1. Twitter is purchased with debt
2. Debt is transferred to xAI via acquisition of X/Twitter
3. Debt is further transferred to SpaceX via acquisition of xAI
4. SpaceX IPO offered at extreme valuation
5. Index fund inclusion rules waived for SpaceX IPO: profitability requirement, inclusion period cut from 90 to 5 days
6. Index funds are largely held by passive investors such as pension funds.
7. Index fund managers are not incentivized to exclude a SpaceX from their indexes. (?)
8. Holders of original X/Twitter debt (banks) incentivized to support the rule waiver since post IPO, SpaceX will have liquidity to service/pay the debt.
9. Passive investors are unable to rapidly respond to these types of changes because liquidating portfolios will incur capital gains taxes. (?)
10. SpaceX is in Texas jurisdiction, where shareholder lawsuits are not possible and must instead go for arbitration. (?)
Correction: index funds don't have a choice. They must follow the index, and so must buy the stock.
side effect: they'll have to sell other stocks, pushing their prices and weighting in market cap weighted indexes down.
> Passive investors are unable to rapidly respond to these types of changes because liquidating portfolios will incur capital gains taxes. (?)
For some active investors, yes. For passive investors (say you through your employer's pension fund), the tax isn't the problem. It's that the market has such a short time to adjust the price of these companies before indexes are forced to include them--and so might buy them at wildly inflated prices. Then, not too long after, the early investors can sell at still-high prices as soon as their lockup periods end. It's a massive transfer of wealth from pension funds and index investors to the early investors in those companies.
Nevertheless it is part of a pattern of weird deals in Elon’s companies. He’ll do anything to move the goalposts and turn his failures into successes. There is no norm he won’t violate, no boundary he won’t cross.
There is video explaining the process
7. ETF managers that track an index aren't allowed to put discretion into what they buy. They offer much lower fees because they don't have to do any thinking, just executing on an algorithm.
8. SpaceX servicing the X/Twitter debt isn't really a question. The total amount of debt is equal to about one year of revenue at the moment, and it's under 3% of the expected market cap of SpaceX. It's less than a third of what SpaceX's IPO is expected to generate selling new shares to the public. It's a non-issue. On the other hand, the fees the banks will get for the IPO could easily convince them to support the rules waivers.
9. This is true of some passive investors. It is not true of pension funds (which are usually not passive) or 401ks or other tax-advantaged retirement accounts. It is likely to be partly true for any individual depending on how much of their assets is in a tax-advantaged account vs a regular account.
10. Yes to Texas. It seems like the arbitration part is likely to be true (SpaceX is certainly claiming it in the prospectus), but there is not the certainty of having a long history of litigation.
Returning to 2+3: The rolling up of all other private Musk companies into SpaceX certainly impacted the investors in those companies, and how much Musk owns vs other people. But the equity adjustments there would be interesting, not the debt.
Pension operators are not typically passive. It's a different story to say that maybe they should be given that their returns don't always match up with index funds.
Morgan Stanley, Goldman Sachs, JPMorgan, Bank of America, and Citigroup
They all know how idiotic Tesla investors are, and they all want those idiots to pick up their bags.
Also: SpaceX debt is $20 billion.
Personally, I do think SpaceX is overvalued at these proposed IPO numbers and I will trade accordingly. So should anyone else who is confident and competent at taking appropriate market positions.
1. https://www.investmentnews.com/practice-management/spacexs-i...
which is exactly why public markets have always been a superior price discovery mechanism in comparison to private markets
Like if both these stocks become penny stocks what happens to the indices?
Isn’t the whole point that they are hedged across the whole market?
* S&P500: 0.08% – 0.12%
* NASDAQ-100: 0.47% – 0.70%
* Russell 1000: 0.1%
What Spacex/Elon are doing is sketchy as hell. But the numbers involved here are not terribly meaningful for your portfolio.
At IPO, $75B of Spacex shares will be bought/sold. The S&P 500 uses float-adjusted weightings, and the current float-adjusted total is $54T. If you are 100% invested in SPY, then about 0.14% of your holdings will be spacex on IPO day (75B/54T~=0.14%).
