The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100. The index fast-tracked SpaceX stock for inclusion 15 days after the IPO, instead of the normal three-month seasoning period. They also changed its 10% minimum float rule to a 3x weighting boost for low-float stockss.
So many people will unwillingly and prematurely invest into SpaceX, before it has any chance to discover its real price.
IE: The floating, 5% at launch, could attain 30% end august, if Nasdaq didn't change their rules it would have included SpaceX after this..
So, the inclusion rules are basically "these are the hard limits that specify which stocks are eligible, unless someone really big and lucrative comes along, in which case it's whatever and we'll just adjust the rules to make them eligible"?
What do you mean? I was under the impression that including SPCX has been massively beneficial for Nasdaq. It creates lots of trading volume and sends a quiet signal to other massive tech companies looking to IPO to come to them, rules be damned. So they're definitely extremely lucrative for Nasdaq.
Having the stock traded on their board is good for them. They also maintain an index. Elon made inclusion in the index a prerequisite for trading the stock on the board.
> Elon made inclusion in the index a prerequisite for trading the stock on the board
Source?
He may have claimed this. But he has no power to. Once a stock is publicly listed, every exchange can trade it. Where Musk had influence was on to whom he paid his listing fee.
"SpaceX stock is expected to be listed on the Nasdaq. To secure such a high-profile listing, While listing requirements remain unchanged, Nasdaq recently amended its index-inclusion rules to accommodate companies like SpaceX when they go public."
Notice a listing on the board and an inclusion in an index are two different things. Nastaq changed the index to secure the listing of SpaceX on their board.
In this case I think it is, because they're talking about whether a particular deal with be lucrative for one particular company named Nasdaq Incorporated.
Much like how Wile E. Coyote is a "safe" customer for Acme Inc, even though he purchases dangerous explosives and deploys them in reckless ways.
I think the rules are there are hard limits unless a multi-trillion dollar company IPOs with a significant absolute float, in which case tracking the "market" obviously includes said company.
A stock index is a business model. The concept of "passive" investing is alluring because you don't have to do any work. However, choosing a proprietor of a index that actually looks out for your well-being is, arguable, always relevant.
We are now at the point where companies can game the system of indexing. Investors need to wake up to this fact and realize this is likely a paradigm shift.
If the underwriters of a fund based on an index are involved in manipulating the content of the index, they are effectively the managers of a managed fund pretending to be an index fund.
Yeah, this is correct. There are so many large multi-trillion dollar companies coming to IPO, which if your are passive index holder and you are trying to track the market it is correct for these companies to be included. And besides SPY has chosen not to fast track where QQQ has. It is a free market, and folks are free to NOT buy QQQ. So I'm not sure why this is a point of debate.
"People" in this instance aren't always informed buyers. Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing.
The normal seasoning period is there for a reason. There is a massive downside to premature inclusion of a stock that is initially overvalued and then settles to a reasonable/sustainable value.
how embarrassing! Look, your joke was "If it's only 1.2%, hey, that's not that much, just give it to me for free!" We don't have to believe SPCX is worth whatever it's trading at today, but that 1.2% isn't simply being given away. Under capitalism, money is exchanged for goods and services.
FWIW, I read their joke differently: you were the one who said "only 1.2%", and they turned that on you by asking for you to part ways with "only 1.2%" of your net worth.
They are not questioning money exchange, they are questioning the "only" part, claiming this is significant.
> Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing
Then they should buy a broad-market fund. The kinds in which new issues are a tiny fraction or, if it’s following something like the S&P 500, not included at all. Following the Nasdaq 100 and then complaining it has too many risky tech plays is a bit silly.
The reason you know the people complaining the most about this aren’t serious is that they don’t lead with crsp and vti.
They did change their rules, they did it fairly specifically for spacex and it did drive inclusion in a major index fund (perhaps the biggest one).
Now me personally, as a holder of vti I am good with the change and my included exposure to spacex. Further I think mostly complaining about the inclusion/exclusion of a single name in an index _defeats the point_.
But for those decrying the shenanigans crsp and vti are the example to go with.
My (non-motivated, don't have NASDAQ or SpaceX) take is that isn't this how these funds are supposed to behave? You buy NASDAQ if you can take risk, S&P otherwise. If you check out what companies are in the NASDAQ, it's not like it's not majority tech, of which a lot of them are AI-based, so adding SpaceX to that mix is reasonable - and if they waited a year or so for price discovery, and had SpaceX been a popular choice (still can turn out like that), then investors would've missed out on those gains.
Yes, and there are tiers of risk. What people are complaining about is that with the recent behavior, NASDAQ has arguably increased the level of risk involved. If it's as simple as "buy NASDAQ if you can take risk" then that would imply it should pull in meme stocks when the WSB crowd are doing their diamond hand thing.
> the inclusion rules are basically "these are the hard limits
The inclusion rules for indices change every couple of years. That’s why there is an index provider versus a mathematical formula. (There are also formulaic indices. They aren’t very popular.)
My comment never says the rules are set in stone permanently - only that every stock needs to abide by the current set, unless there's enough money in play in which case the rules are edited then and there to specifically accommodate that company.
> unless there's enough money in play in which case the rules are edited then and there to specifically accommodate that company
The Nasdaq 100 rule change covers multiple companies.
Like, there is so much wrong with the SpaceX IPO. It’s kind of weird, as someone who’s spent time in both the equity capital markets and private markets, to see this being the thing finance Twitter has fixated on.
> The Nasdaq 100 rule change covers multiple companies.
I don't think that's relevant to the point you're responding to there. A rule change can apply to many parties while the content and timing nonetheless target a single player. The two things aren't at odds.
it's just a generic dismissal, a way of putting someone in a box without actually engaging with anything they say. which lumps it in with 90% of all internet arguments really. "Your argument must be invalid because you're the type of person whose arguments are invalid."
my account is 11 months old, which invalidates your theory that i'm part of some recent influx. also is septemberism still a thing? i thought that went away when most people had home internet rather than getting it through a university.
We're living under true capitalism right now. Look at the incentives. I don't see how we could have progressed to anything besides this, this is the natural outcome of the system in place.
American libertarians often imagine some kind of wonderland capitalism where everyone agrees to play by the rules that aren't enforced by anyone. To my knowledge this has never existed as a long-term equilibrium and it can't exist. I've yet to meet anyone who can tell me how their imaginary ideas go up against claims like
1. Encouraging infinite growth with no controls or limits will always lead to monopolism and is a one-way ratchet
2. Power vacuums are always filled (no public government leads to private companies stepping in and taking the dictatorial role, this time without any of the democracy)
The answer is that most libertarians see both 1.) and 2.) as a good thing they want to achieve. They imagine themselves benefiting as a high profile worker of that monopoly or rule setting company.
Also, note how super ok and welcomming libertarians are toward racists or even fashists. They do dislike pro-democratic center groups, they hate democratic left.
The United States is far more socialist than capitalist and it’s not close. In the early 1900s the federal tax rate was 0. Now we spend 125% of what we bring in in taxes. That is definitely not capitalism. That’s not a free market, that is the government spending far beyond what’s even feasible
What does the relative level of government spending versus taxation have to do with whether businesses will self-regulate? You're just spewing non sequiturs here.
They said we live under true capitalism right now we I’m clearly showing we do not. Not to mentions the US is far from “self regulating” there are millions of words of regulation in the US.
No you didn't, all you did was complain about taxes and say that there exist regulations by counting the number words in them. Not all words are equal, not does it mean that they're effectively enforced. Looking at various monopolies like Ticketmaster or the UnitedHealth group and how they've been allowed to flourish it doesn't seem like America has anywhere near enough regulations to be considered true capitalism. If the market economy isn't a free market because a monopolist is exerting outsize control on the market, it's not a free market. That doesn't make it socialism though, that makes it crony-capitalism instead.
First of all I didn't complain. I don't care what happens personally. Secondly it's just a fact that the US has a tremendous amount of regulations compared to the past. Just look at how few regulations existed in the 70s vs today. Apparently you don't like word counts, but the reality is there are a enormous amount today that didn't exist in the past.
That's not a free market economy.
"it doesn't seem like America has anywhere near enough regulations to be considered true capitalism."
You can't regulate your way into capitalism because capitalism by definition means markets free from government interference. The more it interferes the less capitalism you have.
United Healthcare is a great example. The governments enforce these companies being a monopoly be restricting which companies can operate in which states, having an enormous amount of red tape and regulation, documentation laws, etc.
If it was truly "capitalism" the government wouldn't' get involved at all. Part of the reason that doctors are so expensive to see is because there is a board that the US Government certifies to allow them to control which hospitals are allowed to be teaching hospitals for doctors.
If it was true capitalism there would be no regulation there and any college could graduate doctors. This artificially keeps the supply lower than it would be. These are facts.
> socialist than capitalist [...] federal tax rate
My dude, you're acting like Federal government is the only government that matters. It's a common mistake, but in this context it's fatal to your argument.
It's fatal because federal spending is the least relevant kind, since so much of it (and so much of its growth) is for the military, and military spending indicates very little about whether a country is socialist or capitalist on the inside.
In contrast, state/local taxes and programs are--even today--still a majority of the spending that actually tells us anything useful for a socialist/capitalist spectrum, the stuff that involves schools, libraries, policing, homelessness, property rights, etc.
"since so much of it (and so much of its growth) is for the military"
So clearly you are pretty uninformed as the military spending is only 13% of the federal budget. Social Security (AKA a socialist program, IDK if anyone can deny that) is 22%, Medicare (another socialist program is 14.2%). Interest on our prior spending (a lot of it from SS and Medicare, etc, some military too. is 14%
So, if you add social programs you has (SS = 22.5%, Medicare = 14.2%, not counting education) that is 36% of the budget or nearly 3x miltitary spending.
A capitalist economy would NOT have those things are as they are not free market at all, they are the government forcing your to pay into them.
This is another aspect where your thesis is not-fully-baked. If you want people to receive what you meant, you have to stop writing it wrong.
1. You spoke about "the federal tax rate" and claimed it was "0" in 1900.
2. The most charitable interpretation of that is that you meant to say income tax: That's usually what people mean when they're too-vague; It would literally be $0 before it was introduced in 1913; You can't have meant all taxes because those were absolutely >0 and you wouldn't make that kind of math mistake, right?
3. When critiquing the growth and dominance of the income tax, that excludes the separate taxes (payroll) that go to SS/Medicare.
> capitalist economy
I'm not taking a stand on the "what the US is" conclusion at this point. What I'm saying is that your argument--how you're getting there--is unsound (can't ignore state/local level) and unclear (which numbers from where).
The vast majority of you money goes to the federal level. You are here nitpicking and not dealing with any of the real issue. You are dancing around it for the sake of semantics rather than dealing with the actual issue.
The term "capitalism" was literally only created for the purpose of writing criticisms of the (then) current system of markets/trading/taxing/investing.
Try actually defining capitalism in a way that doesn't apply to basically any random society since the dawn of agriculture.
Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society we have written records for.
The formalization of the process of buying shares in a company and receiving dividends/profits as a result is a bit newer, but the general concept of "I give you money, you use it to make something and sell it then give me money back" has been around for roughly the same amount of time as currency itself.
Anyways, my point is that there is a lot of things to criticize about our current world/economy, using the term "capitalism" while doing so is too vague to be useful in any way.
(Communism/socialism does have more of an actual definition, but very few people are aware of or use it, so it doesn't help all that much).
Saw an interesting discussion on how capitalism has existed for as long as markets have existed, including ancient Greece, and how it inevitably leads to wealth inequality, monopolistic behavior, unsustainable resource extraction, and all the other negatives we see today. The only difference is that in Greece, all of these negatives would have been applied locally but now they're all being applied globally. Instead of one super-wealthy man being a pain in the ass for the local Athens economy, he can now ruin things for everyone everywhere.
I would more simply define that as "wealth inequality" rather than capitalism (or more broadly, power inequality) and perhaps go on to say that the real problem is that, while you can't realistically prevent/remove all inquality, most systems do a poor job of preventing the people with more money/power from using that to consistently increase their own share.
No need to do that, Capitalism—just like feudalism and mercantilism before it—is about how power is distributed. Both feudalism and mercantilism also had extreme wealth (and power) inequality (feudalism arguably had more), as did communism for that matter.
What makes capitalism different is that the power is distributed along capital (as opposed to handpicked by the king under feudalism; or embedded in government monopoly under mercantilism).
In other words, in capitalism, the owners of capital (or the owners of the means of production; i.e the rich; the aristocracy; etc.) are the ones who get to dictate the living conditions of the rest of society. The rulers (be it democratically elected government; an absolute monarch; a military dictatorship) will legislate in order to maintain the interest of the owners of capital. The police (or military) will fight for the interest of the owners of capital, and will suppress any resistance against the interest of the rich, etc.
Nah, Ancient Greece has nothing to do with today’s capitalism. It’s a dumb example and the parallels will fall down to a close inspection. Different world.
Pretty sure Adam Smith captured that in his writings.
Full laissez-faire, free market capitalism generally leads to wealth (and power) imbalance. Regulation is necessary to prevent that (assuming you want to maintain a "fair" democracy of sorts and not regress to oligarchy).
I can't see any system where people are treated fairly (equally and able to reap benefits of their labor aka not slaves) that won't lead to inequality. People are just different, and will have different production rates.
Sure, and that's mostly ok. I earn more than many people, some people earn more than me.
The problem is that extreme wealth imbalance leads to a power imbalance that tends to throw society into turmoil. The French Revolution being a canonical example.
Broadly speaking, I think most people would agree that Maria Hernandez the world renowned neurosurgeon who does 200 surgeries a year makes dozens or perhaps even hundred of times the amount Joe Smith the housr cleaner makes.
Even if they perhaps work the same number of hours a year, Maria has more training and (maybe) some kind of rarer aptitude and as a result we have a lot more house cleaners than neurosurgeons (in america and other places there a whole bunch of other factors like who gets access to the training and so on that causes some of these imbalances, but that's a whole 'nother comment).
The people, in general, are probably considerably less happy with the idea that jk rowling the ultrarich author gets to use her money to try to pass laws taking rights away from people she doesn't like.
Look at the difference between Ellison and Musk. Ellison is probably has similar levels of power to Musk, but he (afaik) mostly uses it to buy giant yachts and annoy other fortune 500 companies, and as a result most people don't really care that he's a billionaire.
Musk, on the other hand, tries to use his power to screw with government services and publically attack minorities and so on.
> Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society we have written records for.
That's a market economy, which may or may not be capitalist. Markets have existed for thousands of years under various economic systems.
Agree on your other points though, 'capitalism' was coined to just describe and criticize the system they saw emerging, one of private ownership of the means of production, combined with wage workers who do not own their tools or the product of their labor, but instead sell their time.
But its hard to have discussions around because too many people conflate "market economy" == "capitalism" but you can have markets in a feudalist, socialist, communist, any other society, that doesn't inherently make them capitalist. But I still think its useful as a term, but only to specifically describe who owns the capital.
Apply it to reality, and things get muddy really quickly.
The major issue is the "private ownership of the means of production". While some argue it's a recent development, others (like me) argue it has been present since the dawn of civilization and, ignoring the "free market" and "voluntary transactions" part, one could argue both feudalism and socialism are capitalistic systems, with the latter often receiving the term "state capitalism", instead.
And then there's the issue of "wage workers". Workers who own their means of production (i.e. freelancers) are still often considered "capitalists" themselves, as under the umbrella of "small capitalists", even if they rely more on their labor than their ownership.
> Feudalism is a term often used to describe the social, economic and political conditions that existed in Western Europe during the Middle Ages. At its core, it was a system in which a landowner, or lord, granted a piece of land called a fief to a subordinate known as a vassal. In return, the vassal pledged loyalty to the lord, providing labor, military service, payments—or a mix of these.
And then the next paragraph goes on to say that historians think this is way too simple to describe what real people were actually doing.
Either way, unless every single piece of property in the kingdom (including, like, plows and mill stones and spinning wheels) was granted by the king (or someone he had granted to) it seems like there's still a lot of room for buying/selling/investing.
I mean, it's an interesting answer but my basic point is that the "real world" is far too complex for a term like capitalism to be at all useful.
Even stuff like "free market", can a market be "free" if a government exists? What about monopolies? Etc etc.
I just want people to be more specific when they criticize systems!
plows and mill stones and spinning wheels are excellent examples of exactly what a feudal lord owned. They owned the land, the major structures on that land, and the major implements on that land. If you wanted to use them you paid the lord in fees via goods, labor, etc. It's basically the gig economy - you will own nothing, your labor will be for his benefit, and if you want to keep participating you'll make it worth his while.
Tesla does not, AFAICT, also own the land you live on. They pay you in fiat currency that can be exchanged for other goods sold by any provider.
A better comparison to support your "capitalism = feudalism" argument would actually be the era of company stores and truck wages: https://en.wikipedia.org/wiki/Sixteen_Tons
I understand that you think that, but you're wrong according to pretty much every historical source.
If you don't understand the difference between a feudal lord an Elon musk I'm not sure I can help you. We live in a world where individual rights are orders of magnitude more significant that those of a feudal serf.
Empirically this isn't true. However you feel about "true" capitalism vs socialism, countries underpinned by capitalism have prospered, even the socialist flavors (China, Scandinavia)...while the countries that have attempted pure socialism have all failed.
The problem with that logic is you're treating economic systems as if they all exist in a vacuum, and you're setting up a circular argument of if its successful its actually because capitalism, if it fails it must have been socialism.
It completely ignores the decades of external hostility toward any nation that attempted to build a socialist economy. Almost every attempt has been met with near immediate intervention from captialist super powers, particularly the USA. Nixon activeley worked to cause the military coup in Chile, Cuba has faced the longest trade embargo in modern history (and yet still managed to outperform its peers in the region in healthcare and literacy). Its unscientific to attribute these struggles purely to internal failure when they are subject to deliberate economic warfare.
Secondly, your definitions are being stretched to fit your thesis. Scandinavia is not "socialist flavored" it IS a social democracy, with free markets. Claiming China's success is from captialism is ignoring that its economy relies entirely on state owned land, state owned and controlled banks, and state owned companies, and mandatory five year plans coming from the state.
If we classify any successful state-led initiative as "capitalist" and any blockaded, intervened upon state as "purely socialist" then the argument is an unfalsifiable truism.
I see socialism benefitting from capitalism, but how have capitalistic nations benefitted from socialist ones (other than a place to put military bases)?
smartphone glass: corning, gorilla, etc is an east german invention
the soviet union also pushed humans into space
cuba produces a ton of doctors who then go on to heal people too poor to train local doctors
in terms of, how does socialism benefit jeff bezos and elon musk and the actual capitalism of epsteins and the like using money as power mad exption from the law, i guess musk built space x on soviet rocket designs, but otherwise not a ton.
does it need to benefit the ultra wealthy capitalists to be good though?
Bezos and Elon receive socialism from the American government, no need to talk about other countries there. They are backstopped, they have all their needs met by the government and the government gives them tax money from all of us and then grants them exclusive control over an economic monopoly so they can extract more directly from us
Usually "true capitalism" means one of two things:
1. Capitalism where there is no government or regulatory interference, and the "invisible hand of the free market" produces some kind of utopian society based purely on every business abiding by rules enforced by no one, where somehow corporations don't take advantage of workers they way they do now despite there being no laws against it.
2. The same thing but sarcastically because it's obvious that that system would be demonstrably worse than the restricted version of capitalism that we have now.
The "invisible hand of the free market" works only, if you have many market participants competing one against another. When a participant wins the competition you get monopoly, when multiple participants collude you get oligopoly, or cartel. Market can not solve this.
Where does capitalism mandate corruption? Yes, it is not realistic to assume there is no corruption, but capitalism in and by itself does not mandate corruption.
Obviously this all falls apart when capitalism can buy legislation. We are seeing how the USA is currently eroded by a few oligarchs.
They're not saying it 'mandates' it as law, but that the systematic incentives inevitably lead to corruption. The ability to buy government is irrelevant - this is just the easiest method right now of converting money into power. If there was no government to buy, private business would execute that conversion themselves by ruling over people and enforcing their wishes directly.
"capitalism" was meant to harness the greed in men- they're self-assembling groups on mostly level playing fields, and the people vote during every purchase. The more votes they get, the more opportunities to expand. Only when the people fail to choose wisely is a governmental body supposed to come in and help "regulate". The other option is the government decides from on-high how things should work, and you'd better hope that what got them to power was good. Then these people need to be wizards at allocating labor, research, and benefits.
Crony capitalism is true capitalism. The idea that capitalists will simply choose not to organize to benefit their own positions out of some sense of altruism is insanely naive, and puts you in the same camp as USSR apologists claiming that their issue was the lack of true communism. A system that fails when people subvert it to their own benefit is a system that fails.
The power of who lives, dies, and what's allowed are made by the individual consumers (or groups of consumers), so it's the same problem we have with democracy.
> The directors with of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own
You could make a decent argument that capitalism will very likely end-game devolve into crony-capitalism as it's typical failure mode, but I don't think it's written in stone.
It's funny to me. Everyone rails about Atlas Shrugged being some libertarian fantasy story. I always read it as an allegory warning about crony capitalism and how it ruins society along with a story about trains and magical perpetual motion machines.
Socialism capitalism, history shows basically all human systems devolve into corruption regardless of how sound the underlying concepts are.
Which I’m surprised people don’t point out more. What does it matter which system is the best when at the end of the day the powerful people are going to make back room deals to subvert it and that always leads to a feedback loop
Yep. This is how I view the world these days too. All systems will inevitable devolve into corruption and centralized power. The best system I suppose is the one that starts with the most distributed means of power possible, and then that gives the most quality of life years out of anything before it's time for a horrific reset again.
In practice the choices tend to be limited for a lot of the people for whom this rule change was meant to ensnare their money because it exists within 401k plans with limited portfolio options.
Right but that's because you've now layered in government control. 401k plans are more heavily regulated, often negotiated by the employer rather than the employee.
The real question is why are employers able to limit employee 401k investment choices and employee health insurance. This is not freedom.
The most insistent the salesman, the highest odds you got a bad deal.
But we are thread is about corruption (probably with bribes, and stealing the money of people that didn't participate on the transaction), while everybody keeps pretending is a consensual sale.
