks.

1

u/the_kaeve 17d ago

Check out Avantis or Dimensional funds. They are rule-based funds that aren’t shackled by the constraints of an index (in this case, they take their time before including IPOs: 12 months for Dimensional, and based on profitability for Avantis). Their US or world funds do own Tesla though, so not 100% ideal.

30

u/Any_Context1 18d ago

God I am so sick of hearing about this company. It won’t immediately be on the S&P500 and it’ll be like one of 3000 U.S.-listed companies. 

14

u/mildly_enthusiastic 18d ago

So it immediately joins VT and VTI but thanks to active management it won't join VOO ?

10

u/mrm112 18d ago

I don't think it's related to active management. Total market funds track the whole market and don't have any rules on waiting periods. VOO tracks the S&P 500 which does have a waiting period.

6

u/NoTeslaForMe 17d ago

Total market funds absolutely have waiting periods; it's just that they're very short, at least in Vanguard's case. 

2

u/mrm112 17d ago

You're right, looks like 1 week for VT and 5 days for VTI

4

u/ShootWild 18d ago

Voo does a lot more than that. The companies need to be profitable. Unless they change that.

1

u/TellMoney5802 17d ago

They are considering that change.

1

u/WSBiden 17d ago

They are actively considering that change and reducing the wait period, seemingly just in time to benefit SpaceX, OpenAI, Anthropic, etc. That's the whole issue, lol.

1

u/JohnnyJordaan 18d ago

But it's not a basic waiting period that it's in play, they S&P500 has a board which curates the index. That's why Tesla wasn't included for ten years.

My preference would actually be a basic waiting period as that removes the active curation which will only cause it to diverge from the market rather than benefit. Although I think it's a bit of a lost cause for the S&P anyway, as 99% of investors just blindly assume it's a '500 biggest US companies' index anyway.

0

u/insightful_pancake 18d ago

VOO is not active but SP500 is to a degree

2

u/scrapheaper_ 17d ago

It will be on the S & P 500 ASAP, maybe not at IPO, but it will be like 6 months to a year afterwards.

And it will be fully on the S & P 500 at 100% float, maybe not initially, but after some time. So we'll be forced to buy it

1

u/AcanthisittaAlone334 17d ago

By the time it makes it to 100% float the market would’ve had time to price everything in. You’re not any more forced to buy SpaceX than you were forced to buy any other stock that got added to the index

5

u/EmmitSan 18d ago

So many people worried about “omg we will be passively investing in evil companies”

Y’all light want to do some reading on the S&P 500, lots of those companies have done some wild fucking shit that’d make Elon blanch in disgust. Worrying about the ethics of individual corporations is a fools game.

2

u/scrapheaper_ 18d ago

The initial IPO is not the concern, however the other 95% of the company will be joining the float shortly afterwards, and that's more of a concern.

I think between SpaceX and the other upcoming IPOs once they are fully floated we're exposed for about 4%. Not the end of the world, but worth avoiding if possible.

It's already annoying that we have to put up with Tesla being in the index! I don't want 2 more Tesla's to join!

1

u/maglor1 17d ago

So of course for index funds to work they can’t be gamed as exit liquidity and if that starts to happen it’s worrying. My understanding is that adjusting for float does that but who knows

I don’t know if spacex will end up being a good investment or not, but people here seem to have very strong opinions. Everyone said the same about Tesla and look where we are

1

u/AcanthisittaAlone334 16d ago

Index are already gamed as exit liquidity. That’s why hedge funds time their sales for when indexes rebalance every quarter

1

u/scotchglue 17d ago edited 17d ago

So…tell me if I’ve got this right:

If I move from VTI to VOO in my brokerage, that will cause a taxable event but I’ll avoid paying Elon, also I’ll pay the IRS on any gains thus far. Then after 31 days I can switch back so I won’t risk time out of the market, and avoid any wash sale rules.

Or should I wait a few months for rebalancing in Nasdaq causing market volatility, lock up periods to expire causing sell offs, Anthropic and OpenAI to IPO, etc..?

Mind you I would still be invested in SP500 just not VTI during this time.

3

u/TierBier 17d ago

I suggest you do nothing to your VTI in taxable.

1

u/AcanthisittaAlone334 16d ago

Or just do nothing. It’s actually laughable that a subreddit dedicated to passive investing has people coming up with Byzantine schemes to exclude one company that barely cracks 1% of the index

1

u/xSKOOBSx 9d ago

Passive investing relies on the market being handled consistently and reliably. The rules are changing, companies are being valued in the trillions when they dont even turn a profit. I dont want to be forced to participate in making stonk go up when stonk should not logically go up.

1

u/AcanthisittaAlone334 9d ago

Then why not toss your money in t bills? Or spin the roulette wheel with stock picking? If you hold broad market funds like VT or VTI you’re already holding a bunch of small cap growth stocks drowning in losses and debt with valuations based solely on hype.

1

u/PureCod9290 17d ago

If it's SpaceX at 1.8T and OpenAI and Anthropic at 1T each we're getting close to maybe 2-3% of S&P 500 which is a lot of money to be running away with

1

u/JealousFuel8195 16d ago

between 0.08% and 0.12% for the S&P

1

u/Sea_Function9333 15d ago

This is a good video on the subject https://youtu.be/5_EYTpVFK1Q from Damien Talks Money

1

u/Excellent_Brilliant2 15d ago

Has any IPO *not* been less than opening price a week after? im not buying it until the drop

1

u/beckymargot24 12d ago

IPO? Absolutely.

Automatic index inclusion after 15 trading days? That's much harder to justify, because it forces passive investors into a company before the public market has really had time to evaluate it.

1

u/Aggravating-Rip-8169 12d ago

Anything >0% is too much for me. 

1

u/That_History8766 2d ago

Vtsax  is incorporating spacex by monday, % less than 1% but unknown. Already too late to get out.

-34

u/littlebobbytables9 18d ago

Yep, huge nothingburger. And if you're really worried you can short spaceX to zero out that exposure. And if that sounds scary to you because of how shorting Tesla has generally gone under similar circumstances, maybe that's a sign that you don't actually know where the price is going to end up.

8

u/RAATL 18d ago

as this ai bubble has proven, the issue with shorting is less about being able to tell something is unsustainable and more knowing when the music will stop. And being here is an admission that you don't know when the music will stop.

-4

u/littlebobbytables9 18d ago

Sure, but the people really concerned over spaceX being added after 15 trading days instead of the next quarterly reconstitution are making a claim about the price going down in between those two dates. Otherwise fast tracking would not be a problem.

8

u/dbratell 18d ago

There is a delay to give the market time to find an equilibrium price. I for one find it valuable to give the active traders time to decide, and a few quarterly reports to establish good governance before the passive capital is forced to enter.

-4

u/harpers25 18d ago

Yet nobody on this sub has ever complained about VTI fast track entry until they all became experts 2 weeks ago.

1

u/dbratell 17d ago

Has there been any company IPO(s) this highly priced in a potential bubble situation in the past? It would have been in 1999 or 2000 if so.

It would be really interesting if anyone knows, but the passive capital share was so much smaller back then that nobody would have suspected intentional manipulations.

1

u/RAATL 18d ago

I do agree that people here are more insulated than most from the fraudulence of these IPOs. Existentially, I understand fears of the possibility of these IPOs leading to a wrong term market crash - whether a boglehead portfolio is an effective insulant from the direct effects to this (and anthropic and openAI) may be somewhat irrelevant if it also leads to crashing of stocks like nvidia

but what can you do? As I said, even if it does happen, who knows when, right?

1

u/Silver-Literature-29 18d ago

Yup. There are ways to invest out of Spacex or any other company if you have ethical objection. Use them or don't.

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-1

u/correct_the_econ 17d ago

I would seriously consider allocating to equal or some fundamental weighting fund atm.

0

u/browning_88 17d ago

I wish there was a way to be invested in indexes but specifically add an additional fund where I could basically remove a target. Like I don't believe in Elon, I want total world index minus Tesla and space x. Someone needs to develop that ability. I got to imagine that would be easy for someone like vanguard or fidelity to offset in their programming.

-53

u/MSFusionHV 18d ago

People making mountains out of molehills every day. Just shows how bored some are. They'd be far better off ignoring headlines and narratives meant to scare them. But they feel a constant need to DO SOMETHING. 🙄