Obviously Musk and friends will start dumping some of the locked up float (~1.65T) when they can. But they definitely will not be doing so in a way that crashes the price or the market. That's in nobody's interest.
If you assume that half of the shares end up as float eventually (post-lockup), you'd end up owning around 1.6% of spacex in your S&P 500 etf (875B/~55T~=1.6%). That's not nothing but it's not significant enough that you should consider liquidating your 401k.
I'm picking on Spacex specifically because they are the biggest and imo, have the sketchiest/worst finances of the 3.
What you should do is have an Investor Policy Statement[0].
This should contain at least two things:
- your desired Asset Allocation (e.g. 30% U.S. stocks, 30% International stocks, 20% U.S. bonds, 20% International bonds) which should be decided upon based on specific, personal goals and risk tolerance
- your strict policy rules for if and when to do anything, if ever, e.g. (don't sell anything ever, or... rebalance your portfolio if one of your allocations is more than 2% from the desired goal)
Now... if say U.S. stocks took a big dump in the next 6 months (while other asset classes either grew, held steady, or simply didn't drop as much), when it would drop below 28% of your allocation, and you'd open a spreadsheet and figure out which other asset classes to sell a few percentage of, to buy the reduced price U.S. stock funds. (This is a policy-driven buy low, sell high strategy.)
[0] https://www.bogleheads.org/wiki/Investment_policy_statement
On what grounds? What tort have you suffered?
If you want change (and who wouldn't?) you need to talk to your representatives, not the courts.
Also some EU pension funds are already in the process of divesting from US markets...
And where will they go to?
Amazon is worth $2.81T right now and only represents 4.03% of the S&P500.
So a $1T share would represent less than 2% of the S&P500. This is significant for a single company, and 6% for 3 shit-tier companies (SpaceX, OpenAI and Anthropic) is even more significant, but we're far from "losing retirement if they go bust"-levels.
It is especially telling if we try to list out all the psychological biases at play:
- Availability & salience bias - vivid, memorable things feel more important than they are
- Narrative bias - humans tend to think in stories, and AI tells plenty
- Recency and novelty bias — new things feel more consequential than established ones (this one already drives like 80% of all HN content btw)
- Proportionality neglect - people are bad at intuitively grasping what percentages mean, even if they see the stats
- Social proof and reflexivity - coverage signals importance, and drives more coverage
- Status quo invisibility - things that work reliably become invisible (surprisingly, HN is really good in terms of working against this bias, I feel like at least 5% of all posts are some niche "inner daily workings" topics)
- Speculation premium in attention - uncertainty generates more discussion than certainty
- In-group signaling - cutting-edge things are status markers among influencershttps://en.wikipedia.org/wiki/Public_float
I hear S&P 500 is weighted on float rather than on market cap, while Nasdaq 100 is based on market cap.
NVIDIA Corp NVDA 8.02%
Apple Inc AAPL 6.53%
Microsoft Corp MSFT 4.84%
Amazon.com Inc AMZN 4.01%
Broadcom Inc AVGO 3.36%
Alphabet Inc GOOGL 3.32%
Alphabet Inc GOOG 3.09%
Meta Platforms Inc META 2.23%
Micron Technology Inc MU 1.71%
Advanced Micro Devices Inc AMD 1.19%
Oracle Corp ORCL 0.99%
That's 40% of the S&P 500.
And if anything happens to the AI bubble all of these go down together. While they won't all go to zero and cause a "-40%" overnight, Nvidia's rise is so meteoric that they will trigger a -8% and the rest's valuation has more than doubled since 2023. Even Apple, which isn't much of an "AI company", is still following the AI-tech hype.
If Nvidia eats shit, and the others go -50%, that translates to an overall ~-24% on the stock market.
Before any contagion outside the tech industry is considered. Look at the Dotcom Bubble and a -40% to -50% crash is quite plausible.