I've started telling basically that to the solar salesmen who come by every few days: if it was so great, you wouldn't have to pretend to be from PG&E or tell a bunch of half-truths about how utilities work.
problem with solar is that in itself it is great, but here in US if you look at the cost per watt produced it is heavily inflated with permitting and marketing costs. which is basically their margins till it becomes barely profitable to you. otherwise most of solar system cost has been fallen quite a bit for last decade plus.
dont believe me, look up how much a open loop DIY system costs.
Oh yeah solar is getting good but the guys who come to your door and say they'll give you a $0 electric bill just sign here are peddling something that's maximally profitable for them
No, but they did hold research sessions and they did draft the policy and the rules and all the updates and have them go through legal... they were planning to, until they saw public sentiment, or other influence. It'd be misleading to claim it was never a consideration.
While I know it exists again, we are talking about the Nasdaq 100. It’s already a pretty quirky specific index and folks investing in it are already aligned with a spacex type of company.
And beyond that there is a lot of capital in active funds that use an index as their benchmark. So they don’t have to buy anything, but they are trying to beat their benchmark so not buying is an active decision with risk.
I'm going to assume this question was in good faith, and ignore that you are seemingly spamming it as a 'gotcha' all over this discussion.
If I'm already invested, and they change the rules on me in a way I don't like, I have to sell, and that's a taxable event.
So if I have invested in a Nasdaq index, and I don't want a massive exposure to SpaceX prematurely, I am forced to close my position and immediately pay taxes on the profits. I pay the taxes, and now my investing capital is reduced because Elon wanted to force index funds to buy SpaceX stock, which indirectly forces all current owners to buy SpaceX.
It's not future buyers so much as people that are already exposed, and were probably not counting on getting rug pulled by the Nasdaq.
So no, you are correct that no one new to investing is forced to own SpaceX stock, but millions of existing fund holders are now exposed to a stock in a way that simply wasn't possible when they put their money in, and will be penalized if they don't want that.
People already own them, and have owned them for months or years before the rules were changed for SpaceX.
There's a cost to selling, the brokerage fee plus in many countries there's then taxes due on any profits. Many people would prefer to have unrealized gains where they can pay the tax years ahead, when they need the money.
(Also please don't make the same comment 4+ times.)
leaving the word 'forced' aside (purposefully), pension funds, 401k holders, and many passive investors end up buying these things. you're right that no one is "forcing" them, but people who try to invest responsibly with little control over the day-to-day which is most people place trust in the institutions who do that investing for them.
I don't think that the claim of "the Nasdaq is misusing their institutional trust" is a controversial claim. Moreover, one of the things that people choose when they (401k, pension funds, passive investors) is institutional mechanisms that prevent potentially mispriced items from entering their portfolios.
Very few retirement plans offer the Nasdaq 100 as a direct investment choice and certainly no plans offer it as the sole choice.
>However, based on figures from the over 700,000 401(k) plans, allocation to Nasdaq-100 Index mutual funds makes up less than 1% of all 401(k) assets, which the firm suggests is a significant underrepresentation compared to the S&P 500 and other Large Cap Growth Indexes.
The problem is a lot of passive investors own large quantities of that ETF, and to take their money out now they have to pay a tax penalty, so they are forced to invest in SPCX due to the rule change.
Its also a matter of principle. They had a seasoning period to allow for market price discovery over time, and they created a process to waive it for one company. Its not unreasonable to say that that is a bad thing.
Correct. Index funds are owned by people. For example, I have invested a large chunk of my retirement savings in an S&P 500 indexed fund (as many, many other people do). Whatever stocks the S&P 500 list, are what I end up owning; if I don't want to own one of those, I have to either roll that money into a different fund (which IIRC has limits, can't do that too often without tax consequences) or take the money out (and pay a tax penalty for withdrawing it before retirement).
So whether the index funds do or don't buy a certain stock has direct implications for real, non-millionaire, people.
I don’t even have access to a NASDAQ fund in my 401K. You have to go out of your way to buy the NASDAQ 100, QQQ and /NQ or /MNQ futures are the most popular instruments for getting exposure.
I have a tiny minute slice of SPCX from owning VTI total market ETF but my 401K holds no SpaceX.
Okay? Just because you don't have access to that investment vehicle doesn't mean others aren't using it. What type of reasoning is this? "I, personally, am not too badly effected, therefore it's not a problem"
And guess what, your VTI which does track NASDAQ as part of it's index is effected by this inclusion rule.
His reasoning is valid. Compared to the S&P500, it's a small sum of money. Most people aren't buying a fund that tracks that nasdaq index. The total effect isn't that large.
Not only is he wrong that it doesn't impact him, because VTI is impacted, but the whole premise is wrong. "I'm not harmed" does not mean things are fine. If I go murder your neighbor, will you come to my trial and demand I go free because you weren't harmed? Should the judge let me go because he wasn't harmed?
He wasn't making the case he isn't harmed. He was making the case that the effect isn't large. You don't appear to understand the claim itself, let alone the reasoning.
Just because you don't understand the basics of the financial system, or the different indices, or the amount of money flowing into the funds that track each, it doesn't mean others don't. The impact if it had been included in the S&P500 would have been at least an order of magnitude more than just the nasdaq 100.
There’s around five trillion dollars indexed to the S&P 500 in large funds. QQQ is half a trillion dollars.
If you look at Fidelity mutual funds, the difference is even greater. FXAIX has $827B in it, USNQX has $9.6B in it.
The absolute dollars do matter, as do the risk characteristics of both baskets of stocks. If and when SPCX meets the S&P 500 index criteria it will be included.
Also, NASDAQ both operates the NASDAQ exchange and also decides what is in the NASDAQ 100. S&P decides what is in the S&P 500 but they do not operate an exchange. Allowing SPCX into the NASDAQ 100 was good for NASDAQ the exchange and it was legal, so it happened. The S&P 500 committee was not facing the same incentive so SPCX will have to wait until it meets the criteria for inclusion.
If you understand the incentives, you can predict the outcome. I agree that it sucks that QQQ holders had to swallow SPCX.
One last thing, if you reread my post, I explicitly acknowledge I have exposure to SPCX through VTI which I own in my Roth IRA. As of right now, 0.14% of VTI is SPCX which means I have $91 of exposure. I think I’ll be OK if it goes to zero :) I said I have no SPCX in my 401K which is just FXAIX, an S&P 500 index fund.
There’s an order of magnitude more money indexed to the S&P 500, you have to go out out your way to buy QQQ since NASDAQ 100 and total market funds are uncommon in 401K options for employees.
QQQ is more volatile and higher risk than the S&P 500, the people buying it should understand that.
Why was musk/spacex so interested in having the rules broken to include spacex stock? Do you think maybe there was a reason that involved musk benefitting??
I'm not sure why that's relevant. The original discussion was about who's forced to buy NDX 100 stocks like SpaceX. The answer to that is "index funds".
Asked and answered. Whatever cute point you're trying to make is rendered moot by real market dynamics and index inclusion rules.
A lot of employer pensions will have limited fund options. (At least in the UK, maybe the US works differently.)
Quite likely that the only sensible one for most people (~global equities) will track S&P 500 internally. So essentially employees are being forced to hold whatever the index includes.
Hopefully it's less of a problem with Nasdaq, but it was a real worry.
Turns out people (and institutions like municipalities and pension funds) sometimes buy index funds before SpaceX enters the NASDAQ 100, and changing their policies over a single event would be a great effort and expense, and set a bad precedent. Sounds crazy, but it's true.
Nobody has any idea what point you're trying to make, and the fact that you're repeating yourself and not being clearer makes everyone suspect that you don't have any idea either.
Funds often have institutional investors. Many of them Pension Funds (i.e. ordinary every day people) and when the institutional investors signed up, they didn't do so expecting Nasdaq rule change.
that is the whole point of an index fund - they buy whatever is in the index so you can get exposure to the total market. The scandalous thing is that an IPO'd company is going to have a lot of volatility for weeks to months after it goes public, so they typically do not allow any newly listed company to be included in the index for up to one year. This is for the benefit of retail. People have put their entire life savings into these funds because they are viewed as the optimal tradeoff between risk and return. Those people are now contractually obligated to either sell everything or expose themselves to spacex's IPO price movements.
So you are saying it could have been worse, and therefor it is not that bad. I feel like this may be a logical fallacy.
It is like saying that the worst thing about twin earthquakes in Venezuela was not the fact that there were two of them, because there could have been three.
Defend your position instead of comparing to earthquakes. The Nasdaq 100 is already quirky in that it’s the largest 100 non-financial companies listed on Nasdaq. So it’s a large-cap growth/tech play or for Nasdaq a showcase piece. I don’t think it’s great they remove the 3 month criteria but also knowing the specific slice of potentially unprofitable companies it highlights does not make it as concerning as the SP500 drastically changing their rules to include.
To clarify: I am not comparing anything to these horrible earthquakes. I am comparing the above rhetoric to a hypothetical rhetoric about the earthquakes.
Nobody would actually say this about these earthquakes, and that is my point.
Again, do you have anything constructive to add to the conversation? Your words are insulting and just putting words in my mouth. The Nasdaq 100 is not that special or unique. You’re comparing a quirky index to earthquakes which is weird. They don’t have much of any rules, the three month modification is maybe not great but also not that big of a deal. Price discovery is pretty quick and for the Nasdaq 100 it fits for their theme. It’s absolutely not the worst thing. It’s not really great or bad, it’s the Nasdaq 100. It might help to go read up on how they market that index.
I know people tend too see “index” and think it’s a rigorous financial instrument but on a lot of cases it’s not. This index excludes financials so it ends up being this mega cap/tech 100. No other rules historically.
I am pointing out (what I think is) a logical fallacy you made earlier.
This what your parent said:
> The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100.
And you replied with:
> It would be shocking if we were talking about the SP500.
My critique is that this is not a valid refutation of your parent’s original claim.
If you don‘t think this is constructive, then that is on you. In my mind you have not refuted your parent’s original claim, and I have explained why above.
Also let me repeat, since you seem to have missed it when I said it above: I am not comparing anything to earthquake. I am making an obviously ridiculous hypothetical claim I just picked earthquakes because it was more obvious. I could have as well made the hypothetical claim about the worst thing about coffee is that it is only lukewarm, and then the refutation saying: “no actually, it could have been room temperature, so lukewarm is not that bad.“
> worst about the SpaceX IPO is Nasdaq changing their inclusion rules
Nasdaq 100 has always been marketed as a tech-forward index. It would be a bit ridiculous if they didn’t include the most value tech companies on the market.
There was a potential scandal at S&P. But it didn’t happen. My personal guess is a lot of finance influencers latched onto this story. When it didn’t pan out they tried to maintain credibility by shifting it onto the Nasdaq 100, where it doesn’t make sense.
> Nasdaq 100 has always been marketed as a tech-forward index. It would be a bit ridiculous if they didn’t include the most value tech companies on the market.
What if they floated only .01%? What's the cutoff for it being ridiculous not to include?
> What if they floated only .01%? What's the cutoff for it being ridiculous not to include?
You’d probably still include it, at least for a tech index. But you’d underweight it relative to float for indices published for funds. (The pure play index would weight it wholly because informationally it’s still a whole company.)
The timing isn’t great. But this was being discussed for a while. If it were only SpaceX, I’m doubtful the rules would have changed. But a tech index not including SpaceX, OpenAI, Anthropic and SK Hynix is a bit silly. And in the end, on index inclusion, the stock still fell.
...such thoughtless justification is not really disproving comparison to "anything goes" discourse of other platforms with a nonsense appeal to empty normalization
100% designed to offload an empty bag onto retail investors
SpaceX is propped up entirely by government subsidy
It has no real sustainable business unlike SK Hynix, very much like OAI and Anthropic
What's silly is propping up ephemeral companies that burn resources and produce nothing
This was a popular meme on Twitter and Reddit and YouTube, granted. The math doesn’t make sense with an index like the Nasdaq 100. But I’ll admit it’s a good story.
> SpaceX is propped up entirely by government subsidy
These companies are built on little more than "a good story" for politicians to sell to voters ..."i voted in Congress for that!"
You're arguing semantics
Economic math is being leveraged against innumerates as euphemism and obfuscation of same old avarice and political corruption. Biology is self selecting. There's no using rhetoric to wave off the ground truth is just a minority of the total population ensuring their own lived experience is put above everyone else's
No it is not. Appeals to equality of condition have existed for centuries. Among them are that term used verbatim.
Ignored the other points and redirected to the least salient. Will take it as acceptance you realized how silly your carrying water for people who don't know or care you exist is.
Age of account makes it clear you need the social system to remain solvent as you're likely rich on paper. Nothing more.
In this comment [1]? Seriously, what salient points were you trying to make?
Nobody is arguing anything is fairly valued. That's your straw man. There's a bit ironically complaining about innumeracy in a series of comments with zero numbers. Then a general appeal to Twitter tropes around sheeple and whatnot.
If anything, the quality of this comment thread sort of points to the quality of the argument for SpaceX being included in the Nasdaq 100 being corrupt. It's based on vibes and feels. Which is a good story–it's clearly convinced a bunch of people to watch another video, click on another ad.
> Age of account makes it clear you need the social system to remain solvent as you're likely rich on paper. Nothing more
...genuine question, how are you connecting that observation to that conclusion?
Back n forth with someone who used "a bit silly" as a justification.
You set a low bar out the gate. I merely met you down there.
Numbers don't make a difference. They can be shaped to any argument like English or German because they're picked by the biases of the author.
You seem to live in a rhetoric derived neural hallucination and are completely detached from physical reality, meaningful thresholds for verification.
Will stick to the skills I picked up studying applied physics and electrical engineering for checking hypothesis and formal verification. No interest continuing a conversation with a functional illiterate who cannot reason outside their native cultural bubble.
To paraphrase Feynman, doesn't make much sense to get hung up on the syntax and their semantics.
How much of your money did they take? Are you one of those people that went all in on WallStreetbets?
Who should be at the gambling commissioner that allows such things? Should people be made Wards of the state and finances placed in Trump's noble stewardship?
I didn’t consider that angle—thanks. I don’t day trade and don’t think anyone should. Lots of folks do anyway, however, and then they predictably lose money. It should be similarly predictable that they’ll then get upset and lash out, sometimes in the correct direction, often not.
(And the influencers pitching day trading and whatnot, lo and behold, are probably also selling the corruption of indices and why you should buy their crypto to not be a "simp" or whatnot.)
Mostly like I think they simply long for communal property ownership with a benevolent overseer that invests and distributes resources according to values that match their own.
Therefore they are offended that private individuals can allocate as they choose, and make losing gambles on other private institutions.
Some of these people were taught indexes are safe havens, and recoil at the idea they might not be safe as milk.
Idk, I kinda agree with Matt Levine. The purpose of these ETFs is conceptually to track the "largest X companies", so including SPCX is just staying true to that.
If there's an issue I think it's earlier in the IPO pipeline.
But if SpaceX valuation drops by 2/3 before settling into a steady state, does that not mean that SpaceX is not one of the "largest X companies" but rather was overvalued?
The entire reason for these seasoning periods is to give the market time to determine what the company is actually worth to the market itself. Bypassing those rules to get it in earlier says to me that they don't believe it will settle at a price near its start.
If I IPO my lemonade stand at $1T valuation do I deserve to be in that "largest X companies" list? Or does it only make sense if I can maintain that valuation over time?
Is your assertation that spaceX just valued themselves? If your lemonade stand gets underwritten by Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase, and 18 other large banks then yeah, you belong on that list.
I think a lot of people are upset that they bought something (an ETF or fund that tracks an index, for which has various rules for what gets included) and those rules get broken so the wealthiest man in the world who is also extremely close with the President of the US can get his company included on a shorter timeline. Yes, there's an issue with the IPO process but a) you can just buy SPCX if you wanted exposure b) even if it's not included you're getting decent exposure and c) the IPO process being broken is not the problem of the indexer.
Putting cynicism aside (there's plenty of that here already): there is a theory that people invest in index funds because they don't want to pick individual stocks. They want exposure to "the public stock market as a whole". I think there are good arguments on both sides of including SpaceX in such an index.
Oh come on, that's a view so charitable that not even Musk giving away all of his wealth would come close.
Pretty much everybody know what it was about on day one, brokers were (and still are) operating in blatant bad faith for personal gain and they know they can count on the current US administration to get off scot free. It's like if Jordan Belfort was in charge of Nasdaq.
I think that is the problem with concentrated markets. You can do whatever and younare actually never "punished" by the market. Ie market htpothesis does not work
The president may throw a tantrum that “some crazy democrat throws stones under the feet of that beautiful Elon, the most beautiful Elon we ever had”. Better do what the new Tzar wants. Dude was sent here apparently by the God, don’t mess with the God.
Sorta invalidates the whole market to know that they'll change the rules in order to manufacture the result that they have pre-ordained to be "correct". NASDAQ seems to have decided that they're in the business of picking winners and losers rather than simply providing people the mechanisms by which to decide for themselves.
nah the very worst thing about the spacex ipo is that schwab won't allow me to short it. has nothing to do with the recency of the issue. today i shorted some skhy when i realized it's trading about 30% over the Korean share price (I could be wrong about that)
> And if you are buying an instrument where you can lose more than you invested, the approach maybe wrong? :-)
This is precisely why shorting can lose more than you "invest", because you're not buying an instrument, you're selling it with the intent (or promise, depending on what kind of instrument it is) to buy it back later, hopefully at a lower price.
There are, as said, depending on juristic regime, products which do not let you lose more than you invested.
On top of this comes national regulation: E.g. in some EU countries, retail traders are exempt from s.c. "margin calls" and the broker is required by regulation to "just close and not ask for more"
> nah the very worst thing about the spacex ipo is that schwab won't allow me to short it.
there are easier ways to make money than betting against Elon Musk. See Tesla and how well it worked out for short sellers there.
I like SpaceX as a company (especially Starlink) but it's over valued in my opinion. In about a year when there's a little bit of public financial history and the dilution is over i'll probably buy in.
I for one am glad that you were not allowed to short SpaceX. People gaming the market for their own profits are the worst kind of exploiters and swindlers. You contribute absolutely nothing while siphoning the profits that workers make, lowering the salaries of everyone that actually works for a living.
Note this has nothing to do with my feelings about SpaceX. I am Elon hater nr. 1 and hope SpaceX burns to dust, I only hope speculative investors burn down with it.
EDIT/CLARIFICATION: This post is fundamentally anti-capitalist. You may feel like I am mis-informed or misunderstanding. I am both of theses things if and only if Capitalism truly is self-evident.
Putting one's money where their mouth is in expressing that a company's stock appears overvalued is very low on my list of "things that exploit the proletariat."
I don’t care the method people use to game the market. They are still participating in a systematic exploitation of workers and deserve the maximum of nothing of what they hope to gain.
My parent wanted to make some unearned money by making speculations and gambles. If they were allowed and if they were successful, they would have made a bunch of money while contributing nothing. Every single dollar they would have made in their speculative gamble would have come from somebody else who actually contributed and but didn’t get the full value from their work.
I am glad that my parent was denied the privileged to participate in this systematic exploitation. The ideal number of speculative investors is zero, and any movement towards that number is an improvement for workers.
What a weird misunderstanding. Shorting reduces fraud in the market, and making it harder to short increases it. There's a reason shady managers had shorts, it increases the chances their bad behavior will be uncovered and punished financially.
I'm not an investor in SpaceX but I don't think shorting stocks at IPO should be allowed. The market should be given time to settle on a price, and it's unlikely that anyone needs to short it on day 1 for hedging. It's purely price speculation.
Yeah, I know why people _want to_ (betting), but it doesn't serve a broader economic purpose.
Going long or going short is your bet on the market. If you can go long, you should be allowed to go short. Restrictions on any trading means you don’t have confidence in the price in which case it shouldn’t be available for trade.
Betting is what everyone who jumped into retail investing and meme stocks does with it, but shorts are a valuable tool in the economy for hedging risk. It also is a good indicator for fraud too.
If someone wants to dress it up in jargon or talk about beneficial second order effects, they can. But if putting money on an outcome you can’t control isn’t gambling, I don’t know what is.
Is buying insurance gambling? Is giving your second cousin 100k some money so he can open up is restaurant gambling if you expect a percent of the profits but won't actively be involved in advising him on running the business?
Gambling is placing a wager with a negative expected value. If you can gain an edge and have positive EV, it’s not gambling. That’s the distinction between poker and slots. A skilled poker player can take advantage of positive EV positions while slots are programmed to have negative EV. There are traders that have positive EV bets.
If you're confident the price of bananas will fall tomorrow you absolutely can sign a contract to deliver bananas next week at the current price and then buy them when the price drops...
Yes, because the guy buying your bananas is able to make banana-buying decisions for next week based on the price you give him.
You’re not going to make up a silly low number because you actually have to buy the bananas yourself at some point, and you help price discovery because now that guy isn’t buying bananas at a higher price than someone is willing to sell them for.
Just as a thought experiment, would you say there are any (societal) negatives to the possibility of thr price of bananas (or the share price of spacex) being able to fluctuate wildly based on semi-abstract economic manipulations, like shorts and futures and such.
What I'm getting at is when does it go from investing, "I think this entity is going to take my money and use it to build a profitable factory that will then return to me a share of the profits", to just gambling "I think this stock price will change by the end of the day and I'm going to bet on it", and what are the positives and negatives of that?
The price of bananas is generally likely to fluctuate less as a result of shorts, futures etc.
The distinction between investing vs gambling and positives and negatives sounds like more the subject of a PhD thesis than an HN comment! At some point the marginal benefit of smaller price spreads from very short term trade to actually allocating physical capital and labour to producing more valuable stuff might actually be lower than the amount it simply inflates asset prices, but that is much closer to microseconds than "you're not allowed to bet against this IPO, the insiders artificially pumping its value need to be able to cash out first"...
I'm not certain you're right, but I think this opinion deserves considerably more (fair) discusson than it's getting.
Lots of replies either personally benefit or just assume the "way things are" is the best, but the stock market has gotten highly abstracted from the original intention of providing capital to grow companies via means other than bank loans.
I get the argument that shorts and friends help make the price the stock is being sold at more accurate, and I believe there's some truth there, but also we constantly see stock prices fluctuate by 10+% in a single day and I have trouble believing the actual value of all these companies changed that much in a single 24 period.
Well the idea that the price of a stock represents the actual value of the company can be complicated but the realization that it's super hard to figure out what the actual value of a company really is, because figuring that out really requires a crystal ball, because you need to know exactly how much money the company will earn in the future, among other things.
None of us have that crystal ball, so market participants try to guess at the future. It's not difficult to believe that those guesses can swing a lot in a single day. Just trying to figure out whether or the Hormuz will be open next week can give you whiplash.
the company manipulates itself to look its best possible, taking long term bad decisions in order to juice the value, and wont have more immediate items to juice the share price again for a while
its a reasonable expectation that 3 months after an IPO the price will be lower than it was at IPO
not really a bet so much as that on average the prices at IPO are a local maxima
Why is line go up price discovery acceptable, but line go down price discovery not? If the shares are trading, you should be able to short, it’s arbitrary to disallow it. It is quite literally a part of the market settling on a price.
(under the assumption your broker is managing their risk if your losses from a short position potentially exceeds capital available for liquidation if the trade moves against you)
Line go down discovery is acceptable (that is what selling a share is). The reason you might not want options trading very early after an IPO is because the market is frothy enough without the additional layer of complexity.
Certainly, its reasonable for a delay in options being available while market makers prepare to make the market for those options. But shorting? Day 1, the shares are trading and available to borrow to sell to short.
Are they actually? How many intermediate steps are involved in finding shares to borrow for a short? I imagine they have to be transferred to some central depository with the feature, for a start, and that takes 2-4 days
Your broker will locate and borrow the shares from an available pool (such as other clients' portfolios), sell them on your behalf, and hold the cash. They don't have to go to the clearinghouse.
Because lines tend to trend up over time. You're betting on lines going down, and paying rent while doing so as shorting requires you to rent/borrow shares from somebody else. It's an extremely high risk activity that can easily result in an investor losing a very large amount of money.
Elon Musk is politicized so you're going to have people wanting to short against him, for reasons other than it being seen as a rational and sound investment strategy. This is one reason brokers tend to restrict this activity to certain types of investors who are more able to appreciate the risks, to say nothing of baseline necessities like needing a margin account to cover potential losses. Shorting is just very different than buying a stock.
Annoying but not much more. It kinda makes sense too if the index is suppose to reflect the corps. The way SpaceX is set up from a governance point of view is a nightmare though. Also, data centers in space is just stupid. Now it seems like they already abandon it and are going for some kind of AI satellites. Still stupid. I should probably take a hyperloop over to US and ask Elon about it, oh wait, that was also garbage.
What you didn't elaborate on is that it's a poor investment thesis, so while the association is Nasdaq == tech, it's not entirely true, and it missing things if what you really want is tech. It also penalizes small floats less than S&P 500, enabling these shenanigans.
I'm sure people planning to invest for only 1 year of their lifespan and began their investment journey exactly 1 year ago and who are in the process of selling everything they own today never to invest in stocks ever again will find that Nasdaq one year performance very useful information!
NASDAQ is famously overweighted in tech. It saw an 80% drop in the aftermath of the dotcom bubble, while the S&P500 only had a 40% drop. It's a double edged sword, with the AI boom it's benefiting, if that reverses it will fall proportionally to those gains.
Rule changes like this create market inefficiencies that can be exploited by retail; if everything plays by constant rules, the vast majority of alpha gets concentrated in the institutions.
I love shaking up the firms. Gives normal people a chance to build wealth.
A stupid/naive question. Why does this affect SpaceX? They have their money(The IPO) Any third party trading value does not change that. Sure there may be individuals, officers of SpaceX who hold these instruments who will be negatively affective, but the company itself?
My best guess, it makes it harder to get loans in the future.
> My best guess, it makes it harder to get loans in the future.
Which is pretty important! It's my understanding that from all that money they raised during their IPO, a good amount of it went right back out the door again to pay off misc loans for the twitter acquisition. They may only have bought themselves 6 more months of time given their purported burn rate (mostly driven by AI investment), so they're going to need more loans really soon, or another major stock offering.
> They may only have bought themselves 6 more months of time given their purported burn rate
If they had only ~6 more months they (+auditor) had to issue a warning.
The 6 is not a hard number, AFAIK, but surely a point where it must be reported.
That was indeed my intent. Pre-IPO, SpaceX already had _some_ cash in hand, and was burning >4b per quarter IIRC; so presumably _some_ runway. That said, they also got the anthropic/openai monthly payments coming in soon (already started maybe?). The next earnings release will be the interesting one IMO.
This is about their bond, not that share price. If you are in the US, it's like having low credit score, everything you want to do financially such as leasing or financing a car, buying a house, etc.. will be more costly (higher interest rate) from the lender.
Except that it's not clear really that lenders will be able to judge on that basis alone. SpaceX is a different kind of unicorn: it's a government contractor run by the richest man in the world who controls a media echo chamber and gets people elected.
That article compares them to Oracle. Who are, as it goes, pretty similar: run by rich people with a media empire who have their teeth deep in government systems.
These bonds could get worse and worse but if US state and federal governments continue to put thumbs on scales it doesn't matter. The US free market isn't uniformly free.
Of course. But you have a bond buyer who can put their thumb on the scale, and has shown willingness to do so. That buyer also tried to interfere in (succeeded in interfering in) the business of law firms that worked for anti-Trump causes, has directly interfered in the renewable energy market to benefit its backers, etc.
What is to say that SpaceX and Oracle won't get these benefits? (Government buying bonds, trashing ratings agencies, leaning on banks to lend etc.)
Nothing obvious, I posit. So what is the value of a bond when a government is increasingly likely to manipulate the market for it?
And that is putting aside the second order of government interference: foreign governments putting their thumbs on the scale with their own investment funds and influenceable buyers, to buy influence over a government that favours these firms.
Nobody doubts all this. What the bond market is saying is that even with all of that, there are plenty of viable scenarios where bond holders aren't paid back.
After all, if you truly believe what you say with conviction, the sensible thing to do would be to buy up as many SpaceX bonds as you can if you think they're so undervalued.
I'm old enough to remember they weren't just buying and selling corporate bonds like most of the bond market. They were a hedge fund that used massive leverage to exploit tiny arbitrage opportunities between correlated securities.
There may be important factors that the bond market isn't aware of, just like most of them didn't know about the problems with mortgage-backed securities in 2008. But anything you and I are aware of, they probably are too.
> But anything you and I are aware of, they probably are too.
This is something that seems like it should be true but the subprime crisis (which didn't at all come out of the blue — anyone with any instinct at all should have understood when they first saw someone get given insane mortgages) argues against.
The subprime crisis was a story of perverse financial incentives causing the industry to play along with a fig-leaf statistical excuse for overrating derivative products, not bond raters botching ratings or missing "common-knowledge" info about specific mortgages.
If you want to suggest the subprime crisis as a mechanism for SpaceX bonds getting mispriced, you need to propose a model for how bond evaluators could be operating under a perverse incentive to under-rate it and somehow reap profits from doing so.
> If you want to suggest the subprime crisis as a mechanism for SpaceX bonds getting mispriced
I don't? I'm just observing that the bond market got something wrong — through an absolutely industry-wide blindness - that was indeed observed, years beforehand, by non-experts. Not my example, even. Just responding.
A lot of mortgages were trash but the securities were a new and complicated financial product with a plausible story. A few people figured out the problems, but Michael Burry for example did it by combing through thousands of pages of prospectuses.
SpaceX bonds are just plain ol' corporate bonds, the same stuff these investors have been analyzing for a very long time.
Max Keiser of Karmabanque was talking about and writing about it in public more than a year before Burry acted, with pretty solid predictions, without any obvious forensic action. He's quite bonkers, but if it was obvious to Keiser it should have been obvious to these highly intelligent people we're discussing.
He's only the "richest" man in the world because of the inflated valuations of his companies. At some point the market looks like a dog chasing its own tail:
Q: Why is this stock so valuable? A: Duh, because Musk is worth a kajillion dollars and everything he touches is gold!
Q: Why is Musk worth a kajillion dollars? A: Because he holds so many shares of extremely valuable companies, silly!
They have a $5bn credit line, and this means the creditor might increase the interest on it.
It's better described as "it increases operational risks to SpaceX". When they face some future difficulty, the odds they can come out of it are lowered. Which is itself a factor that partners consider, including employees, because obviously people prefer to bet their livelihoods on more of a sure thing.
This is a potentially strong indicator of how institutional investors view spacex. Given that Spacex is in a high depreciation/capital intensive business, a high cost of capital and potentially difficult capital terms is problematic.
Spacex will raise more money again, they have no known path to structural profitability.
There is the affect as you say - but more interesting is that it just suggests people who sit around analyzing companies all day think there is a pretty decent chance this thing goes bankrupt.
Companies need to raise money for investment. Even Apple doesn’t have cash for all the things they want to do. Suppose they want to lease or buy a piece of real estate.
Apple has a giant pile of cash and the last time they issued bonds was to do a stock buyback so that might not be the best example, although there's a fairly small number of companies in their unique position.
The losses fall on bondholders now, but it does make it harder for SpaceX to raise money going forward. And if they actually slip into junk territory, some institutional investors will be forced to sell (mandates only allow investment-grade), pushing prices down and yields/spreads up even further.
That can snowball: wider spreads → higher borrowing costs → more stress → wider spreads. The existing bonds' coupons are fixed, so the real bite is on future issuance and refinancing.
Lots of capital-intensive companies (SpaceX is definitely in this category) lean heavily on debt markets to fund ongoing investment and roll over maturing debt, so losing cheap access is a big deal.
Burton Malkiel's "A Random Walk Down Wall Street" was published in 1973, well before significant changes to financial markets that affect its theoretical randomness.
1. 401Ks were introduced in 1978, making mainstream the concept of automatic payroll deductions that funded an investment account. Trillions more dollars moved into pension funds that might otherwise have been spent elsewhere.
2. Bloomberg Terminals went online in 1982, kicking off an ever-growing information assymetry between investment professionals and retail investors.
3. Electronic trading didn't take off until 1992 with Globex, the Chicago Mercantile Exchange's platform
4. High-frequency trading didn't take off until 2005 or so
5. Finally, the Nasdaq changed its rules in 2026 in a way that directly benefited new IPOs like SpaceX, triggering automated purchases from investment funds, propping up its price beyond what its business fundamentals might have justified.
This bit is not about the stock, it‘s about bonds. They made about $70B (?) in the IPO and now issued bonds for about $25B. This debt is rated at junk level now.
2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387% (if the price of a bond goes down, but the coupon stays the same, the yield goes up).
3. This doesn't affect SpaceX directly, but it tells you that if SpaceX were to issue new bonds today, they would have to offer 7.4% coupon on them, not 6.5%. Note that even though that was caused by a 10% drop in the bond value, it's a 13% increase in cost of borrowing!
SpaceX is a cash-flow negative company that depends on debt and selling equity in order to pay the bills. They will have to issue bonds again, and those bonds will be more expensive.
Note that the shortest maturity bonds don't have to be repaid for 5 years, so the impact on cash is not going to manifest for a while...at least 5 years time (assuming they did another bond offering tomorrow). In that sense it's a nothingburger.
The immediate impact it could have is if spacex depends on issuing new, shorter-term debt (lines of credit, etc) whose price could be impacted by the market's perception of their riskiness.
> 2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387%
That's your return if you buy one of those bonds and the bond is paid on schedule. Presumably the market consensus is there's some risk that payment may arrive late or not at all since the yield to maturity has increased since issuance and not as a result of underlying interest rate changes.
I mean, that's what the yield is. The spread between what the bond pays and the Risk-Free Rate (Treasury) tells you what the market thinks the risk of default is.
For a spread of 300 basis points that's still a very low probability, probably under 5%.
Good thing there's a strong corporate governance model at SpaceX where the c-suite is fully accountable to an independent board of directors, who could use their majority voting power to remove that c-suite at will.
Could you imagine the abuse of power that could happen if one person held over 50% of the voting power at such a company?
Are super shares like Zuckerberg's and Musk a new thing? Genuinely curious if they're a recent invention or something that's quietly happened for a while because it seems like a large inversion of the deal of going public, lose some control of the company in exchange for a large amount of cash but these nonvoting/supervoting share splits seem to completely upend what I understood to be part of the deal for access to the stock market.
The New York Times Company operates under a dual-class stock structure where the Ochs-Sulzberger family holds roughly 95% of Class B shares. This family control allows them to elect 70% of the company's Board of Directors.
Copied from google's response to "new york times governance"
Google's AI also says that the NYT has had that structure since 1957.
Ford has something similar from the 1930s. (Dodge did too until it was bought.) Raylon (synthetic textiles) did it in the 1920s and the company behind Jack Daniels did it right after Prohibition.
Google says that the NYSE banned dual-class between 1926 and 1986; I don't know how to reconcile that with Ford.
Ford has them. What it has meant for Ford-- and will probably mean for Facebook-- is that Zuck's heirs will control the company, for better or for worse.
The common justification for this is that for a media company (NYT) you want a person or family to take responsibility for the editorial content, not a pure profit seeker. Facebook has it both ways and typically denies it has editorial control.
IMO, the flaw of markets is that they are short sighted. Sometimes this allows states to outmaneuver them with a longer view. Current exhibit A: China. Historically state intervention has been worse in the long run. But who knows. If we went into a depression a lot of people may think state intervention is a better system, as many admired the USSR during the Great Depression.
Don't worry, he will try to change the law before he passes this mortal coil. This is a person that has open disdain for the law and thinks he should be emperor of humanity.
The USSR's main problem was not that it was socialist or communist, but that it was Russian. Russia is run by people who are adept at coopting revolutionary movements into a corrupt, authoritarian core. When left-wing libertarians say "true Socialism has never been tried", this is (along with China) what they are referring to.
The theoretical arguments against socialism (or, more specifically, centrally planned state production) given by Hayek is that pricing is information and markets are computers on that information, ergo changing the information gives you a bad result. This certainly applied to the kinds of production the Soviet Union loved to engage in, but there's no particular reason why it can't apply to capitalist enterprise as well. I mean, Facebook's headcount or market cap alone is larger than some actual nation-states' population or GDP.
Just like how the USSR was nominally socialist but practically engaged in exactly the same state-controlled mode of production as feudalism, today's corporate entities are nominally capitalist but practically feudalist. The medieval historians in the room would probably balk at me using the word "feudalist" to describe either, so to be clear, what I mean is "an economic system in which the majority of profit goes to landowners / platform owners / the state / etc". In this economic mode, companies can warp markets to their whims in exactly the same way Congress can.
Except, Congress is democratically controlled. Joint-stock corporations are inherently oligarchial in structure: control of the company is assigned based on how many shares you can afford to buy, so the company answers to the amount of money that has capitalized it, and not any other concern[0]. The "innovation" in Facebook's IPO was to go from internal oligarchy to internal autocracy - to install Mark Zuckerberg as God-Emperor of Facebook and largely depose the shareholder class that normally runs publicly-traded entities.
You'd think markets would have priced in this risk, but Facebook IPO'd at the peak of its hype and was able to get away with this. The funny thing about Hayek's distributed market computer is that it does not actually reach perfectly efficient price computation. If it did, you could crack RSA keys by placing a sufficient number of suitably complex options trades. Markets can put a bounty on fixing incorrect pricing information, but they can also just refuse to accept corrected pricing. Everyone rushing into Facebook stock counteracted the few people concerned about the ridiculously autocratic governance structure. And now that it's obvious that such a thing was a problem, it's too late to challenge it, because now Facebook has platform holder money. Zuckerberg can bribe the shareholders to not care about their lack of control.
The history of state intervention is very fraught, but there's one subset of interventions that has a better track record than most: those intended to stymie autocrats of trade. The state cannot correctly set prices better than a market can, but it absolutely can prevent other state-like entities from doing the same thing. Likewise, it would behoove the world's competition law and securities regulators to investigate and regulate the use of dual-class shares to retain control over companies you do not own.
Unfortunately, the current administration is unlikely to do anything about this.
Actually, to make matters worse, Texas is deliberately trying to pour gasoline on the problem by disenfranchising minority shareholders. I believe this was done specifically to give Elon Musk even more control over SpaceX, because Delaware made the mistake of actually entertaining a shareholder lawsuit over Musk's pay packet. If Facebook was an autocracy that bribed its shareholders into compliance, then SpaceX is an autocracy that says, "Fuck you, pay me". If there's one thing that gives me hope, it's that the markets are rightfully rejecting this obvious attempt at offloading Musk's toxic junk onto retail. But this is mainly because Elon failed to generate suitable hype to get the market to buy into his trash, not because markets are actually good at pricing in this specific kind of risk.
[0] In fact, this is part of why you see companies go to great lengths to fight unions, even when negotiating with a union would be cheaper. The shareholder class considers democratic control (one worker, one vote) to be an existential threat.
I would not put empaphis on some sort of ethnological mythos to why the USSR was like it was. It is a weak argument.
> Zuckerberg can bribe the shareholders to not care about their lack of control.
Monarchies had to please the aristocracy, etc.
I would say that "democracy" happens on party level not voter level. Party members are way more into the details than even the most engaged voters. You need to be at the meetings to know who is pushing what. It is all in subtle things. Most people I speak to have the most naive view on how parties work internally. Like it is a person. Goomba fallacy..
And party members more understand power hierarchy. All the drama is about that internally. Commité of whatever doing whatever having a say in whatever and delegate count of whatever county level org. to distict congress org. etc.
I think a big problem is that far too few people are engaged in politics nowadays. Active party members are aware of power structures and how they work.
In American politics at least, there is a phenomenon of political issues that happen to have high popular support but also high political opposition. I call these "antipartisan" issues; and one interesting feature of these antipartisan issues is that they tend to get politically disengaged people to actually show up and lobby their representatives like nothing else.
Think things like right-to-repair, or data centers. A lot of people want right-to-repair, but a lot of politicians think IP law is untouchable and don't want to burn political capital on a battle they know they will lose when they can just sop up donor money to strike down or water down R2R bills. Same with data centers: they're unpopular with the electorate but politicians will do the scummiest tricks in the book to try and get a data center built. Eventually these kinds of issues do get some political wins, but they're swimming uphill both ways.
The problem isn't that democracy does not happen anymore, it's that our democratically elected representatives are unwilling to yield to democracy when the people wish to overrule them. The point of representative democracy is that the representative is supposed to do things in my best interest even if I don't particularly understand all the nuts and bolts. But a lot of representatives just think they got elected king and that my voice doesn't matter the moment I exit the polling place. This is, in effect, a deliberate attempt to disengage voters.
There's an old political cartoon from the post-Brexit era that goes something like, "These smug pilots have lost touch with regular passengers like us. Who thinks I should fly the plane"? The obvious joke being that no, randos are not qualified to fly the plane. But at the same time, the people who bought tickets are the ones who ultimately deciding where to fly. If the pilot said, "I know you bought a ticket for Miami, but I don't like Florida weather, so we're flying to Houston", you'd be right to be pissed off. The fact that you don't know how to fly the plane is not a moral vindication of the pilot's decision to override your travel decisions. Or, in this case, the fact that party leaders can out-organize their members does not mean they should overrule them.
As for the USSR, I had written a whole explainer on the French Revolution and how it neatly mirrored the Russian one before I realized it was distracting from my main point. It's easier to say "Russia is good at resisting change and coopting economic systems".
But if you want a stronger argument: The general pattern is that revolutions that intend to depose the ruling class of a country run the risk of turning on themselves. The infighting proceeds to burn through and kill all the true believers, leaving a hollow shell of people who played the power game well enough to survive. Thermidor[0] comes, and a coalition of surviving old guard and revolutionaries enjoy the spoils of a system whose dead wood just got killed off. And Russia did this twice: first, the Bolsheviks turned Communism into a dictatorship; second, the oligarchs turned "liberal" capitalism into an aristocracy. Inferring anything about the properties of the underlying economic system from how it was coopted by Russia is useless.
[0] The French Revolutionary Calendar month that covers late July through early August. Since nobody uses that calendar anymore, "Thermidor" generally means "the moment when the revolution is coopted".
> our democratically elected representatives are unwilling to yield to democracy when the people wish to overrule them.
Yeah this is a big problem. Essentially I feel there is to few "the child in Emporors new clothes" that can call out obvious BS.
I.e. somewhat emotional members that don't know the unspoken rules.
> But if you want a stronger argument: The general pattern is that revolutions that intend to depose the ruling class of a country run the risk of turning on themselves.
Sure. You could generalize to violent brutes should not run things if you want a nice society and they are let loose in bloody revolutions.
Some media companies had them before the 1980s. New York Times issued dual class in 1969 so that the owning family maintained editorial control.
Berkshire Hathaway is possibly the most famous from the 80s/90s. The class A shares are significantly more expensive and proportionately even more powerful than the class B shares. The lower price version was important back when physical exchanges didn’t support fractional shares as they do today.
Berkshires share classes are different in that A is exactly ten B shares and anyone can convert A to B and hold them. The dual share classes that are bad separate control from ownership.
The BRK A and B are slightly different in that A is worth 1500 B but B only has 1/10000 of a vote so it IS a somewhat lopsided value vs voting share but not as bad as the 0 vote SPCX shares that just got dumped on the market.
They were a thing in the previous 20's and the exchanges banned them in like the 40's (you could still have a dual-class corporate structure, you just wouldn't be listed on eg the NYSE), because investors thought that was some bullshit to have someone control a company while owning only a tiny slice of it.
> Kreuger's financial empire has been described by one biographer as a Ponzi scheme... Another biographer called Kreuger a "genius and swindler", and John Kenneth Galbraith wrote that he was the "Leonardo of larcenists".
Google is also pretty new in the terms I was talking about only slightly older than Facebook. I mean going back to the 80s/90s or earlier, pre current FAANG at least.
Interestingly enough, strong corporate governance and independent directors do not produce better returns. This is a central point in Eric Rees's book Incorruptible.
Is it abuse of power or company success? Wouldn’t shareholders vote out any crazy successful ideas Elon had? Likely bankrupting companies at their early stages?
That's why companies usually don't have a bunch of competing owners from the start. You do your big risky moves early on when you have the novel vision and a big blank check from a VC. Public stockholders aren't going to be as risk tolerant because the ROI is never going to be as high as what the early VC would get. Going public is growing up, you can't do the fun risky stuff you did when you were a young startup with more cash than sense. When you do want to do something fun as a public company, you have to do it carefully because you're dealing with other people's money now.
I just realized that dictatorship is in a way the same thing. Look at Singapore. It is super successful because of "right" dictatorship. Libya was somewhat a good example with their insane water infrastructure and social programs.
No one ever votes out the guy running the ring toss at the carnival either. What if your man only plays rigged games so he can resist anyone looking at the books or having a voice?
I can't comprehend for the life of me that people put their life savings in what Elon Musk is doing. Are people not seeing how he's lying about the future all the time?
He said he aimed to have 5000 Optimus robots out by end of 2025, 50000 by 2026 and 10 times that in 2027.
He promised in 2015 that full autonomous driving would arrive in 2 years and we aren't there yet 11 years later. He even said in 2016 that there would be coast-to-coast autonomous driving in 2017.
He promised manned missions to Mars by 2024-2025 in multiple interviews between 2011 and 2016.
He promised in 2016 that there would be solar roofs expansions by 2017 that didn't pan out, he promised AGI by 2025 in 2024.
Elon Musk has repeatedly lied about outcomes of his ventures, gotten crazy valuations based on those exaggerations and now people are starting to finally wake up that he isn't as good as his ego.
He claimed that he would unearth billions of dollars of government fraud, only to lie about that too. Instead his team cut aid programs and have contributed to an estimated 700,000 deaths so far.
It's crazy to believe that stopping the funding of US backed NGOs directly kills people. Literally just make up bullshit numbers and virtue signal. This is a reason why the US is trillions in debt. We need more than DOGE. We need real cuts to mandatory spending. Otherwise buckle up - they are going to inflate their way out of the debt.
"No Snowflake in an Avalanche Ever Feels Responsible"
You're right - we need to cut more. We'll save more lives if the US government stops the rate at which it is currently spending. The interest on our debt is currently larger that our military budget. The government can sell bonds to cover some of this debt but when it doesn't have money to cover mature bonds it needs to sell more bonds at a higher interest rates. It makes the deficit worse. The fed will respond with printing more money causing inflation. Inflation hurts the middle and lower classes the most. You either make massive cuts, or burden your productive wealth creating classes with taxes. We have a massive SPENDING problem.
Gotta hit on a few things there in no particular order:
- USAID's final budget was $34 billion. That's already very real money, but it came from the discretionary budget - that giant bill of spending where the government decides what to spend money on: schools, roads, housing, and so on. The entire discretionary budget for 2025 was $1.9 trillion, so USAID made up almost 2% of all the US' federal discretionary spending!
- Nothing USAID was doing was irreplaceable. The vacuum their exit has created is being rapidly filled by a wide mix of other interests. So saying they are saving a life when they are just another replaceable entity, even if a rather large one, is misleading. It's kind of like saying Google is why we have web browsers.
- USAID and the CIA worked hand-in-hand. For instance one project was USAID/CIA starting a fake social media site [1] in Cuba specifically with the goal of trying to create an insurrection, which would undoubtedly be very bloody had they succeeded. So in your calculus you need to account for deaths caused by USAID as well.
- Many of their programs seemed geared towards the creation of dependencies rather than working to ensure the self sustainability of various places. I think this likely ties into the above issue. Teach a man to fish and you feed him for life, give a man a fish a day and you now control that man because he's dependent upon you. Sociopathic intelligence agencies blending with philanthropy is a rather horrific combination.
> so USAID made up almost 2% of all the US' federal discretionary spending!
So, tiny; a fraction of what we spend on much less useful things like the Iran war or huge gifts to ICE.
30 years of that level of USAID funding would only get us to a single one of those trillions in debt.
> The vacuum their exit has created is being rapidly filled by a wide mix of other interests.
Yeah, we don't really want China vacuuming up all of Africa. It was already looking like a growing problem before the USAID cuts (https://www.congress.gov/crs-product/IF11304).
> So in your calculus you need to account for deaths caused by USAID as well.
I mean, your one example cited didn't work and resulted in zero deaths. If we get to count that sort of thing, we'd have to start accounting for the soft power benefits of USAID (and those the CIA gets from the trade), too. Goodwill, intel, not having a bunch of polio infections come into the country via air, etc.
> Teach a man to fish and you feed him for life, give a man a fish a day and you now control that man because he's dependent upon you.
How does "deplete their fishing grounds (and other resources) for hundreds of years" figure into the analogy?
Yes the Iran war is also a waste of money. Money being wasted in one place is hardly an argument to do it in another place. And the whole point of discretionary spending is that it's money that could have been spent on society instead of e.g. setting up fake social media sites to try to cause chaos in another country. And because of spending I think we often lose track of what it means. $34 billion is $100 from every man, woman, and child in the US. That's a lot of money, wasted every single year. And yeah after all is said and done Iran will cost hundreds more. Add Ukraine and we're up to the thousands. Add Iraq and we're getting into the tens of thousands soon enough. Imagine if all of this money was spent domestically.
The reason China is succeeding in Africa largely gets back to my critiques of USAID. China's pharma companies are establishing production factories within Africa for the local production of trade-level quantities of pharmaceuticals meaning they'll be able to provide not only for their own needs, but have enough production to turn drugs into exports. In the future Africa could even viably start to become a destination for medical tourism. The US could have done this and much more with the vast sums of money we blew on USAID, but we didn't. We preferred exploitable dependency creation paired alongside some corporate welfare for US big pharma. It's yet another example of the focus on short-term benefits while ignoring long-term costs. It's not like African nations don't realize what we're doing, while we then go and try to lecture them about the Chinese debt trap.
If US backed NGOs were distributing life saving medications (e.g. for HIV-AIDS via PEPFAR, to give only one example) and then that distribution was withdrawn, causing recipients to die because they could no longer access medication, what other conclusion should we draw?
Maybe we should have elected Hillary Clinton then?
(This is a reference to Bill Clinton's extremely successful "Reinventing Government" initiative which actually balanced the federal budget until the next republican came along...)
> This is a reason why the US is trillions in debt.
Trump's OBBBA will be another reason, expected to add several trillion in the next few years. So yeah, real cuts are probably needed, but the DOGE people aren't achieving that in net.
To clarify, Elon himself opposed OBBBA because of the deficit. My point is that anyone cheering on DOGE for cuts but staying silent on the administration's generally bad record on spending, has an ideological bias that is not purely about fiscal responsibility.
Name 3 accomplishments he made and I'll show you world class work done elsewhere by other companies. The only thing he did which was notable was Starlink and I'll gladly grant you that. China is about to eat Starlink's lunch with their own tech.
Again I think people overestimate Musk's contributions to the world.
2. Made the modern EV relatively commonplace; no other manufacturer was taking it seriously until Tesla succeeded, and took many years to catch up, although they have
3. Re-usable rockets / higher launch cadence leading to significantly cheaper costs to put things in space. No major competition yet.
Falcon rockets, starlink, Tesla. They all pushed the envelope in their field. Are the stocks overpriced? Yes. Did they do impressive technical work? Also yes. They might get surpassed by competitors, but that is to be expected for all companies. But they clearly did something special there. And I deff am no Musk fanboy, but you have to give him the credit for establishing those systems.
Tesla may not have pioneered fundamental technology, but it put together a combination of price and utility that nobody matched at the time. Find me anything in 2018 like a Model 3 that wasn't a compliance car.
Profitably reusable rockets were a major accomplishment. People like to argue against this. Every argument I've seen is either saying it doesn't actually save money or it wasn't new, neither of which is correct. It's very hard to argue with the numbers here; SpaceX is now launching more into orbit than every other launch provider combined.
I think the main reason people downplay these things is precisely because his own claims are so exaggerated. Doing 165 orbital launches in a year just doesn't sound impressive when he promised we'd be sending people to Mars years ago.
"Every company you mentioned has made more progress in those spaces than anyone else"
Lies. Waymo beats Tesla in FSD. Optimus is nothing while China has full fucking martial arts robots. It's 2026 where's that 2025 manned Mars mission? Where's that 2025 AGI promise (currently running itself in circles.) His solar roof tile idea was a bunk plan and any regular roofer could've told you that.
China made a fucking electric car that can KITT jump. The only way Teslas get off the ground is when they hit curbs at batshit insane speeds.
Elon and his companies, outside of SpaceX, are generally frauds. Down to PayPal, which thinks it has a right to YOUR MONEY if you even so much as sneeze wrong (theft by contract.)
Yeah, but the topic of discussion is presumably FSD that actually works ;-)
And before people jump in to say "have you tried it, it works" yes I have a Tesla and FSD has tried to kill me multiple times already. Including jumping a damn red light after slowing down to a stop so I was absolutely unprepared to react.
Credit where it's due, it's a pretty nice car and even the self-driving technology is decent, despite being hobbled by Elon's nonsensical allergy to LIDAR or other sensors. But it is being marketed as "FSD" and it is very much not FSD, and I can't believe more is not being done to prevent the needless deaths that are inevitable because of this.
That simply isn't true. Progress toward a goal isn't the same as leading the field.
Autonomous driving is the clearest counterexample: by March 2026 Waymo had logged over 220 million rider-only miles with nobody in the driver's seat, and was doing 400,000+ rides per week across six US metros. Tesla's consumer product is still officially "Full Self-Driving (Supervised)," and Tesla itself says it does not make the car autonomous. Mercedes has Level 3 certification. Tesla has none.
Optimus missed the stated 5,000 robots in 2025. As of July 2026, Tesla still isn't selling it and is only preparing manufacturing capacity. Meanwhile Agility's Digit is in commercial warehouse deployment today. Solar Roof is worse: Musk targeted 1,000 installations per week, and Wood Mackenzie estimated Tesla averaged about 21 in 2022. Tesla's disputed the number but offered no replacement count.
SpaceX is the real exception. It genuinely leads, and the engineering is remarkable. But it's still a decade overdue on "crewed Mars by 2024." That's the point: on the one venture where "more progress than anyone else" is actually true, the promise is still failing by over a decade.
The criticism isn't that nothing comes to pass. It's that concrete near term promises repeatedly fail and get replaced by bigger ones. When a valuation depends on being uniquely far ahead, competitors catching up erases that premium fast.
Salesforce often does product announcements to determine how the market might respond before they ever build anything. The very thing they're selling may not exist and might not even be possible as they describe it.
I think it's a way some businesses just do business and the market has not issued a correction to that. Maybe it should?
Yeah yeah yeah he lies all the time but Tesla cars exist and are awesome and the company is worth more than all other car companies combined going on how many years now? Do you really believe you have some unique insight that the rest of the market has not discounted? Spacex was probably just over valued and this sell off has nothing to do with “people starting to finally wake up that he isn’t as good as his ego”. I suspect the best thing you could for yourself, at least as far as the stock market goes, is humbly acknowledge you know nothing and just buy index funds.
His success is like the best case study in the world of how our current economic system is solely for the benefit of a privileged few.
He is obviously a liar, a conman and morally suspect. But he has mastered the art of lying in a way that people want to believe. So much so that he can separate fools from their money to the tune of billions.
When you can do that, every economic institution on the planet wants a piece. It's a firehouse of ill gotten cash, and those supporting his staggering rise to power are there to grab a bit of filthy lucre for themselves. It's a wealth transfer than comes along maybe only a few times in a generation.
Everyone knows he's a complete fraud even as they enable him to pull off all these stunts.
Google pushed this AMP thing to make pages load faster but via them as a powergrab so using amp to archive articles is using the system against itself if you squint real hard and oversimplify the various actors in the situation.
Heading for junk? It's absolutely junk and trash. Every retail investor that I know that bought SPCX, did so to make a quick buck. It's even worse than crypto, at least some people believe crypto has value and will take over or replace fiat currency. No one that I know who bought in SPCX did so believes the space data center story or going to mars. There's certainly value in launching things into space, but none believed the valuation with the profit, but the figured Elon has the midas touch and they could cash out before the music stopped.
Which is all sorts of backwards. Debt has liquidation preference over equity. And equity market say spacex has trillion+ of supposed equity buffer before it cuts into debt value
This is incorrect. SpaceX has a trillion in Market Capitalization, not a trillion in Equity. These two concepts are no the same. The equity value is the theoretical intrinsic "worth" of a company, and has a very simple definition: Equity = Assets - Liabilities.
Market capitalization takes into account the future value of the business, while equity (an accounting concept) only looks at present day cash & liabilities.
When a company gets liquidated, the future growth/value of the business is, pretty obviously, zero, so the "market cap" is irrelevant. What matters is what is left over once all debts are liquidated.
SpaceX's equity at the time of their IPO was $34 Billion (it's in the S1!). You can also see in their S1 that their cash decreases by about $8B a year, so unless things change they should be underwater in about 4 years.
By „equity buffer“ I don’t mean equity in the balance sheet sense you seem think.
In this case the gap between the value bond market and equity markets assign to spacex is equal to market cap ie a trillion.
If equity markets are right there is a trillion of spare equity buffer ( ie equity in the enterprise value sense not accounting equity) before endangering bonds and the bond people are idiots for marking their bonds down. If bond market is right equity is worthless and equity people are silly to push it to a trillion market cap.
On the other hand the bond markets are pretty reliable too. It's all old school professionals in there not /r/wallstreetbets memekings pumping up their fav stonk
Quite honestly IPOs and the stock market in general is a Ponzi scheme. This is something I would never have said before. I am not a skeptic. I invested in the markets for years and made money on Amazon, Google, twilio, and so many others. But I also lost a lot of money buying near or after the IPO. The game is rigged. Those who put money in post IPO in the 12 months after are left holding the bag for years. It takes 10+ years to recover that. The people who invested pre IPO, the VCs, the bankers, etc. they are getting a good deal. In the case of VCs they are taking early risk. Not at the late stage. But earlier. In many cases it's been a long hold. Again 10+ years. But anyone coming in at the IPO you are buying at a peak when someone decided that's the perfect time to hype it. We're all catching a falling knife. Doesn't matter if the business fundamentals are sound. They become disconnected from realities of the market when it all gets tulip crazy.
These things have a way of working themselves out. But look at almost all IPOs and the next 12 months the stock is down 50+% so I'd rather wait. And honestly when I buy, it's to hold 10+ years, not make a quick buck and it's because I believe in the value. You can believe in SpaceX but also still believe the market and the dynamics of IPOs is almost criminal for retail investors.
And his data shows that IPOs for the most part perform about as well as their respective market. That is large multi-billion dollar IPOs perform about as well as the broad market, and smaller IPOs (which constitute the vast majority of IPOs) perform about as well as other small-cap companies.
In other words, investing in IPOs doesn't give much of an advantage or disadvantage compared to investing in other similarly sized companies.
What's true is that most stocks, including IPOs, don't do well in the long run. The half-life of a publicly traded company is something like 10 years.
Also, the OP just does not understand how the market works anyway. Surely if it was obvious that investing in fresh IPOs is a bad move, all of the big boys (banks, hedge funds etc) would short them to the point of equalising anyway. Maybe not to the absolute efficient point, but still, why do people think they can see such a huge obvious trend, and also assume that other people cannot see it?
Banks generally cannot make these kind of directional bets, and the Gamestop saga has shown that it's very risky for short interest to get too high against retail excitement. So if an IPO is heavily overvalued, the level of pressure required to bring it down immediately may not materialize for structural reasons. I made a modest amount of money from SPCX falling, and I'm sure some hedge funds made much more than me, but I and I expect they would have stayed far away if short interest had been higher.
>Doesn't matter if the business fundamentals are sound.
The business fundamentals are rarely sound for modern IPOs, especially anything Elon adjacent. His companies are just as bad as crypto token sales in terms of their hype. Heck, some of the stock price appreciation of Tesla _was_ driven by their ownership of crypto for a year or two.
That is funny comparison looking how baseball card markets have gone recently. Which is extreme increases in prices for little logical reasons. Or has baseball massively increased in popularity? (Honest question)
I would guess it’s the same force driving absurd stock valuations — the money supply doubled around COVID and all the new money has to pool up somewhere. Some of it ends up in stocks and real estate, but once those become obviously overvalued it starts pooling up in more fringe investments like trading cards. It’s the same dynamic that created exotic mortgage backed securities that led to the 2008 financial crisis. There’s literally trillions of dollars of capital that’s slowly losing value from inflation and the owners of that capital are desperate to find investments that will preserve or increase their wealth.
And on lower end for many it feels that they are out of options. So flipping or speculating on anything they can get their hands on is only way to make it in life now. Pokemon cards is biggest example of this. People camping and literally fighting over in essence scraps for very small amount of product to then just resell it to someone else. Who probably speculate on it themselves or need for it to run some type of other scheme like gambling...
It really is weird market from outside. Like millions of cards waiting to be encapsulated in plastic with tiny label on them naming a number. Depending on number the value can go up multiple times. Each of these paid at least something like 20 dollars...
It’s been true for over twenty years that the majority of IPOs drop below their IPO price and stay there. Maybe your brokerage has some shares before IPO day that they’ll let you buy, but you’re still taking a big risk. Buy shares on the open market? Yeah, you’re the sucker they were looking for.
There's been a massive change to public markets in the last decade and the retail path to making money seems to have closed. I made a some money on IPOs using a laughably simple heuristic:
"Is the company market cap low? Do they have a decent product? Is it plausible they'll 10x? Yes -> Buy some amount I can afford loosing"
For example, Tesla IPO'd at $5B cap, it was perfectly plausible to believe they'd be worth $50B some day. Shopify IPO'd at $1.3B, Square at $3B, 10x was perfectly believable. Uber IPO'd at $75B, I did not believe they'd be worth $750B any time soon, or ever. Do I believe SpaceX will be worth 20T in like 10 years? Lol. Fmao even.
Today's IPOs at $1T+ means that private money figured this out and cut the retail public out, IPOs seems to be a really terrible deal these days.
I don't think so. It's strident and it may be eliding some details, but the idea is IPO shares are available to institutional investors first and that adds a tax for retail investors that is probably not worth paying. A suspicious mind might go so far as thinking the institutional investors don't necessarily care about the underlying metrics at IPO up to a certain number of shares: they know that whatever X opens at, they can get 1.25X for the shares immediately after.
The next time SpaceX wants to sell some bonds they will take a bath. Even if this isn't immediately screwing Elon or SpaceX, it indicates a much higher interest rate next time they issue bonds
No, but the fact that they're the worst-performing BBB bonds, the company is burning cash, and the equity being down 38% since its peak after 1 month of trading is indicative of the market's…suspicions.
We'll see what ratings agencies think of the health of the company.
Can we have a separate anti-Trump, Elon, etc. section on hacker news? So I can separate this noise from the real news. I'm no pro Elon, but this stock went from 150 to 200, and there was no news on HN. Now it dipped from 150 to 136 and suddenly it's on HN front page. The headline should be: "Traders trading".
Stocks and bonds are different things, and the bond issue is separate from the IPO. Both are ways for companies to raise money, SpaceX did both. This thread's nominally about the bond, but for some reason everyone's talking about the stock.
Musk biggest mistake is that he wanted to start another bubble while the last bubble didn't pop yet. This is against the handbook of a Wall Street thief, bad, bad Elon.
SpaceX-the-space-launch-business is doing amazing things, which is part of what makes it so sad that the financials and buzz is all for SpaceX-the-enterprise-AI-business.
Their S-1 projects $28 trillion TAM, with 93% of that attributed to AI, ~6% to connectivity via Starlink, and only ~1% for space launch capability.
Of their $20 billion CapEx spent in 2025, 60% was spent towards AI data-centers, 20% was spent towards Starlink satellites, and ~20% was spent towards actually building Starship and Falcon 9. That's gone up to nearly 80% towards AI in Q1 2026.
Of course, "AI" makes up only ~20% of their current revenues.
So... this company is priced as an AI startup but it's actually a satellite internet and space launch business.... or is it? Shame to see the coolest thing that Elon did be eaten by the AI monster.
It depends on if you mean the space part or the nascent AI mega company SpaceX is pretending to be. The ipo claimed the space launches would only be a small part of their future profits and business and that they'd reach a 7 trillion dollar TAM or etc - this isn't a good sign for that promise.
The drop in price is a bad metric to judge this by since bond prices depend on the yield of other items.
Here's the key point in the article: A month ago, the bond was priced at +175bps yield above treasuries with similar maturity, now it's priced at +231bps.
yeah, as the article said bond prices have fallen slightly over the time period but this is much more bond buyers seeing increased risk SpaceX isn't going to have the cashflow or ease of further equity raises to pay them back in the long run. (With it being bonds the upside of "but what if SpaceX actually does become bigger than the present US economy" is capped too)
I don't see a future in which those bondholders don't get paid back.
The company has plenty of revenue, and if needed can just turn off the r&d tap and become a boring company. Terrible for the shareholders obviously, but the bond holders will be fine.
This assumes that SpaceX's decision maker decides to prioritise cuts to repay bondholders over R&D to see if they can innovate their way to bigger profits, which doesn't seem a sure bet (tbh I'd put SpaceX under its current management very low on the list of companies likely to do this)
I mean the bond yield is 6.65% over US Treasury returns of 4.75% so it's not like everyone's running in fear of their imminent collapse either. But they're less confident than they were when Elon company valuations looked immune to gravity.
Yep spacex can afford to have a declining value of equity… its talent who are mostly paid with stock will leave for its competitors - increasing the probability of bankruptcy. Putting the company in a tail spin heading for default.
So how are the bond holders gonna get paid in the event that happens? Oh in bankruptcy court? Lmao.
Raising equity is not a loophole either - ebit and ebitda drive measures of default risk.
Most of you on here should never ever talk about finance. It’s like you learned how to discount a cash flow and have it all figured out lololol
It's wild to watch HN root for Tesla, spacex, starlink, etc to fail just because they don't like Musk. If HN gets their way, we'll regress back to the stone age with all their "anti" views on tech these days (even anti datacenters). I guess it's good that the influence of the HN crowd doesn't flow into China/Asia where they are aggressively mimicking Musks vision. At least Asia will have a future.
I'm very pro tech. Because I'm pro tech, I honestly wish there were more ethical companies in the space. It can be hard to find US tech companies to cheer for. My main business-related challenge with Elon is his public predictions are so wildly ungrounded. Skepticism is absolutely warranted.
Two things:
- You can cheer for his companies and technologies but against these financial maneuverings because they risk genuine harm & setback to the industry
- I stopped asking for people to put politics aside in support of these companies when I realized Elon couldn't put politics aside to support these companies.
It certainly is a contrast from the Tesla years. But overall I think the current consensus is:
- we don’t believe in startups (low quality scams)
- we don’t believe in technology. (It’s surveillance and distraction).
- we don’t believe in markets (regulate the RAM)
- we don’t believe in agency (unruly rule breakers)
And honestly we’ve seen a lot of events that strengthen those positions. Some of it is age as well. I’m just interested to see what comes next with so little faith in the industry.
I don’t see very many articles interested in new startups. It’s usually about them failing. I often use market explanations in my comments and these are not received favorably.
Now, I'm a computer guy, love tech and have nothing against datacenters. But the recent anti-datacenter sentiment is not some luddite reaction. Data-centers cause serious social changes in property prices, electricity costs, water waste etc. Sure, there is a need for more datacenters and more compute, but lets not diminish the very real worries by the people or communities affected.
And contrary to what many of these hyper-scalers and the senators/politicians they lobby want to make you believe, datacenters do not bring in enough jobs to make it worth it for many of these communities.
Once a datacenter is built, minimum staff is required. And this is now very obvious since many of these companies are now also preaching for datacenters in space.
I think the biggest change in public sentiment in datacenters is a reaction to the extreme scale they're being deployed at these days. They're really vastly unlike datacenters of the past. The power densities are so much higher, they're so much larger, and they're getting vastly more environmental waivers and tax subsidies than ever before.
A quiet, average-sized warehouse-like building in an industrial area with a big power substation next to it often didn't bother a lot of people. A giant monster of a building being built in what was previously people's backyards with howling on-site power generation that got installed without any kind of air quality reviews because they're allegedly "temporary" and starts sucking the groudwater dry is a whole different story.
I don't understand why people cast skepticism or not-devotion as "hatred." There's a whole spectrum for opinions to fall on; I don't care for sports but that doesn't mean I hate baseball.
I don't just dislike Elon Musk like he's some jerk I don't agree with. This isn't a baseball game where he's the other team's star pitcher and we should put aside our differences when the game is over.
Elon actively interfered with US elections, and has done untold damage through his DOGE stunt. He uses his vast wealth in ways that have done real damage to the US, the US economy and in support of people who are dismantling American rights.
The boogeyman of "China/Asia" won't make me "support" a man who uses his money to make America worse. I do not support his actions and I do no wish to fund them regardless of the technology they create.
This is the explanation for most anti-US industrial power comments on here. The rest are chinese bots or people who have overdosed on biased news (which is not a phenomenon exclusive to one side or another).
I don't actually hate Musk. Although he has done bad, I think he has done far more good than bad. He has, for one, directly improved my quality of life on the transportation front.
The guy's vision is a world where children don't get the medicine they need and fascism rules (he gave a nazi salute, unironically). DOGE has killed people. Has killed children.
Guy was doing Nazi salutes at Trump's inauguration. If he wanted support from normal people, he should have remained within normal political norms, not do Nazi salutes. I don't think it is normal to expect sympathy after that, people will be revolted and would want him to fail. They should not be judged for this opinion, it's pretty vanilla. Normal people still carry conscience, an innate justice system. Otherwise we won't even have justice system if we start giving people an out based on fame, talent etc.
If anything people are severly downplaying him being an unstable alt-nazi edgelord or whatever he self identifies as. As his fan club gets smaller it gets more fanatic, too. A lot of Twitter AI on Mars fan fic.
The fact that people like you are still pushing the subjective salute thing as incontrovertible fact makes it hard to find any common ground. Serious people in the media, even the ones heavily biased against Elon, don’t harp on it the way online people do.
Subjective? This is gas lighting. He put on his angry face, lips together and all. It was no subjective or ironic John Cleese nazi salute. It was a nazi salute. Then he went on to starve kids on medecine to death. I mean. Like. Really? Is this still in dispute?
i do not want to find common ground with people who do nazi salutes or those who excuse them. i want consequences these people because they wish harm upon me or excuse those who wish harm upon me. there is no "center" with this subject; there never has been, because nazi behavior forces the binary.
It's not like the salute is a singular event. Just look at him on X. Most of what he talks about today is his support for racist political movements (like Reform UK and AfD). That's when he's not tweaking grok to insert "white genocide" into responses for recipe requests.
There's a pattern here. The man's brain was utterly broken by the social media platform he bought, and he's an overt fascist at this point.
The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100. The index fast-tracked SpaceX stock for inclusion 15 days after the IPO, instead of the normal three-month seasoning period. They also changed its 10% minimum float rule to a 3x weighting boost for low-float stockss. So many people will unwillingly and prematurely invest into SpaceX, before it has any chance to discover its real price. IE: The floating, 5% at launch, could attain 30% end august, if Nasdaq didn't change their rules it would have included SpaceX after this..
https://finance.yahoo.com/markets/stocks/articles/nasdaq-che...
So, the inclusion rules are basically "these are the hard limits that specify which stocks are eligible, unless someone really big and lucrative comes along, in which case it's whatever and we'll just adjust the rules to make them eligible"?
"Lucrative" is not really the word you are looking for.
What do you mean? I was under the impression that including SPCX has been massively beneficial for Nasdaq. It creates lots of trading volume and sends a quiet signal to other massive tech companies looking to IPO to come to them, rules be damned. So they're definitely extremely lucrative for Nasdaq.
I the short term. Who knows what the damage to the brand will cost them.
It created basically the volume of the index funds buying the required stock, and it's not yet clear what kind of signal this has sent to people.
They got mostly the money SPCX paid them. It was a large payment but not out of the ordinary. And all that they risked was their index relevancy.
Having the stock traded on their board is good for them. They also maintain an index. Elon made inclusion in the index a prerequisite for trading the stock on the board.
> Elon made inclusion in the index a prerequisite for trading the stock on the board
Source?
He may have claimed this. But he has no power to. Once a stock is publicly listed, every exchange can trade it. Where Musk had influence was on to whom he paid his listing fee.
"SpaceX stock is expected to be listed on the Nasdaq. To secure such a high-profile listing, While listing requirements remain unchanged, Nasdaq recently amended its index-inclusion rules to accommodate companies like SpaceX when they go public."
https://www.forbes.com/sites/garthfriesen/2026/04/25/spacex-...
Notice a listing on the board and an inclusion in an index are two different things. Nastaq changed the index to secure the listing of SpaceX on their board.
> a listing on the board and an inclusion in an index are two different things
Nobody contested this. You said inclusion was “a prerequisite for trading the stock on the board.” That is incorrect.
In this case I think it is, because they're talking about whether a particular deal with be lucrative for one particular company named Nasdaq Incorporated.
Much like how Wile E. Coyote is a "safe" customer for Acme Inc, even though he purchases dangerous explosives and deploys them in reckless ways.
"Honest"
I think the rules are there are hard limits unless a multi-trillion dollar company IPOs with a significant absolute float, in which case tracking the "market" obviously includes said company.
A stock index is a business model. The concept of "passive" investing is alluring because you don't have to do any work. However, choosing a proprietor of a index that actually looks out for your well-being is, arguable, always relevant.
We are now at the point where companies can game the system of indexing. Investors need to wake up to this fact and realize this is likely a paradigm shift.
If the underwriters of a fund based on an index are involved in manipulating the content of the index, they are effectively the managers of a managed fund pretending to be an index fund.
Which multi trillion dollar company are we talking about here?
Yeah, this is correct. There are so many large multi-trillion dollar companies coming to IPO, which if your are passive index holder and you are trying to track the market it is correct for these companies to be included. And besides SPY has chosen not to fast track where QQQ has. It is a free market, and folks are free to NOT buy QQQ. So I'm not sure why this is a point of debate.
"People" in this instance aren't always informed buyers. Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing.
The normal seasoning period is there for a reason. There is a massive downside to premature inclusion of a stock that is initially overvalued and then settles to a reasonable/sustainable value.
> There is a massive downside to premature inclusion of a stock that is initially overvalued
Define “massive”. SpaceX is only 1.2% of QQQ.
Can I please have 1.2% of your total net worth
Sure, just give me SpaceX shares equivalent to 1.2%.
uh oh I think you lost the thread of metaphor there.
how embarrassing! Look, your joke was "If it's only 1.2%, hey, that's not that much, just give it to me for free!" We don't have to believe SPCX is worth whatever it's trading at today, but that 1.2% isn't simply being given away. Under capitalism, money is exchanged for goods and services.
FWIW, I read their joke differently: you were the one who said "only 1.2%", and they turned that on you by asking for you to part ways with "only 1.2%" of your net worth.
They are not questioning money exchange, they are questioning the "only" part, claiming this is significant.
Yes
> Sometimes they're buying an index fund because they don't have the time to research individual stocks and sometimes it's their pension investing
Then they should buy a broad-market fund. The kinds in which new issues are a tiny fraction or, if it’s following something like the S&P 500, not included at all. Following the Nasdaq 100 and then complaining it has too many risky tech plays is a bit silly.
Then they should buy a broad-market fund.
Like a Russell 1000 fund? Oh wait...
> Like a Russell 1000 fund?
Yes. A fund that doesn’t choose what is and isn’t a good investment. Total market means total market.
If you don’t like that, the S&P 500 is bigger than those for a reason.
The reason you know the people complaining the most about this aren’t serious is that they don’t lead with crsp and vti.
They did change their rules, they did it fairly specifically for spacex and it did drive inclusion in a major index fund (perhaps the biggest one).
Now me personally, as a holder of vti I am good with the change and my included exposure to spacex. Further I think mostly complaining about the inclusion/exclusion of a single name in an index _defeats the point_.
But for those decrying the shenanigans crsp and vti are the example to go with.
> crsp
To the extent there is potential bullshit, it is here.
Except Russell did change their rules in 2026. Yes, in theory to more closely represent the state of the market.
My (non-motivated, don't have NASDAQ or SpaceX) take is that isn't this how these funds are supposed to behave? You buy NASDAQ if you can take risk, S&P otherwise. If you check out what companies are in the NASDAQ, it's not like it's not majority tech, of which a lot of them are AI-based, so adding SpaceX to that mix is reasonable - and if they waited a year or so for price discovery, and had SpaceX been a popular choice (still can turn out like that), then investors would've missed out on those gains.
Yes, and there are tiers of risk. What people are complaining about is that with the recent behavior, NASDAQ has arguably increased the level of risk involved. If it's as simple as "buy NASDAQ if you can take risk" then that would imply it should pull in meme stocks when the WSB crowd are doing their diamond hand thing.
Well this is not how Nastaq's index worked until Elon twisted their arm. I would assume Nastaq had good reasons for the old rules.
> the inclusion rules are basically "these are the hard limits
The inclusion rules for indices change every couple of years. That’s why there is an index provider versus a mathematical formula. (There are also formulaic indices. They aren’t very popular.)
My comment never says the rules are set in stone permanently - only that every stock needs to abide by the current set, unless there's enough money in play in which case the rules are edited then and there to specifically accommodate that company.
> unless there's enough money in play in which case the rules are edited then and there to specifically accommodate that company
The Nasdaq 100 rule change covers multiple companies.
Like, there is so much wrong with the SpaceX IPO. It’s kind of weird, as someone who’s spent time in both the equity capital markets and private markets, to see this being the thing finance Twitter has fixated on.
> The Nasdaq 100 rule change covers multiple companies.
I don't think that's relevant to the point you're responding to there. A rule change can apply to many parties while the content and timing nonetheless target a single player. The two things aren't at odds.
> A rule change can apply to many parties while the content and timing nonetheless target a single player. The two things aren't at odds
Fair enough. From what I understand, the decisions were timed to anticipate the cohort. It Anthropic made it out first, they’d have gotten the shade.
Not quite, you can get them changed if you’re willing to announce to everyone that your stock is wildly overvalued and is going to crash.
Less of an issue in fascistic dictatorships—time will tell
Turns out all the rules of our society are "hard limits unless someone with a lot of money disagrees at which point they become negotiable".
lol just be glad it's something civil money, historically it was much worse.
Also, what's up with this influx of very sheltered reddit-like comments? It's not even September yet.
complaining about reddit is the most redditor thing you can do on HN, congratulations.
it's just a generic dismissal, a way of putting someone in a box without actually engaging with anything they say. which lumps it in with 90% of all internet arguments really. "Your argument must be invalid because you're the type of person whose arguments are invalid."
my account is 11 months old, which invalidates your theory that i'm part of some recent influx. also is septemberism still a thing? i thought that went away when most people had home internet rather than getting it through a university.
Um, 11 months old is pretty recent..
"Everyone has a price." - Pablo Escobar
reality distortion field in full effect.
Isn’t that how capitalism works in general?
Edit: thanks for the downvotes. Defenders of capitalism unite!!! lol. Free market right?
You're forgetting that whenever the incentives lead to bad places it isn't True Capitalism (tm).
True capitalism has never been tried. This right now is crony capitalism.
It had been though. Just search for Galt's Gulch, Chile 2012 :)
We're living under true capitalism right now. Look at the incentives. I don't see how we could have progressed to anything besides this, this is the natural outcome of the system in place.
American libertarians often imagine some kind of wonderland capitalism where everyone agrees to play by the rules that aren't enforced by anyone. To my knowledge this has never existed as a long-term equilibrium and it can't exist. I've yet to meet anyone who can tell me how their imaginary ideas go up against claims like
1. Encouraging infinite growth with no controls or limits will always lead to monopolism and is a one-way ratchet
2. Power vacuums are always filled (no public government leads to private companies stepping in and taking the dictatorial role, this time without any of the democracy)
3. Power always corrupts
The answer is that most libertarians see both 1.) and 2.) as a good thing they want to achieve. They imagine themselves benefiting as a high profile worker of that monopoly or rule setting company.
Also, note how super ok and welcomming libertarians are toward racists or even fashists. They do dislike pro-democratic center groups, they hate democratic left.
The United States is far more socialist than capitalist and it’s not close. In the early 1900s the federal tax rate was 0. Now we spend 125% of what we bring in in taxes. That is definitely not capitalism. That’s not a free market, that is the government spending far beyond what’s even feasible
What does the relative level of government spending versus taxation have to do with whether businesses will self-regulate? You're just spewing non sequiturs here.
They said we live under true capitalism right now we I’m clearly showing we do not. Not to mentions the US is far from “self regulating” there are millions of words of regulation in the US.
No you didn't, all you did was complain about taxes and say that there exist regulations by counting the number words in them. Not all words are equal, not does it mean that they're effectively enforced. Looking at various monopolies like Ticketmaster or the UnitedHealth group and how they've been allowed to flourish it doesn't seem like America has anywhere near enough regulations to be considered true capitalism. If the market economy isn't a free market because a monopolist is exerting outsize control on the market, it's not a free market. That doesn't make it socialism though, that makes it crony-capitalism instead.
First of all I didn't complain. I don't care what happens personally. Secondly it's just a fact that the US has a tremendous amount of regulations compared to the past. Just look at how few regulations existed in the 70s vs today. Apparently you don't like word counts, but the reality is there are a enormous amount today that didn't exist in the past.
That's not a free market economy.
"it doesn't seem like America has anywhere near enough regulations to be considered true capitalism."
You can't regulate your way into capitalism because capitalism by definition means markets free from government interference. The more it interferes the less capitalism you have.
United Healthcare is a great example. The governments enforce these companies being a monopoly be restricting which companies can operate in which states, having an enormous amount of red tape and regulation, documentation laws, etc.
If it was truly "capitalism" the government wouldn't' get involved at all. Part of the reason that doctors are so expensive to see is because there is a board that the US Government certifies to allow them to control which hospitals are allowed to be teaching hospitals for doctors.
If it was true capitalism there would be no regulation there and any college could graduate doctors. This artificially keeps the supply lower than it would be. These are facts.
> socialist than capitalist [...] federal tax rate
My dude, you're acting like Federal government is the only government that matters. It's a common mistake, but in this context it's fatal to your argument.
It's fatal because federal spending is the least relevant kind, since so much of it (and so much of its growth) is for the military, and military spending indicates very little about whether a country is socialist or capitalist on the inside.
In contrast, state/local taxes and programs are--even today--still a majority of the spending that actually tells us anything useful for a socialist/capitalist spectrum, the stuff that involves schools, libraries, policing, homelessness, property rights, etc.
"since so much of it (and so much of its growth) is for the military"
So clearly you are pretty uninformed as the military spending is only 13% of the federal budget. Social Security (AKA a socialist program, IDK if anyone can deny that) is 22%, Medicare (another socialist program is 14.2%). Interest on our prior spending (a lot of it from SS and Medicare, etc, some military too. is 14%
So, if you add social programs you has (SS = 22.5%, Medicare = 14.2%, not counting education) that is 36% of the budget or nearly 3x miltitary spending.
A capitalist economy would NOT have those things are as they are not free market at all, they are the government forcing your to pay into them.
> you are pretty uninformed [...] SS and Medicare
This is another aspect where your thesis is not-fully-baked. If you want people to receive what you meant, you have to stop writing it wrong.
1. You spoke about "the federal tax rate" and claimed it was "0" in 1900.
2. The most charitable interpretation of that is that you meant to say income tax: That's usually what people mean when they're too-vague; It would literally be $0 before it was introduced in 1913; You can't have meant all taxes because those were absolutely >0 and you wouldn't make that kind of math mistake, right?
3. When critiquing the growth and dominance of the income tax, that excludes the separate taxes (payroll) that go to SS/Medicare.
> capitalist economy
I'm not taking a stand on the "what the US is" conclusion at this point. What I'm saying is that your argument--how you're getting there--is unsound (can't ignore state/local level) and unclear (which numbers from where).
The vast majority of you money goes to the federal level. You are here nitpicking and not dealing with any of the real issue. You are dancing around it for the sake of semantics rather than dealing with the actual issue.
Sounds like no true scotsman.
Remember kids: socialism is judged by how it failed in real life, capitalism is judged by how perfect it is in theory
The term "capitalism" was literally only created for the purpose of writing criticisms of the (then) current system of markets/trading/taxing/investing.
Try actually defining capitalism in a way that doesn't apply to basically any random society since the dawn of agriculture.
Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society we have written records for.
The formalization of the process of buying shares in a company and receiving dividends/profits as a result is a bit newer, but the general concept of "I give you money, you use it to make something and sell it then give me money back" has been around for roughly the same amount of time as currency itself.
Anyways, my point is that there is a lot of things to criticize about our current world/economy, using the term "capitalism" while doing so is too vague to be useful in any way.
(Communism/socialism does have more of an actual definition, but very few people are aware of or use it, so it doesn't help all that much).
Saw an interesting discussion on how capitalism has existed for as long as markets have existed, including ancient Greece, and how it inevitably leads to wealth inequality, monopolistic behavior, unsustainable resource extraction, and all the other negatives we see today. The only difference is that in Greece, all of these negatives would have been applied locally but now they're all being applied globally. Instead of one super-wealthy man being a pain in the ass for the local Athens economy, he can now ruin things for everyone everywhere.
I would more simply define that as "wealth inequality" rather than capitalism (or more broadly, power inequality) and perhaps go on to say that the real problem is that, while you can't realistically prevent/remove all inquality, most systems do a poor job of preventing the people with more money/power from using that to consistently increase their own share.
TIL: The bad parts of a system are some other isim, the good parts are the system.
The problem is defining what is the system.
The system is only the good parts of the system.
Thanks for restating what OP said.
No need to do that, Capitalism—just like feudalism and mercantilism before it—is about how power is distributed. Both feudalism and mercantilism also had extreme wealth (and power) inequality (feudalism arguably had more), as did communism for that matter.
What makes capitalism different is that the power is distributed along capital (as opposed to handpicked by the king under feudalism; or embedded in government monopoly under mercantilism).
In other words, in capitalism, the owners of capital (or the owners of the means of production; i.e the rich; the aristocracy; etc.) are the ones who get to dictate the living conditions of the rest of society. The rulers (be it democratically elected government; an absolute monarch; a military dictatorship) will legislate in order to maintain the interest of the owners of capital. The police (or military) will fight for the interest of the owners of capital, and will suppress any resistance against the interest of the rich, etc.
Nah, Ancient Greece has nothing to do with today’s capitalism. It’s a dumb example and the parallels will fall down to a close inspection. Different world.
Pretty sure Adam Smith captured that in his writings.
Full laissez-faire, free market capitalism generally leads to wealth (and power) imbalance. Regulation is necessary to prevent that (assuming you want to maintain a "fair" democracy of sorts and not regress to oligarchy).
I can't see any system where people are treated fairly (equally and able to reap benefits of their labor aka not slaves) that won't lead to inequality. People are just different, and will have different production rates.
Sure, and that's mostly ok. I earn more than many people, some people earn more than me.
The problem is that extreme wealth imbalance leads to a power imbalance that tends to throw society into turmoil. The French Revolution being a canonical example.
Broadly speaking, I think most people would agree that Maria Hernandez the world renowned neurosurgeon who does 200 surgeries a year makes dozens or perhaps even hundred of times the amount Joe Smith the housr cleaner makes.
Even if they perhaps work the same number of hours a year, Maria has more training and (maybe) some kind of rarer aptitude and as a result we have a lot more house cleaners than neurosurgeons (in america and other places there a whole bunch of other factors like who gets access to the training and so on that causes some of these imbalances, but that's a whole 'nother comment).
The people, in general, are probably considerably less happy with the idea that jk rowling the ultrarich author gets to use her money to try to pass laws taking rights away from people she doesn't like.
Look at the difference between Ellison and Musk. Ellison is probably has similar levels of power to Musk, but he (afaik) mostly uses it to buy giant yachts and annoy other fortune 500 companies, and as a result most people don't really care that he's a billionaire.
Musk, on the other hand, tries to use his power to screw with government services and publically attack minorities and so on.
> Stuff like people buying and selling items using a currency for a price the individual chooses has been common to basically every human society we have written records for.
That's a market economy, which may or may not be capitalist. Markets have existed for thousands of years under various economic systems.
Agree on your other points though, 'capitalism' was coined to just describe and criticize the system they saw emerging, one of private ownership of the means of production, combined with wage workers who do not own their tools or the product of their labor, but instead sell their time.
But its hard to have discussions around because too many people conflate "market economy" == "capitalism" but you can have markets in a feudalist, socialist, communist, any other society, that doesn't inherently make them capitalist. But I still think its useful as a term, but only to specifically describe who owns the capital.
Apply it to reality, and things get muddy really quickly.
The major issue is the "private ownership of the means of production". While some argue it's a recent development, others (like me) argue it has been present since the dawn of civilization and, ignoring the "free market" and "voluntary transactions" part, one could argue both feudalism and socialism are capitalistic systems, with the latter often receiving the term "state capitalism", instead.
And then there's the issue of "wage workers". Workers who own their means of production (i.e. freelancers) are still often considered "capitalists" themselves, as under the umbrella of "small capitalists", even if they rely more on their labor than their ownership.
> Try actually defining capitalism in a way that doesn't apply to basically any random society since the dawn of agriculture.
.. feudalism?
Which, AFAIK, lasted much longer, and is just not the same thing?
History.com says:
> Feudalism is a term often used to describe the social, economic and political conditions that existed in Western Europe during the Middle Ages. At its core, it was a system in which a landowner, or lord, granted a piece of land called a fief to a subordinate known as a vassal. In return, the vassal pledged loyalty to the lord, providing labor, military service, payments—or a mix of these.
And then the next paragraph goes on to say that historians think this is way too simple to describe what real people were actually doing.
Either way, unless every single piece of property in the kingdom (including, like, plows and mill stones and spinning wheels) was granted by the king (or someone he had granted to) it seems like there's still a lot of room for buying/selling/investing.
I mean, it's an interesting answer but my basic point is that the "real world" is far too complex for a term like capitalism to be at all useful.
Even stuff like "free market", can a market be "free" if a government exists? What about monopolies? Etc etc.
I just want people to be more specific when they criticize systems!
plows and mill stones and spinning wheels are excellent examples of exactly what a feudal lord owned. They owned the land, the major structures on that land, and the major implements on that land. If you wanted to use them you paid the lord in fees via goods, labor, etc. It's basically the gig economy - you will own nothing, your labor will be for his benefit, and if you want to keep participating you'll make it worth his while.
That did occasionally happen but I don't think it was the majority case by any means.
That being said, if we're talking about the lord owning the mill you labor at, how is that different than tesla owning the car factory you work at?
It isn't, and that's why people speak about technofeudalism?
Tesla does not, AFAICT, also own the land you live on. They pay you in fiat currency that can be exchanged for other goods sold by any provider.
A better comparison to support your "capitalism = feudalism" argument would actually be the era of company stores and truck wages: https://en.wikipedia.org/wiki/Sixteen_Tons
I understand that you think that, but you're wrong according to pretty much every historical source.
If you don't understand the difference between a feudal lord an Elon musk I'm not sure I can help you. We live in a world where individual rights are orders of magnitude more significant that those of a feudal serf.
Empirically this isn't true. However you feel about "true" capitalism vs socialism, countries underpinned by capitalism have prospered, even the socialist flavors (China, Scandinavia)...while the countries that have attempted pure socialism have all failed.
The problem with that logic is you're treating economic systems as if they all exist in a vacuum, and you're setting up a circular argument of if its successful its actually because capitalism, if it fails it must have been socialism.
It completely ignores the decades of external hostility toward any nation that attempted to build a socialist economy. Almost every attempt has been met with near immediate intervention from captialist super powers, particularly the USA. Nixon activeley worked to cause the military coup in Chile, Cuba has faced the longest trade embargo in modern history (and yet still managed to outperform its peers in the region in healthcare and literacy). Its unscientific to attribute these struggles purely to internal failure when they are subject to deliberate economic warfare.
Secondly, your definitions are being stretched to fit your thesis. Scandinavia is not "socialist flavored" it IS a social democracy, with free markets. Claiming China's success is from captialism is ignoring that its economy relies entirely on state owned land, state owned and controlled banks, and state owned companies, and mandatory five year plans coming from the state.
If we classify any successful state-led initiative as "capitalist" and any blockaded, intervened upon state as "purely socialist" then the argument is an unfalsifiable truism.
agreed. its almost like... we need a healthy mix of economic systems to prosper
I see socialism benefitting from capitalism, but how have capitalistic nations benefitted from socialist ones (other than a place to put military bases)?
smartphone glass: corning, gorilla, etc is an east german invention
the soviet union also pushed humans into space
cuba produces a ton of doctors who then go on to heal people too poor to train local doctors
in terms of, how does socialism benefit jeff bezos and elon musk and the actual capitalism of epsteins and the like using money as power mad exption from the law, i guess musk built space x on soviet rocket designs, but otherwise not a ton.
does it need to benefit the ultra wealthy capitalists to be good though?
Bezos and Elon receive socialism from the American government, no need to talk about other countries there. They are backstopped, they have all their needs met by the government and the government gives them tax money from all of us and then grants them exclusive control over an economic monopoly so they can extract more directly from us
Ah yes, because capitalism in it's purest form would never have companies form monopolies and lobby governments for favorable legislation.
Is there even a government under true capitalism or is it more like the lunar anarchy described in „the moon is a harsh mistress“?
What even is "true capitalism"?
Usually "true capitalism" means one of two things:
1. Capitalism where there is no government or regulatory interference, and the "invisible hand of the free market" produces some kind of utopian society based purely on every business abiding by rules enforced by no one, where somehow corporations don't take advantage of workers they way they do now despite there being no laws against it.
2. The same thing but sarcastically because it's obvious that that system would be demonstrably worse than the restricted version of capitalism that we have now.
The "invisible hand of the free market" works only, if you have many market participants competing one against another. When a participant wins the competition you get monopoly, when multiple participants collude you get oligopoly, or cartel. Market can not solve this.
Historical examples:
https://en.wikipedia.org/wiki/Standard_Oil
https://en.wikipedia.org/wiki/Phoebus_cartel
https://en.wikipedia.org/wiki/DRAM_price_fixing_scandal
https://en.wikipedia.org/wiki/High-Tech_Employee_Antitrust_L...
https://en.wikipedia.org/wiki/OPEC
If competition was economically efficient, it would happen. Monopolies prove that monopolies are efficient.
Under True Capitalism™, cartels could do their price fixing on reality shows.
End stage True Capitalism™ is when you have to subscribe to a streaming service to watch as the streaming service cartel fixes their prices.
Where does capitalism mandate corruption? Yes, it is not realistic to assume there is no corruption, but capitalism in and by itself does not mandate corruption.
Obviously this all falls apart when capitalism can buy legislation. We are seeing how the USA is currently eroded by a few oligarchs.
They're not saying it 'mandates' it as law, but that the systematic incentives inevitably lead to corruption. The ability to buy government is irrelevant - this is just the easiest method right now of converting money into power. If there was no government to buy, private business would execute that conversion themselves by ruling over people and enforcing their wishes directly.
"capitalism" was meant to harness the greed in men- they're self-assembling groups on mostly level playing fields, and the people vote during every purchase. The more votes they get, the more opportunities to expand. Only when the people fail to choose wisely is a governmental body supposed to come in and help "regulate". The other option is the government decides from on-high how things should work, and you'd better hope that what got them to power was good. Then these people need to be wizards at allocating labor, research, and benefits.
Anything that involves humans will have corruption.
Society needs somethings to try to stop corruption wehther government rules or non government actions.
Under pure capitalism what stops this?
capitalism definitely mandates corruption
non-corrupt competitors will be beaten every time by corrupt ones
> True capitalism has never been tried
“True communism has never been tried”
Crony capitalism is true capitalism. The idea that capitalists will simply choose not to organize to benefit their own positions out of some sense of altruism is insanely naive, and puts you in the same camp as USSR apologists claiming that their issue was the lack of true communism. A system that fails when people subvert it to their own benefit is a system that fails.
The power of who lives, dies, and what's allowed are made by the individual consumers (or groups of consumers), so it's the same problem we have with democracy.
Crony capitalism is just regular capitalism.
Does seem a bit like; we’ve never tried roasting people at 1200C, only at 1000C
True Capitalism looks a lot more like socialism than many would like to admit.
> The directors with of such [joint-stock] companies, however, being the managers rather of other people's money than of their own, it cannot well be expected, that they should watch over it with the same anxious vigilance with which the partners in a private copartnery frequently watch over their own
Adam Smith, the Wealth of Nations
Corporations are the definition of socialism- everyone pools their efforts and they decide how to allocate the rewards (after taxes).
reap the profits, socialize the losses
That's crony capitalism again
Socialism is crony capitalism?
It’s how the world works in general. Bribes and corruption are not unique to capitalism.
But not in the Shining City on the Hill
No. This is how crony-capitalism works.
You could make a decent argument that capitalism will very likely end-game devolve into crony-capitalism as it's typical failure mode, but I don't think it's written in stone.
It's funny to me. Everyone rails about Atlas Shrugged being some libertarian fantasy story. I always read it as an allegory warning about crony capitalism and how it ruins society along with a story about trains and magical perpetual motion machines.
Socialism capitalism, history shows basically all human systems devolve into corruption regardless of how sound the underlying concepts are.
Which I’m surprised people don’t point out more. What does it matter which system is the best when at the end of the day the powerful people are going to make back room deals to subvert it and that always leads to a feedback loop
Yep. This is how I view the world these days too. All systems will inevitable devolve into corruption and centralized power. The best system I suppose is the one that starts with the most distributed means of power possible, and then that gives the most quality of life years out of anything before it's time for a horrific reset again.
The beauty of capitalism is you have a choice. There are already ETFs that exclude SpaceX/Elon's company's for those who so desire.
See QQNE and SPNE.
In practice the choices tend to be limited for a lot of the people for whom this rule change was meant to ensnare their money because it exists within 401k plans with limited portfolio options.
Right but that's because you've now layered in government control. 401k plans are more heavily regulated, often negotiated by the employer rather than the employee.
The real question is why are employers able to limit employee 401k investment choices and employee health insurance. This is not freedom.
Can this be called "Capitalism" when SpaceX is now a public company?
Public in this context just means publicly listed on a stock exchange.
It does not mean it is state-owned.
State ownership is just a proxy for public ownership.
Doesn't that depend on the form of government the state has?
(For example, state ownership under an absolute monarchy doesn't seem like a proxy for public ownership.)
The word "public" doesn't mean that in this case. It's still a private company.
And yet people continually muse about why "capitalism" is starting to fall out of favor in America. This right here is exactly why.
Nasdaq, FTSE Russell, and CRSP all implemented fast-track options. Fortunately S&P kept its 12-month requirement.
CRSP has always had a short waiting period, they did not change it.
They did lower the free float rule
Free float rule was pretty low already for ftse, yea? Like we went through this with aramco still has free float under 3%, yet it's in vxus.
Is this really the worst thing? People keep bringing this up but it’s the Nasdaq 100. It would be shocking if we were talking about the SP500.
It almost was. S&P decided against it at the last minute, despite saying they would initially.
They never said they would afaik. They were considering it and went through a consultation process and the outcome was a no.
The S&P committee never said they would. Space X asked and the committee said no. They should not have asked.
#1 rule of sales. If someone is trying to sell you something, you _probably_ don't want it. Eg, they need the sale more than you do.
The very fact that they were asking the question is such a huge red flag.
Them needing it more than you doesn't mean you don't need it too.
Bought an air mattress recently. Way better than a sleeping bag on the ground, even though I can also manage that.
The most insistent the salesman, the highest odds you got a bad deal.
But we are thread is about corruption (probably with bribes, and stealing the money of people that didn't participate on the transaction), while everybody keeps pretending is a consensual sale.
Did you buy it from a door-to-door salesman, or did you seek it out?
See, a positive outcome from investing in inflated stock.
I've started telling basically that to the solar salesmen who come by every few days: if it was so great, you wouldn't have to pretend to be from PG&E or tell a bunch of half-truths about how utilities work.
problem with solar is that in itself it is great, but here in US if you look at the cost per watt produced it is heavily inflated with permitting and marketing costs. which is basically their margins till it becomes barely profitable to you. otherwise most of solar system cost has been fallen quite a bit for last decade plus.
dont believe me, look up how much a open loop DIY system costs.
Oh yeah solar is getting good but the guys who come to your door and say they'll give you a $0 electric bill just sign here are peddling something that's maximally profitable for them
It went through the formal process to adopt. Almost certainly public discussion online had an influence.
They don’t meet the inclusion criteria. The committee went through the motions to be diplomatic, not because there was ever a chance of it happening.
No, but they did hold research sessions and they did draft the policy and the rules and all the updates and have them go through legal... they were planning to, until they saw public sentiment, or other influence. It'd be misleading to claim it was never a consideration.
Considering yes but unclear how much of that is doing valid DD or a real push internally to want inclusion.
Yes
Index and other funds are forced to buy as their contractual mandate is to follow the index or methodology set out by the fund.
While I know it exists again, we are talking about the Nasdaq 100. It’s already a pretty quirky specific index and folks investing in it are already aligned with a spacex type of company.
They have some flexibility.
And beyond that there is a lot of capital in active funds that use an index as their benchmark. So they don’t have to buy anything, but they are trying to beat their benchmark so not buying is an active decision with risk.
ok but who is forced to buy the nasdaq 100?
quick search:
https://www.justetf.com/uk/search.html?search=ETFS&assetClas...
ok, who is forced to buy these ETFs?
These are all products that people and funds can choose to buy or not buy.
I'm going to assume this question was in good faith, and ignore that you are seemingly spamming it as a 'gotcha' all over this discussion.
If I'm already invested, and they change the rules on me in a way I don't like, I have to sell, and that's a taxable event.
So if I have invested in a Nasdaq index, and I don't want a massive exposure to SpaceX prematurely, I am forced to close my position and immediately pay taxes on the profits. I pay the taxes, and now my investing capital is reduced because Elon wanted to force index funds to buy SpaceX stock, which indirectly forces all current owners to buy SpaceX.
It's not future buyers so much as people that are already exposed, and were probably not counting on getting rug pulled by the Nasdaq.
So no, you are correct that no one new to investing is forced to own SpaceX stock, but millions of existing fund holders are now exposed to a stock in a way that simply wasn't possible when they put their money in, and will be penalized if they don't want that.
People already own them, and have owned them for months or years before the rules were changed for SpaceX.
There's a cost to selling, the brokerage fee plus in many countries there's then taxes due on any profits. Many people would prefer to have unrealized gains where they can pay the tax years ahead, when they need the money.
(Also please don't make the same comment 4+ times.)
leaving the word 'forced' aside (purposefully), pension funds, 401k holders, and many passive investors end up buying these things. you're right that no one is "forcing" them, but people who try to invest responsibly with little control over the day-to-day which is most people place trust in the institutions who do that investing for them.
I don't think that the claim of "the Nasdaq is misusing their institutional trust" is a controversial claim. Moreover, one of the things that people choose when they (401k, pension funds, passive investors) is institutional mechanisms that prevent potentially mispriced items from entering their portfolios.
Very few retirement plans offer the Nasdaq 100 as a direct investment choice and certainly no plans offer it as the sole choice.
>However, based on figures from the over 700,000 401(k) plans, allocation to Nasdaq-100 Index mutual funds makes up less than 1% of all 401(k) assets, which the firm suggests is a significant underrepresentation compared to the S&P 500 and other Large Cap Growth Indexes.
https://www.psca.org/news/psca-news/2025/4/should-nasdaq-100...
The problem is a lot of passive investors own large quantities of that ETF, and to take their money out now they have to pay a tax penalty, so they are forced to invest in SPCX due to the rule change.
Its also a matter of principle. They had a seasoning period to allow for market price discovery over time, and they created a process to waive it for one company. Its not unreasonable to say that that is a bad thing.
Index funds, for starters.
Contrary to (apparently) popular opinion, index funds are not people.
Correct. Index funds are owned by people. For example, I have invested a large chunk of my retirement savings in an S&P 500 indexed fund (as many, many other people do). Whatever stocks the S&P 500 list, are what I end up owning; if I don't want to own one of those, I have to either roll that money into a different fund (which IIRC has limits, can't do that too often without tax consequences) or take the money out (and pay a tax penalty for withdrawing it before retirement).
So whether the index funds do or don't buy a certain stock has direct implications for real, non-millionaire, people.
No, they're just owned by people. Most of whom aren't billionaires.
This is such a weird response because nothing about index fund inclusion rules has anything to do with whether or not a fund is a person.
Complete non sequitur. Can you explain what you mean? Did you accidentally reply to the wrong comment?
No you're confusing where agency lies.
The Nasdaq 100 is just a fund. Its existence doesn't force you or anyone else to do anything.
People can choose to buy stocks, and people can choose to buy the Nasdaq 100. Or not. Nobody is making you.
I don’t even have access to a NASDAQ fund in my 401K. You have to go out of your way to buy the NASDAQ 100, QQQ and /NQ or /MNQ futures are the most popular instruments for getting exposure.
I have a tiny minute slice of SPCX from owning VTI total market ETF but my 401K holds no SpaceX.
Okay? Just because you don't have access to that investment vehicle doesn't mean others aren't using it. What type of reasoning is this? "I, personally, am not too badly effected, therefore it's not a problem"
And guess what, your VTI which does track NASDAQ as part of it's index is effected by this inclusion rule.
His reasoning is valid. Compared to the S&P500, it's a small sum of money. Most people aren't buying a fund that tracks that nasdaq index. The total effect isn't that large.
His reasoning isn't valid.
Not only is he wrong that it doesn't impact him, because VTI is impacted, but the whole premise is wrong. "I'm not harmed" does not mean things are fine. If I go murder your neighbor, will you come to my trial and demand I go free because you weren't harmed? Should the judge let me go because he wasn't harmed?
He wasn't making the case he isn't harmed. He was making the case that the effect isn't large. You don't appear to understand the claim itself, let alone the reasoning.
Just because you don't understand the basics of the financial system, or the different indices, or the amount of money flowing into the funds that track each, it doesn't mean others don't. The impact if it had been included in the S&P500 would have been at least an order of magnitude more than just the nasdaq 100.
Your honor, I only murdered one person, that effect size isn't large, there's 9 billion people on earth. You should dismiss this case.
Classic apples-to-peanuts comparison
There’s around five trillion dollars indexed to the S&P 500 in large funds. QQQ is half a trillion dollars.
If you look at Fidelity mutual funds, the difference is even greater. FXAIX has $827B in it, USNQX has $9.6B in it.
The absolute dollars do matter, as do the risk characteristics of both baskets of stocks. If and when SPCX meets the S&P 500 index criteria it will be included.
Also, NASDAQ both operates the NASDAQ exchange and also decides what is in the NASDAQ 100. S&P decides what is in the S&P 500 but they do not operate an exchange. Allowing SPCX into the NASDAQ 100 was good for NASDAQ the exchange and it was legal, so it happened. The S&P 500 committee was not facing the same incentive so SPCX will have to wait until it meets the criteria for inclusion.
If you understand the incentives, you can predict the outcome. I agree that it sucks that QQQ holders had to swallow SPCX.
One last thing, if you reread my post, I explicitly acknowledge I have exposure to SPCX through VTI which I own in my Roth IRA. As of right now, 0.14% of VTI is SPCX which means I have $91 of exposure. I think I’ll be OK if it goes to zero :) I said I have no SPCX in my 401K which is just FXAIX, an S&P 500 index fund.
>QQQ and /NQ or /MNQ futures are the most popular instruments for getting exposure.
QQQ tracks the Nasdaq 100. It's an index fund. If the index includes a new ticker, then QQQ has to buy it.
Buying QQQ doesn't seem like going out of one's way. I don't understand your comment. "ETFs and chill" is a very common investment strategy.
You could buy QQNE :)
There’s an order of magnitude more money indexed to the S&P 500, you have to go out out your way to buy QQQ since NASDAQ 100 and total market funds are uncommon in 401K options for employees.
QQQ is more volatile and higher risk than the S&P 500, the people buying it should understand that.
And who is forced to buy QQQ?
Many retirement accounts have limited options, leaving few passive index options. I sort of doubt many would offer qqq but not s&p, but it’s possible
Why was musk/spacex so interested in having the rules broken to include spacex stock? Do you think maybe there was a reason that involved musk benefitting??
I'm not sure why that's relevant. The original discussion was about who's forced to buy NDX 100 stocks like SpaceX. The answer to that is "index funds".
Asked and answered. Whatever cute point you're trying to make is rendered moot by real market dynamics and index inclusion rules.
Who forces them?
Literally the index. If you track the NASDAQ as part of your index you must obey it's inclusion rules.
Contrary to (apparently) popular opinion, index funds are not people.
So, who is being forced to buy that index?
A lot of employer pensions will have limited fund options. (At least in the UK, maybe the US works differently.)
Quite likely that the only sensible one for most people (~global equities) will track S&P 500 internally. So essentially employees are being forced to hold whatever the index includes.
Hopefully it's less of a problem with Nasdaq, but it was a real worry.
Turns out people (and institutions like municipalities and pension funds) sometimes buy index funds before SpaceX enters the NASDAQ 100, and changing their policies over a single event would be a great effort and expense, and set a bad precedent. Sounds crazy, but it's true.
Nobody has any idea what point you're trying to make, and the fact that you're repeating yourself and not being clearer makes everyone suspect that you don't have any idea either.
Ok but there are very few indices following NASDAQ, compared to S&P 500.
It's not NASDAQ as a whole... it's NASDAQ 100.
https://etfdb.com/index/nasdaq-100-index/ are the ETFs that track that index.
Yes sorry I meant NASDAQ 100.
Funds often have institutional investors. Many of them Pension Funds (i.e. ordinary every day people) and when the institutional investors signed up, they didn't do so expecting Nasdaq rule change.
that is the whole point of an index fund - they buy whatever is in the index so you can get exposure to the total market. The scandalous thing is that an IPO'd company is going to have a lot of volatility for weeks to months after it goes public, so they typically do not allow any newly listed company to be included in the index for up to one year. This is for the benefit of retail. People have put their entire life savings into these funds because they are viewed as the optimal tradeoff between risk and return. Those people are now contractually obligated to either sell everything or expose themselves to spacex's IPO price movements.
There are many different kinds of index funds, most don’t participate in Nasdaq 100.
So you are saying it could have been worse, and therefor it is not that bad. I feel like this may be a logical fallacy.
It is like saying that the worst thing about twin earthquakes in Venezuela was not the fact that there were two of them, because there could have been three.
Defend your position instead of comparing to earthquakes. The Nasdaq 100 is already quirky in that it’s the largest 100 non-financial companies listed on Nasdaq. So it’s a large-cap growth/tech play or for Nasdaq a showcase piece. I don’t think it’s great they remove the 3 month criteria but also knowing the specific slice of potentially unprofitable companies it highlights does not make it as concerning as the SP500 drastically changing their rules to include.
To clarify: I am not comparing anything to these horrible earthquakes. I am comparing the above rhetoric to a hypothetical rhetoric about the earthquakes.
Nobody would actually say this about these earthquakes, and that is my point.
Again, do you have anything constructive to add to the conversation? Your words are insulting and just putting words in my mouth. The Nasdaq 100 is not that special or unique. You’re comparing a quirky index to earthquakes which is weird. They don’t have much of any rules, the three month modification is maybe not great but also not that big of a deal. Price discovery is pretty quick and for the Nasdaq 100 it fits for their theme. It’s absolutely not the worst thing. It’s not really great or bad, it’s the Nasdaq 100. It might help to go read up on how they market that index.
I know people tend too see “index” and think it’s a rigorous financial instrument but on a lot of cases it’s not. This index excludes financials so it ends up being this mega cap/tech 100. No other rules historically.
I am pointing out (what I think is) a logical fallacy you made earlier.
This what your parent said:
> The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100.
And you replied with:
> It would be shocking if we were talking about the SP500.
My critique is that this is not a valid refutation of your parent’s original claim.
If you don‘t think this is constructive, then that is on you. In my mind you have not refuted your parent’s original claim, and I have explained why above.
Also let me repeat, since you seem to have missed it when I said it above: I am not comparing anything to earthquake. I am making an obviously ridiculous hypothetical claim I just picked earthquakes because it was more obvious. I could have as well made the hypothetical claim about the worst thing about coffee is that it is only lukewarm, and then the refutation saying: “no actually, it could have been room temperature, so lukewarm is not that bad.“
> worst about the SpaceX IPO is Nasdaq changing their inclusion rules
Nasdaq 100 has always been marketed as a tech-forward index. It would be a bit ridiculous if they didn’t include the most value tech companies on the market.
There was a potential scandal at S&P. But it didn’t happen. My personal guess is a lot of finance influencers latched onto this story. When it didn’t pan out they tried to maintain credibility by shifting it onto the Nasdaq 100, where it doesn’t make sense.
> Nasdaq 100 has always been marketed as a tech-forward index. It would be a bit ridiculous if they didn’t include the most value tech companies on the market.
What if they floated only .01%? What's the cutoff for it being ridiculous not to include?
> What if they floated only .01%? What's the cutoff for it being ridiculous not to include?
You’d probably still include it, at least for a tech index. But you’d underweight it relative to float for indices published for funds. (The pure play index would weight it wholly because informationally it’s still a whole company.)
They changed the rules for one person.
You are the biggest simp for the rich.
They pay you to post here in their defense?
Discourse on this site is no better than Twitter or Reddit, just another flavor of stupid.
> They changed the rules for one person
The timing isn’t great. But this was being discussed for a while. If it were only SpaceX, I’m doubtful the rules would have changed. But a tech index not including SpaceX, OpenAI, Anthropic and SK Hynix is a bit silly. And in the end, on index inclusion, the stock still fell.
> simp…Twitter or Reddit
Mm hmm.
> A bit silly
Mm hmm
I mean the planets would fly off orbit
...such thoughtless justification is not really disproving comparison to "anything goes" discourse of other platforms with a nonsense appeal to empty normalization
100% designed to offload an empty bag onto retail investors
SpaceX is propped up entirely by government subsidy
It has no real sustainable business unlike SK Hynix, very much like OAI and Anthropic
What's silly is propping up ephemeral companies that burn resources and produce nothing
> offload an empty bag onto retail investors
This was a popular meme on Twitter and Reddit and YouTube, granted. The math doesn’t make sense with an index like the Nasdaq 100. But I’ll admit it’s a good story.
> SpaceX is propped up entirely by government subsidy
This is also true of every defence contractor.
Colonies on Mars is a good story
Super intelligence is a good story
These companies are built on little more than "a good story" for politicians to sell to voters ..."i voted in Congress for that!"
You're arguing semantics
Economic math is being leveraged against innumerates as euphemism and obfuscation of same old avarice and political corruption. Biology is self selecting. There's no using rhetoric to wave off the ground truth is just a minority of the total population ensuring their own lived experience is put above everyone else's
> a minority of the total population ensuring their own lived experience is put above everyone else's
That’s a new use of that term!
No it is not. Appeals to equality of condition have existed for centuries. Among them are that term used verbatim.
Ignored the other points and redirected to the least salient. Will take it as acceptance you realized how silly your carrying water for people who don't know or care you exist is.
Age of account makes it clear you need the social system to remain solvent as you're likely rich on paper. Nothing more.
> Ignored the other points
In this comment [1]? Seriously, what salient points were you trying to make?
Nobody is arguing anything is fairly valued. That's your straw man. There's a bit ironically complaining about innumeracy in a series of comments with zero numbers. Then a general appeal to Twitter tropes around sheeple and whatnot.
If anything, the quality of this comment thread sort of points to the quality of the argument for SpaceX being included in the Nasdaq 100 being corrupt. It's based on vibes and feels. Which is a good story–it's clearly convinced a bunch of people to watch another video, click on another ad.
> Age of account makes it clear you need the social system to remain solvent as you're likely rich on paper. Nothing more
...genuine question, how are you connecting that observation to that conclusion?
[1] https://news.ycombinator.com/item?id=48925695
Back n forth with someone who used "a bit silly" as a justification.
You set a low bar out the gate. I merely met you down there.
Numbers don't make a difference. They can be shaped to any argument like English or German because they're picked by the biases of the author.
You seem to live in a rhetoric derived neural hallucination and are completely detached from physical reality, meaningful thresholds for verification.
Will stick to the skills I picked up studying applied physics and electrical engineering for checking hypothesis and formal verification. No interest continuing a conversation with a functional illiterate who cannot reason outside their native cultural bubble.
To paraphrase Feynman, doesn't make much sense to get hung up on the syntax and their semantics.
FWiW you were reading a lot better before this self aggrandising me and my STEM background twaddle.
Read the room, you can't chuck a rock around here w/out hitting two.
Presumably that "twaddle" influenced the bits you found to read better.
On what planet do our engineering backgrounds make us more effective communicators about wealth inequality and index inclusion?
How much of your money did they take? Are you one of those people that went all in on WallStreetbets?
Who should be at the gambling commissioner that allows such things? Should people be made Wards of the state and finances placed in Trump's noble stewardship?
I didn’t consider that angle—thanks. I don’t day trade and don’t think anyone should. Lots of folks do anyway, however, and then they predictably lose money. It should be similarly predictable that they’ll then get upset and lash out, sometimes in the correct direction, often not.
(And the influencers pitching day trading and whatnot, lo and behold, are probably also selling the corruption of indices and why you should buy their crypto to not be a "simp" or whatnot.)
Mostly like I think they simply long for communal property ownership with a benevolent overseer that invests and distributes resources according to values that match their own.
Therefore they are offended that private individuals can allocate as they choose, and make losing gambles on other private institutions.
Some of these people were taught indexes are safe havens, and recoil at the idea they might not be safe as milk.
Idk, I kinda agree with Matt Levine. The purpose of these ETFs is conceptually to track the "largest X companies", so including SPCX is just staying true to that.
If there's an issue I think it's earlier in the IPO pipeline.
But if SpaceX valuation drops by 2/3 before settling into a steady state, does that not mean that SpaceX is not one of the "largest X companies" but rather was overvalued?
The entire reason for these seasoning periods is to give the market time to determine what the company is actually worth to the market itself. Bypassing those rules to get it in earlier says to me that they don't believe it will settle at a price near its start.
If I IPO my lemonade stand at $1T valuation do I deserve to be in that "largest X companies" list? Or does it only make sense if I can maintain that valuation over time?
But then you're trying to time the market which goes against the passiveness approach that most people sign up to when they buy these sort of ETFs.
Is your assertation that spaceX just valued themselves? If your lemonade stand gets underwritten by Goldman Sachs, Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase, and 18 other large banks then yeah, you belong on that list.
Well if you helped the US gov get elected than probably that lemonade “deserves” the valuation… if not, well, it’s just lemonade…
I think a lot of people are upset that they bought something (an ETF or fund that tracks an index, for which has various rules for what gets included) and those rules get broken so the wealthiest man in the world who is also extremely close with the President of the US can get his company included on a shorter timeline. Yes, there's an issue with the IPO process but a) you can just buy SPCX if you wanted exposure b) even if it's not included you're getting decent exposure and c) the IPO process being broken is not the problem of the indexer.
The indices driving the market are the problem.
Index investing is too high a percentage of total investing so the rules matter to the whole market.
>The worst about the SpaceX IPO is Nasdaq changing their inclusion rules for the Nasdaq 100
Why, no employer's 401K or retirement plan offers QQQ as an investment choice. Anyone buying the Nasdaq 100 is doing so by choice?
IMHO it is prudent to allocate a bit more conservatively these days.
I cut out my nasdaq100 and have generally allocated towards ex us
I am really curious for what reason they choose to do it? Like what is in for Nasdaq?
Putting cynicism aside (there's plenty of that here already): there is a theory that people invest in index funds because they don't want to pick individual stocks. They want exposure to "the public stock market as a whole". I think there are good arguments on both sides of including SpaceX in such an index.
Oh come on, that's a view so charitable that not even Musk giving away all of his wealth would come close.
Pretty much everybody know what it was about on day one, brokers were (and still are) operating in blatant bad faith for personal gain and they know they can count on the current US administration to get off scot free. It's like if Jordan Belfort was in charge of Nasdaq.
Getting a very popular stock on their exchange. Directly making money from it.
But on the other hand, it burns trust to change the rules on the fly.
I think that is the problem with concentrated markets. You can do whatever and younare actually never "punished" by the market. Ie market htpothesis does not work
Yes. This was a deal: add us to the index and we will list on your exchange.
The president may throw a tantrum that “some crazy democrat throws stones under the feet of that beautiful Elon, the most beautiful Elon we ever had”. Better do what the new Tzar wants. Dude was sent here apparently by the God, don’t mess with the God.
I thought Elon and Trump broke up?
Have they? Maybe some spacex investor is the “most beautiful we ever had”.
Musk and Trump had a pretty public break up, I think this is one fuckup where we shouldn't blame him.
https://en.wikipedia.org/wiki/Kayfabe
Maybe Trump has money in it. Who needs friends when you have money. “It’s just business”. No idea, I don’t really follow this soap drama.
You're six months out of date. They're buds again.
I mean we know why
What fraction of investors who chose Nasdaq100 over SPY wouldn't have also wanted SpaceX? The whole point is hot and tech-heavy speculation.
Worst, if you're a Nasdaq 100 ETF investor. Best, if you were a SpaceX private investor. All a matter of perspective.
Sorta invalidates the whole market to know that they'll change the rules in order to manufacture the result that they have pre-ordained to be "correct". NASDAQ seems to have decided that they're in the business of picking winners and losers rather than simply providing people the mechanisms by which to decide for themselves.
nah the very worst thing about the spacex ipo is that schwab won't allow me to short it. has nothing to do with the recency of the issue. today i shorted some skhy when i realized it's trading about 30% over the Korean share price (I could be wrong about that)
You can short it elsewhere.
Schwab won't let you, because even if you're 95% right, you'll still probably lose 95% of your money...
It's quite difficult to be 100% right...
You and your broker have to be pretty damn brazen to iron grip a highly liquid stock all the ways down to -95%.
Shorts can go down to -1000% and beyond.
Yes, but you have to hold through that, and your broker also needs to let you hold through it.
The risk of a stock like spaceX gapping up 10x in an instant is virtually zero.
So if I wouldn't lend someone 9 times their assets I can't let them have that position.
Yes, but you have to hold through that, and your broker also needs to let you hold through it.
Not true: Depending on product and regulatory regime, for distinct trader/customer groups there may be distinct rules.
And if you are buying an instrument where you can lose more than you invested, the approach maybe wrong? :-)
> And if you are buying an instrument where you can lose more than you invested, the approach maybe wrong? :-)
This is precisely why shorting can lose more than you "invest", because you're not buying an instrument, you're selling it with the intent (or promise, depending on what kind of instrument it is) to buy it back later, hopefully at a lower price.
The risk is unbounded.
Not true:
https://en.wikipedia.org/wiki/Turbo_(finance)
There are, as said, depending on juristic regime, products which do not let you lose more than you invested.
On top of this comes national regulation: E.g. in some EU countries, retail traders are exempt from s.c. "margin calls" and the broker is required by regulation to "just close and not ask for more"
Source: Im living in one of these EU countries
A turbo is not a short position. It is more similar to an option.
dang all these comments make me want to short more. gimmie your monies!
a company who says we'll have ai in space, meanwhile you can stick ai in the ocean and use ocean water to cool & still have access for upgrade cycles.
meanwhile china and japan and bezos all landing reusable rockets.
meanwhile maybe ai runs locally on phones (today's announcement of deepseek in the iphone in china)
ummmm. short in force!
...downvoted 2 times for telling the truth about EU or LATAM regulatory regmies, wow,thanks :-D
You can synthetic short if you have options level 4
> nah the very worst thing about the spacex ipo is that schwab won't allow me to short it.
there are easier ways to make money than betting against Elon Musk. See Tesla and how well it worked out for short sellers there.
I like SpaceX as a company (especially Starlink) but it's over valued in my opinion. In about a year when there's a little bit of public financial history and the dilution is over i'll probably buy in.
The illusion isn't over for Tesla, not a chance it will be over for SpaceX in a year.
I for one am glad that you were not allowed to short SpaceX. People gaming the market for their own profits are the worst kind of exploiters and swindlers. You contribute absolutely nothing while siphoning the profits that workers make, lowering the salaries of everyone that actually works for a living.
Note this has nothing to do with my feelings about SpaceX. I am Elon hater nr. 1 and hope SpaceX burns to dust, I only hope speculative investors burn down with it.
EDIT/CLARIFICATION: This post is fundamentally anti-capitalist. You may feel like I am mis-informed or misunderstanding. I am both of theses things if and only if Capitalism truly is self-evident.
Putting one's money where their mouth is in expressing that a company's stock appears overvalued is very low on my list of "things that exploit the proletariat."
I don’t care the method people use to game the market. They are still participating in a systematic exploitation of workers and deserve the maximum of nothing of what they hope to gain.
My parent wanted to make some unearned money by making speculations and gambles. If they were allowed and if they were successful, they would have made a bunch of money while contributing nothing. Every single dollar they would have made in their speculative gamble would have come from somebody else who actually contributed and but didn’t get the full value from their work.
I am glad that my parent was denied the privileged to participate in this systematic exploitation. The ideal number of speculative investors is zero, and any movement towards that number is an improvement for workers.
How is shorting a stock gaming the market?
You feel a stock is overvalued and you short it. You feel a stock is undervalued and you buy it. What's the difference?
The former is likely to lose you money, even if you're right, while the latter is likely to gain you money.
What a weird misunderstanding. Shorting reduces fraud in the market, and making it harder to short increases it. There's a reason shady managers had shorts, it increases the chances their bad behavior will be uncovered and punished financially.
God forbid an individual makes a profit from shorting. What would be left for hedge funds then? /s
I'm not an investor in SpaceX but I don't think shorting stocks at IPO should be allowed. The market should be given time to settle on a price, and it's unlikely that anyone needs to short it on day 1 for hedging. It's purely price speculation.
Yeah, I know why people _want to_ (betting), but it doesn't serve a broader economic purpose.
Going long or going short is your bet on the market. If you can go long, you should be allowed to go short. Restrictions on any trading means you don’t have confidence in the price in which case it shouldn’t be available for trade.
Betting is what everyone who jumped into retail investing and meme stocks does with it, but shorts are a valuable tool in the economy for hedging risk. It also is a good indicator for fraud too.
“Broader economic purpose”?
It’s all betting.
If someone wants to dress it up in jargon or talk about beneficial second order effects, they can. But if putting money on an outcome you can’t control isn’t gambling, I don’t know what is.
Is buying insurance gambling? Is giving your second cousin 100k some money so he can open up is restaurant gambling if you expect a percent of the profits but won't actively be involved in advising him on running the business?
Yes.
Mh.... is there a difference between "betting" and "gambling" from wording here?
Gambling is placing a wager with a negative expected value. If you can gain an edge and have positive EV, it’s not gambling. That’s the distinction between poker and slots. A skilled poker player can take advantage of positive EV positions while slots are programmed to have negative EV. There are traders that have positive EV bets.
The market “settling on a price” includes the actions of short sellers.
Do I need to be able to short bananas for the market to settle on the price of a banana?
If you're confident the price of bananas will fall tomorrow you absolutely can sign a contract to deliver bananas next week at the current price and then buy them when the price drops...
My point is that no one is trying to short SpaceX as a hedge. It’s simply gambling.
I agree that hedging is real and useful. The comment I’m replying to isn’t trying to do that.
Yes, you can but does that ability benefit the population/nation/market as a whole?
Yes, because the guy buying your bananas is able to make banana-buying decisions for next week based on the price you give him.
You’re not going to make up a silly low number because you actually have to buy the bananas yourself at some point, and you help price discovery because now that guy isn’t buying bananas at a higher price than someone is willing to sell them for.
Just as a thought experiment, would you say there are any (societal) negatives to the possibility of thr price of bananas (or the share price of spacex) being able to fluctuate wildly based on semi-abstract economic manipulations, like shorts and futures and such.
What I'm getting at is when does it go from investing, "I think this entity is going to take my money and use it to build a profitable factory that will then return to me a share of the profits", to just gambling "I think this stock price will change by the end of the day and I'm going to bet on it", and what are the positives and negatives of that?
The price of bananas is generally likely to fluctuate less as a result of shorts, futures etc.
The distinction between investing vs gambling and positives and negatives sounds like more the subject of a PhD thesis than an HN comment! At some point the marginal benefit of smaller price spreads from very short term trade to actually allocating physical capital and labour to producing more valuable stuff might actually be lower than the amount it simply inflates asset prices, but that is much closer to microseconds than "you're not allowed to bet against this IPO, the insiders artificially pumping its value need to be able to cash out first"...
Well if the company is good, you can lose a lot of money taking short positions as a gamble.
Volatility should be lower with more market participants. More participants means that more information can theoretically be priced in.
Producers that use commodity futures to lock in a sale price need a buyer or speculator to take the other side of the transaction.
Well yes, to the extent the possibility to do that helps stop silly price spikes from a very short term shortage of bananas.
yes because shorts can also be wrong, and the buyer knows they have a stable price
To settle on a price, you need smart investors to be able to push it either way, which they need shorting and leverage for.
Plus there's option traders who naturally need to go short sometimes.
The market will more efficiently settle on a price if market participants can push the price up (buying) and push the price down (shorting).
I'm not certain you're right, but I think this opinion deserves considerably more (fair) discusson than it's getting.
Lots of replies either personally benefit or just assume the "way things are" is the best, but the stock market has gotten highly abstracted from the original intention of providing capital to grow companies via means other than bank loans.
I get the argument that shorts and friends help make the price the stock is being sold at more accurate, and I believe there's some truth there, but also we constantly see stock prices fluctuate by 10+% in a single day and I have trouble believing the actual value of all these companies changed that much in a single 24 period.
Well the idea that the price of a stock represents the actual value of the company can be complicated but the realization that it's super hard to figure out what the actual value of a company really is, because figuring that out really requires a crystal ball, because you need to know exactly how much money the company will earn in the future, among other things.
None of us have that crystal ball, so market participants try to guess at the future. It's not difficult to believe that those guesses can swing a lot in a single day. Just trying to figure out whether or the Hormuz will be open next week can give you whiplash.
the company manipulates itself to look its best possible, taking long term bad decisions in order to juice the value, and wont have more immediate items to juice the share price again for a while
its a reasonable expectation that 3 months after an IPO the price will be lower than it was at IPO
not really a bet so much as that on average the prices at IPO are a local maxima
Why is line go up price discovery acceptable, but line go down price discovery not? If the shares are trading, you should be able to short, it’s arbitrary to disallow it. It is quite literally a part of the market settling on a price.
(under the assumption your broker is managing their risk if your losses from a short position potentially exceeds capital available for liquidation if the trade moves against you)
Line go down discovery is acceptable (that is what selling a share is). The reason you might not want options trading very early after an IPO is because the market is frothy enough without the additional layer of complexity.
Certainly, its reasonable for a delay in options being available while market makers prepare to make the market for those options. But shorting? Day 1, the shares are trading and available to borrow to sell to short.
Are they actually? How many intermediate steps are involved in finding shares to borrow for a short? I imagine they have to be transferred to some central depository with the feature, for a start, and that takes 2-4 days
Your broker will locate and borrow the shares from an available pool (such as other clients' portfolios), sell them on your behalf, and hold the cash. They don't have to go to the clearinghouse.
Because lines tend to trend up over time. You're betting on lines going down, and paying rent while doing so as shorting requires you to rent/borrow shares from somebody else. It's an extremely high risk activity that can easily result in an investor losing a very large amount of money.
Elon Musk is politicized so you're going to have people wanting to short against him, for reasons other than it being seen as a rational and sound investment strategy. This is one reason brokers tend to restrict this activity to certain types of investors who are more able to appreciate the risks, to say nothing of baseline necessities like needing a margin account to cover potential losses. Shorting is just very different than buying a stock.
Borrowing and selling are both pretty straightforward financial actions. It seems strange to say you're not allowed to combine the two.
Isn't it all speculation always though? That's why stock picking doesn't work and ETFs are popular.
Annoying but not much more. It kinda makes sense too if the index is suppose to reflect the corps. The way SpaceX is set up from a governance point of view is a nightmare though. Also, data centers in space is just stupid. Now it seems like they already abandon it and are going for some kind of AI satellites. Still stupid. I should probably take a hyperloop over to US and ask Elon about it, oh wait, that was also garbage.
The Nasdaq is a shit index to begin with. There are so many other options.
What you didn't elaborate on is that it's a poor investment thesis, so while the association is Nasdaq == tech, it's not entirely true, and it missing things if what you really want is tech. It also penalizes small floats less than S&P 500, enabling these shenanigans.
The NASDAQ is up 27% in the past 1 year. S&P 500 up 21%, DOW +20%.
So, it's doing pretty well!
If the argument is that it's being manipulated, I'm not sure these stats help.
That's fair! I didn't read the comment I was replying to as being about the manipulation but, if so, I agree with their opinion.
I didn't read it about the manipulation either, but neither did I read it as a criticism of the returns.
I'm sure people planning to invest for only 1 year of their lifespan and began their investment journey exactly 1 year ago and who are in the process of selling everything they own today never to invest in stocks ever again will find that Nasdaq one year performance very useful information!
NASDAQ is famously overweighted in tech. It saw an 80% drop in the aftermath of the dotcom bubble, while the S&P500 only had a 40% drop. It's a double edged sword, with the AI boom it's benefiting, if that reverses it will fall proportionally to those gains.
Yes. A strategy with tradeoffs does not make it a “shit index”.
And a big chunk of that is the AI bubble. How are the rest of the non-AI industries doing?
https://www.spglobal.com/spdji/en/indices/equity/sp-500-ex-i...
Interesting, so a shit index is whichever goes down and a good index is whichever goes up?
Does the same rule work in crypto?
Always a FTSE truther.
Rule changes like this create market inefficiencies that can be exploited by retail; if everything plays by constant rules, the vast majority of alpha gets concentrated in the institutions.
I love shaking up the firms. Gives normal people a chance to build wealth.
Majority of alpha lol are you on drugs? Do you even know the risk adjusted rate of return most institutions earn…?
Buzz word filled posts like this are the most annoying to read on here
A stupid/naive question. Why does this affect SpaceX? They have their money(The IPO) Any third party trading value does not change that. Sure there may be individuals, officers of SpaceX who hold these instruments who will be negatively affective, but the company itself?
My best guess, it makes it harder to get loans in the future.
> My best guess, it makes it harder to get loans in the future.
Which is pretty important! It's my understanding that from all that money they raised during their IPO, a good amount of it went right back out the door again to pay off misc loans for the twitter acquisition. They may only have bought themselves 6 more months of time given their purported burn rate (mostly driven by AI investment), so they're going to need more loans really soon, or another major stock offering.
> They may only have bought themselves 6 more months of time given their purported burn rate
If they had only ~6 more months they (+auditor) had to issue a warning. The 6 is not a hard number, AFAIK, but surely a point where it must be reported.
So honestly, I doubt it's the case.
At least as written, GP says bought them six more months of time. Not implying they had 0 months to begin with.
That was indeed my intent. Pre-IPO, SpaceX already had _some_ cash in hand, and was burning >4b per quarter IIRC; so presumably _some_ runway. That said, they also got the anthropic/openai monthly payments coming in soon (already started maybe?). The next earnings release will be the interesting one IMO.
You will note that with the unlocks coming there is going to be a lot more spaceX stock on the market quite soon..
Currently 4.9% of the company is on the market.
Mid Aug... 15%...
40% by December.
Elon unlocks next June. Could be quite academic by then.
This is about their bond, not that share price. If you are in the US, it's like having low credit score, everything you want to do financially such as leasing or financing a car, buying a house, etc.. will be more costly (higher interest rate) from the lender.
Except that it's not clear really that lenders will be able to judge on that basis alone. SpaceX is a different kind of unicorn: it's a government contractor run by the richest man in the world who controls a media echo chamber and gets people elected.
That article compares them to Oracle. Who are, as it goes, pretty similar: run by rich people with a media empire who have their teeth deep in government systems.
These bonds could get worse and worse but if US state and federal governments continue to put thumbs on scales it doesn't matter. The US free market isn't uniformly free.
The bond price is an outcome of lenders judging, not a cause. Lenders have already judged.
Of course. But you have a bond buyer who can put their thumb on the scale, and has shown willingness to do so. That buyer also tried to interfere in (succeeded in interfering in) the business of law firms that worked for anti-Trump causes, has directly interfered in the renewable energy market to benefit its backers, etc.
What is to say that SpaceX and Oracle won't get these benefits? (Government buying bonds, trashing ratings agencies, leaning on banks to lend etc.)
Nothing obvious, I posit. So what is the value of a bond when a government is increasingly likely to manipulate the market for it?
And that is putting aside the second order of government interference: foreign governments putting their thumbs on the scale with their own investment funds and influenceable buyers, to buy influence over a government that favours these firms.
Nobody doubts all this. What the bond market is saying is that even with all of that, there are plenty of viable scenarios where bond holders aren't paid back.
After all, if you truly believe what you say with conviction, the sensible thing to do would be to buy up as many SpaceX bonds as you can if you think they're so undervalued.
Institutional bond traders are pretty sophisticated. They're aware of all the possibilities you mentioned, and pricing the bonds low anyway.
> Institutional bond traders are pretty sophisticated.
I am old enough to remember Long Term Capital Management.
I'm old enough to remember they weren't just buying and selling corporate bonds like most of the bond market. They were a hedge fund that used massive leverage to exploit tiny arbitrage opportunities between correlated securities.
There may be important factors that the bond market isn't aware of, just like most of them didn't know about the problems with mortgage-backed securities in 2008. But anything you and I are aware of, they probably are too.
> But anything you and I are aware of, they probably are too.
This is something that seems like it should be true but the subprime crisis (which didn't at all come out of the blue — anyone with any instinct at all should have understood when they first saw someone get given insane mortgages) argues against.
The subprime crisis was a story of perverse financial incentives causing the industry to play along with a fig-leaf statistical excuse for overrating derivative products, not bond raters botching ratings or missing "common-knowledge" info about specific mortgages.
If you want to suggest the subprime crisis as a mechanism for SpaceX bonds getting mispriced, you need to propose a model for how bond evaluators could be operating under a perverse incentive to under-rate it and somehow reap profits from doing so.
> If you want to suggest the subprime crisis as a mechanism for SpaceX bonds getting mispriced
I don't? I'm just observing that the bond market got something wrong — through an absolutely industry-wide blindness - that was indeed observed, years beforehand, by non-experts. Not my example, even. Just responding.
A lot of mortgages were trash but the securities were a new and complicated financial product with a plausible story. A few people figured out the problems, but Michael Burry for example did it by combing through thousands of pages of prospectuses.
SpaceX bonds are just plain ol' corporate bonds, the same stuff these investors have been analyzing for a very long time.
Max Keiser of Karmabanque was talking about and writing about it in public more than a year before Burry acted, with pretty solid predictions, without any obvious forensic action. He's quite bonkers, but if it was obvious to Keiser it should have been obvious to these highly intelligent people we're discussing.
Economists predict 500 out of every 10 recessions.
I too can play devil’s advocate
and now back to being an adult
He's only the "richest" man in the world because of the inflated valuations of his companies. At some point the market looks like a dog chasing its own tail:
Q: Why is this stock so valuable? A: Duh, because Musk is worth a kajillion dollars and everything he touches is gold!
Q: Why is Musk worth a kajillion dollars? A: Because he holds so many shares of extremely valuable companies, silly!
There is this, but he is also a quasi-government figure. As Trump weakens he will reappear in that sphere.
you’re right, the bonds of this overlevered money losing enterprise AI and space cargo conglomerate should be trading at a premium
They have a $5bn credit line, and this means the creditor might increase the interest on it.
It's better described as "it increases operational risks to SpaceX". When they face some future difficulty, the odds they can come out of it are lowered. Which is itself a factor that partners consider, including employees, because obviously people prefer to bet their livelihoods on more of a sure thing.
This is a potentially strong indicator of how institutional investors view spacex. Given that Spacex is in a high depreciation/capital intensive business, a high cost of capital and potentially difficult capital terms is problematic.
Spacex will raise more money again, they have no known path to structural profitability.
This is effectively an increase in interest rates for SpaceX. That's how it affects them
There is the affect as you say - but more interesting is that it just suggests people who sit around analyzing companies all day think there is a pretty decent chance this thing goes bankrupt.
Companies need to raise money for investment. Even Apple doesn’t have cash for all the things they want to do. Suppose they want to lease or buy a piece of real estate.
Apple has a giant pile of cash and the last time they issued bonds was to do a stock buyback so that might not be the best example, although there's a fairly small number of companies in their unique position.
That’s kind of what I’m saying. Their most recent issuance was 2025. Even when you have a lot of cash it’s inconvenient to spend cash on all purchases
It makes borrowing money much more expensive going forward.
The losses fall on bondholders now, but it does make it harder for SpaceX to raise money going forward. And if they actually slip into junk territory, some institutional investors will be forced to sell (mandates only allow investment-grade), pushing prices down and yields/spreads up even further.
That can snowball: wider spreads → higher borrowing costs → more stress → wider spreads. The existing bonds' coupons are fixed, so the real bite is on future issuance and refinancing.
Lots of capital-intensive companies (SpaceX is definitely in this category) lean heavily on debt markets to fund ongoing investment and roll over maturing debt, so losing cheap access is a big deal.
https://archive.is/tnSeY
Isn't it realistically only worth talking about SpaceX stock a few years out? The random walk the stock will do after an IPO seems very uninformative.
How often do companies issue a $25B bond the same month that they IPO?
Normally I would agree, but SpaceX being forced into the Nasdaq at a 3x multiplier makes this a non-normal situation.
Burton Malkiel's "A Random Walk Down Wall Street" was published in 1973, well before significant changes to financial markets that affect its theoretical randomness.
1. 401Ks were introduced in 1978, making mainstream the concept of automatic payroll deductions that funded an investment account. Trillions more dollars moved into pension funds that might otherwise have been spent elsewhere.
2. Bloomberg Terminals went online in 1982, kicking off an ever-growing information assymetry between investment professionals and retail investors.
3. Electronic trading didn't take off until 1992 with Globex, the Chicago Mercantile Exchange's platform
4. High-frequency trading didn't take off until 2005 or so
5. Finally, the Nasdaq changed its rules in 2026 in a way that directly benefited new IPOs like SpaceX, triggering automated purchases from investment funds, propping up its price beyond what its business fundamentals might have justified.
This is about a bond issue - a large drop in value there so soon after issue is far more unusual and much worse news.
This bit is not about the stock, it‘s about bonds. They made about $70B (?) in the IPO and now issued bonds for about $25B. This debt is rated at junk level now.
Here's what this means for SpaceX for those of you uninitiated in bond-math:
1. SpaceX issued long-term bonds whose coupon (ie, "interest rate") was 6.5%.
2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387% (if the price of a bond goes down, but the coupon stays the same, the yield goes up).
3. This doesn't affect SpaceX directly, but it tells you that if SpaceX were to issue new bonds today, they would have to offer 7.4% coupon on them, not 6.5%. Note that even though that was caused by a 10% drop in the bond value, it's a 13% increase in cost of borrowing!
SpaceX is a cash-flow negative company that depends on debt and selling equity in order to pay the bills. They will have to issue bonds again, and those bonds will be more expensive.
Note that the shortest maturity bonds don't have to be repaid for 5 years, so the impact on cash is not going to manifest for a while...at least 5 years time (assuming they did another bond offering tomorrow). In that sense it's a nothingburger.
The immediate impact it could have is if spacex depends on issuing new, shorter-term debt (lines of credit, etc) whose price could be impacted by the market's perception of their riskiness.
> 2. Those bonds are now trading for less than their face value. That means that if you buy one of those bonds on the secondary market, you will get a return (yield) of 7.387%
That's your return if you buy one of those bonds and the bond is paid on schedule. Presumably the market consensus is there's some risk that payment may arrive late or not at all since the yield to maturity has increased since issuance and not as a result of underlying interest rate changes.
I mean, that's what the yield is. The spread between what the bond pays and the Risk-Free Rate (Treasury) tells you what the market thinks the risk of default is.
For a spread of 300 basis points that's still a very low probability, probably under 5%.
If they had said 'the yield is' or especially the 'yield to maturity' is... that's one thing, but they said "you will get a return of"
You'll probably get that, but you might not.
Even in the case of a default it’s not a zero payoff. Bond holders get first dibs of unsecured assets at liquidation.
Is it the bond or is it the share price that also tanked below IPO level?
both. Stock is below IPO price and bond is trading below par.
Good thing there's a strong corporate governance model at SpaceX where the c-suite is fully accountable to an independent board of directors, who could use their majority voting power to remove that c-suite at will.
Could you imagine the abuse of power that could happen if one person held over 50% of the voting power at such a company?
Are super shares like Zuckerberg's and Musk a new thing? Genuinely curious if they're a recent invention or something that's quietly happened for a while because it seems like a large inversion of the deal of going public, lose some control of the company in exchange for a large amount of cash but these nonvoting/supervoting share splits seem to completely upend what I understood to be part of the deal for access to the stock market.
The New York Times Company operates under a dual-class stock structure where the Ochs-Sulzberger family holds roughly 95% of Class B shares. This family control allows them to elect 70% of the company's Board of Directors.
Copied from google's response to "new york times governance"
Google's AI also says that the NYT has had that structure since 1957.
Ford has something similar from the 1930s. (Dodge did too until it was bought.) Raylon (synthetic textiles) did it in the 1920s and the company behind Jack Daniels did it right after Prohibition.
Google says that the NYSE banned dual-class between 1926 and 1986; I don't know how to reconcile that with Ford.
Ford has them. What it has meant for Ford-- and will probably mean for Facebook-- is that Zuck's heirs will control the company, for better or for worse.
The common justification for this is that for a media company (NYT) you want a person or family to take responsibility for the editorial content, not a pure profit seeker. Facebook has it both ways and typically denies it has editorial control.
IMO, the flaw of markets is that they are short sighted. Sometimes this allows states to outmaneuver them with a longer view. Current exhibit A: China. Historically state intervention has been worse in the long run. But who knows. If we went into a depression a lot of people may think state intervention is a better system, as many admired the USSR during the Great Depression.
Zuckerberg’s high vote shares convert to regular shares after he leaves or dies. His heirs will not continue to have super votes.
Don't worry, he will try to change the law before he passes this mortal coil. This is a person that has open disdain for the law and thinks he should be emperor of humanity.
You mean bylaw not law. No law says anything about super voting shares not surviving death.
The USSR's main problem was not that it was socialist or communist, but that it was Russian. Russia is run by people who are adept at coopting revolutionary movements into a corrupt, authoritarian core. When left-wing libertarians say "true Socialism has never been tried", this is (along with China) what they are referring to.
The theoretical arguments against socialism (or, more specifically, centrally planned state production) given by Hayek is that pricing is information and markets are computers on that information, ergo changing the information gives you a bad result. This certainly applied to the kinds of production the Soviet Union loved to engage in, but there's no particular reason why it can't apply to capitalist enterprise as well. I mean, Facebook's headcount or market cap alone is larger than some actual nation-states' population or GDP.
Just like how the USSR was nominally socialist but practically engaged in exactly the same state-controlled mode of production as feudalism, today's corporate entities are nominally capitalist but practically feudalist. The medieval historians in the room would probably balk at me using the word "feudalist" to describe either, so to be clear, what I mean is "an economic system in which the majority of profit goes to landowners / platform owners / the state / etc". In this economic mode, companies can warp markets to their whims in exactly the same way Congress can.
Except, Congress is democratically controlled. Joint-stock corporations are inherently oligarchial in structure: control of the company is assigned based on how many shares you can afford to buy, so the company answers to the amount of money that has capitalized it, and not any other concern[0]. The "innovation" in Facebook's IPO was to go from internal oligarchy to internal autocracy - to install Mark Zuckerberg as God-Emperor of Facebook and largely depose the shareholder class that normally runs publicly-traded entities.
You'd think markets would have priced in this risk, but Facebook IPO'd at the peak of its hype and was able to get away with this. The funny thing about Hayek's distributed market computer is that it does not actually reach perfectly efficient price computation. If it did, you could crack RSA keys by placing a sufficient number of suitably complex options trades. Markets can put a bounty on fixing incorrect pricing information, but they can also just refuse to accept corrected pricing. Everyone rushing into Facebook stock counteracted the few people concerned about the ridiculously autocratic governance structure. And now that it's obvious that such a thing was a problem, it's too late to challenge it, because now Facebook has platform holder money. Zuckerberg can bribe the shareholders to not care about their lack of control.
The history of state intervention is very fraught, but there's one subset of interventions that has a better track record than most: those intended to stymie autocrats of trade. The state cannot correctly set prices better than a market can, but it absolutely can prevent other state-like entities from doing the same thing. Likewise, it would behoove the world's competition law and securities regulators to investigate and regulate the use of dual-class shares to retain control over companies you do not own.
Unfortunately, the current administration is unlikely to do anything about this.
Actually, to make matters worse, Texas is deliberately trying to pour gasoline on the problem by disenfranchising minority shareholders. I believe this was done specifically to give Elon Musk even more control over SpaceX, because Delaware made the mistake of actually entertaining a shareholder lawsuit over Musk's pay packet. If Facebook was an autocracy that bribed its shareholders into compliance, then SpaceX is an autocracy that says, "Fuck you, pay me". If there's one thing that gives me hope, it's that the markets are rightfully rejecting this obvious attempt at offloading Musk's toxic junk onto retail. But this is mainly because Elon failed to generate suitable hype to get the market to buy into his trash, not because markets are actually good at pricing in this specific kind of risk.
[0] In fact, this is part of why you see companies go to great lengths to fight unions, even when negotiating with a union would be cheaper. The shareholder class considers democratic control (one worker, one vote) to be an existential threat.
I would not put empaphis on some sort of ethnological mythos to why the USSR was like it was. It is a weak argument.
> Zuckerberg can bribe the shareholders to not care about their lack of control.
Monarchies had to please the aristocracy, etc.
I would say that "democracy" happens on party level not voter level. Party members are way more into the details than even the most engaged voters. You need to be at the meetings to know who is pushing what. It is all in subtle things. Most people I speak to have the most naive view on how parties work internally. Like it is a person. Goomba fallacy..
And party members more understand power hierarchy. All the drama is about that internally. Commité of whatever doing whatever having a say in whatever and delegate count of whatever county level org. to distict congress org. etc.
I think a big problem is that far too few people are engaged in politics nowadays. Active party members are aware of power structures and how they work.
In American politics at least, there is a phenomenon of political issues that happen to have high popular support but also high political opposition. I call these "antipartisan" issues; and one interesting feature of these antipartisan issues is that they tend to get politically disengaged people to actually show up and lobby their representatives like nothing else.
Think things like right-to-repair, or data centers. A lot of people want right-to-repair, but a lot of politicians think IP law is untouchable and don't want to burn political capital on a battle they know they will lose when they can just sop up donor money to strike down or water down R2R bills. Same with data centers: they're unpopular with the electorate but politicians will do the scummiest tricks in the book to try and get a data center built. Eventually these kinds of issues do get some political wins, but they're swimming uphill both ways.
The problem isn't that democracy does not happen anymore, it's that our democratically elected representatives are unwilling to yield to democracy when the people wish to overrule them. The point of representative democracy is that the representative is supposed to do things in my best interest even if I don't particularly understand all the nuts and bolts. But a lot of representatives just think they got elected king and that my voice doesn't matter the moment I exit the polling place. This is, in effect, a deliberate attempt to disengage voters.
There's an old political cartoon from the post-Brexit era that goes something like, "These smug pilots have lost touch with regular passengers like us. Who thinks I should fly the plane"? The obvious joke being that no, randos are not qualified to fly the plane. But at the same time, the people who bought tickets are the ones who ultimately deciding where to fly. If the pilot said, "I know you bought a ticket for Miami, but I don't like Florida weather, so we're flying to Houston", you'd be right to be pissed off. The fact that you don't know how to fly the plane is not a moral vindication of the pilot's decision to override your travel decisions. Or, in this case, the fact that party leaders can out-organize their members does not mean they should overrule them.
As for the USSR, I had written a whole explainer on the French Revolution and how it neatly mirrored the Russian one before I realized it was distracting from my main point. It's easier to say "Russia is good at resisting change and coopting economic systems".
But if you want a stronger argument: The general pattern is that revolutions that intend to depose the ruling class of a country run the risk of turning on themselves. The infighting proceeds to burn through and kill all the true believers, leaving a hollow shell of people who played the power game well enough to survive. Thermidor[0] comes, and a coalition of surviving old guard and revolutionaries enjoy the spoils of a system whose dead wood just got killed off. And Russia did this twice: first, the Bolsheviks turned Communism into a dictatorship; second, the oligarchs turned "liberal" capitalism into an aristocracy. Inferring anything about the properties of the underlying economic system from how it was coopted by Russia is useless.
[0] The French Revolutionary Calendar month that covers late July through early August. Since nobody uses that calendar anymore, "Thermidor" generally means "the moment when the revolution is coopted".
> our democratically elected representatives are unwilling to yield to democracy when the people wish to overrule them.
Yeah this is a big problem. Essentially I feel there is to few "the child in Emporors new clothes" that can call out obvious BS.
I.e. somewhat emotional members that don't know the unspoken rules.
> But if you want a stronger argument: The general pattern is that revolutions that intend to depose the ruling class of a country run the risk of turning on themselves.
Sure. You could generalize to violent brutes should not run things if you want a nice society and they are let loose in bloody revolutions.
Some media companies had them before the 1980s. New York Times issued dual class in 1969 so that the owning family maintained editorial control.
Berkshire Hathaway is possibly the most famous from the 80s/90s. The class A shares are significantly more expensive and proportionately even more powerful than the class B shares. The lower price version was important back when physical exchanges didn’t support fractional shares as they do today.
Berkshires share classes are different in that A is exactly ten B shares and anyone can convert A to B and hold them. The dual share classes that are bad separate control from ownership.
The BRK A and B are slightly different in that A is worth 1500 B but B only has 1/10000 of a vote so it IS a somewhat lopsided value vs voting share but not as bad as the 0 vote SPCX shares that just got dumped on the market.
They were a thing in the previous 20's and the exchanges banned them in like the 40's (you could still have a dual-class corporate structure, you just wouldn't be listed on eg the NYSE), because investors thought that was some bullshit to have someone control a company while owning only a tiny slice of it.
That rule was dropped sometime in the 80s.
https://en.wikipedia.org/wiki/Ivar_Kreuger#B-shares
> