This is a common misconception. The S&P 500 weights allocation by float-adjusted market cap, not by total market cap. In the case of SpaceX, they are planning to float ~4% of shares at IPO. Even if SpaceX was added to the index, its index weight would be based on that tiny float, and at a $1.75T valuation it would be treated as roughly a $70 billion company.
SpaceX weight would be ~0.125% of the index, not ~2.5% as you imply.
Before the changes, the Nasdaq-100 index was total market cap-weighted not float-weighted. Once a company crossed 10% floated shares, the company was added to the index at full weight.
Nasdaq's new system is a hybrid of float-weighted and cap-weighted. If a company has below 33.3% float, its weighting is 3x float. Above that, it's cap weighted. This allows a gradual fade-in of the company into the index.
It's a better system than the previous one, and in Nasdaq's own words, more conservative.
For the Nasdaq-100, SpaceX at 4% float gets 3 x 4% = 12% of its market cap counted, which is $210B not $1.75T. Still <1% of the index.
Also, the multiplier is 3x, not 5x. Nasdaq proposed 5x, but after feedback, this was reduced to 3x. The new thresholds are 3x and 33%, not 5x and 20%.
https://www.nasdaq.com/newsroom/nasdaq100-index-methodology-...
Critically it’s not simply averaging a bunch of made up numbers. I may think gold is worth 1,000$/kg but if nobody is willing to sell me gold at that price then my “made up” number has zero effect on the market price.
https://bsky.app/profile/patigallardo.bsky.social/post/3mnhc...
They are making more revenue off satellites than nearly every current AI subscription today put together. The launch capacity and growth in space based applications are the real company, everything else is to line Musks pockets and have markets subsidize his dumber projects.
It’s a shell game. I believe in their Space based products, but I’m not touching those investments until the market levels out.
Their S1 cites (by memory) a 370B addressable market for space stuff and a 27 trillion for AI.
And for AI they counted all Twitter accounts as grok users.
The Spaces eXploration company was a cool company, but it's not what's being sold to the market now.
The AI stuff is dumb and just subsidize Elons prior dumber investments.
That's tangential. The valuation is based on supply and demand, nothing else.
Amongst other things the supply part of the equation will be low because all these companies are only to make a very small proportion of their shares available on the public markets.
Wow, you should educate yourself on what 409A is and how it gets created before writing something like that, you'd find it in the dictionary under the definition for what my original comment was :)
The rules around index inclusion exist for a reason. Too much control in one person's hands (which SpaceX has), too small a float (so you don't get price discovery), lack of a history of financial performance and minimal trading days just don't give investors confidence and, like it or not, investment decisions are made based on the index. If you want to argue against passive investment, well, good luck with that.
I think a lot of people have this weird idea that what we need is some theoretically unfettered market for "true" price discovery when it's actually regulations like this that create markets. It's like a libertarian brain worm.
I don't think anybody wants these mega-companies out of the index, specifically. They just don't see why rules that exist for a reason should be suspended when the net effect of that is that investors have less information and there is a lot of forced purchasing. If you have confidence in your IPO, let the market decide what it's worth without trying to fix the price because what they seem to want is for insider lock-ups to end about the time we'd otherwise be getting normal price discovery. Kinda weird.
Investor confidence needfs to be managed by creating a stable, regulated market.