And that is on top of the IPO companies losing value themselves, this seems likely to trigger a doom-loop until the market reaches a low enough value. This will likely trigger layoffs and companies reducing spending and investments further depressing the economy. Added inflation from oil prices and war.
This doesn't seem like one big balloon ready to burst, but more like a house suspended by hundreds of balloons and they are about to be ran over by an airplane.
You mean our pension funds?
"Reasonable" is doing herculean amounts of work as usual, as it is implicitly operating under a thief's logic that the target didn't really deserve it anyway therefore if I steal all of it I will be justified.
We see the same shit when regiemes 'nationalize' segments of the economy and then wonder why instead of miraculously getting better without the 'exploiters' things turn to shit and absolutely nobody wants to trade with them. Empathy such a foreign concept to them that they don’t understand why merchants refuse to trade with those who steal businesses wholesale. Whose only response when confronted about their crimes is lame whataboutisms and victim blaming.
But this doesn't solve the problem in any way; it simply leads to production drop.
I mean, this is literally the logic of every communist government in the 20th century. They had the same logic that "given the mechanization of agriculture, food practically produces itself; you just need to throw a seed in the ground and give it a couple of tractor rides, and the earth will do the rest. Therefore, we need a tax on such activity, because we have enough resources to feed everyone".
In other words, it's literally a pure tax on automation. The results were mass deaths from starvation every single time.
There has yet to be an attempt at a centrally planned economy that actually had accurate data to plan with.
Not advocating for central planning but the important point is that these failure modes are possible under any tyrannical regime. For an example of where capitalist competition fell down in a similar way, look no further than the Irish potato famines.
It's absolutely correct that we can easily feed, clothe, house everyone. We can even give everyone comforts. It's mostly greed that prevents it. Greed that capitalism spends $trillions cultivating by brain-washing us all to want more and never be satisfied.
The fact it became an all-inclusive all-year-round vacation reward is an anomaly which is getting corrected. Too bad for us we're the generations holding the bag.
Caring for grandchildren, running clubs and societies, giving their experience to local politics.
At 60, women who had daughters at 30, whose daughters just had children would be well placed to help with childrearing.
These sorts of things got lost in UK with equality and the pensions crisis.
Current system: Work until you die.
New system collapses: Work until you die.
New system lucks out: Probably get returns (pension).
Current system isnt great but works. Just fear uncertainity doubt here.
Unless I'm misunderstanding this, buying at the sale price is the least risky way of purchasing the stock, which is what index funds should do. They should pursue the least risky way of indexing the market
More importantly, it allowed organic price discovery to occur. This eschews that process because the indexes are _forced_ to participate essentially at _any_ price, so rather than the market writ large having the opportunity to reward or punish the underwriter pricing of the IPO and determine any true idea of price, they're forced to buy the banker's narrative, which will intrinsically prop up the stock to some degree, but at what cost, and based on what underlying?
It's basically a money transfer from the average person to the poor richest person on the planet.
The true Great Filter is mental illness, apparently.
Instead blame the bankers and market who are putting buying in at 1.5T valuation.
If people really don't want SpaceX in their S&P 500 tracking ETF, we should see a S&P-ex SpaceX in short order.
I'd argue that it certainly isn't.
Only for people that get their news from reddit.
Initial public offerings whose market capitalizations rank within the Nasdaq 100’s top members will normally be eligible to be included after 15 days of trading, Nasdaq said in a statement. The timeline is shortened from at least three months currently.
“Industry professionals, including asset managers and institutional passive portfolio managers, were mostly supportive of the Fast Entry proposal and proposed timing,” Nasdaq said in the statement.[0]
15 days vs 90 days isn't some huge shift nor is it inherently some "flaw." These changes have been asked for long before Elon entered the White House.
[0] https://www.bloomberg.com/news/articles/2026-03-30/nasdaq-cl...
This is why non partisan financial institutes like the FED and consumer protection groups like the CPB are important and we should have them as non corrupt and robust as possible.
Because it just doesn’t seem wise to trust asset managers with these kinds of things without a lot of evidence and transparency. The 2008 crisis should have taught all of us that much.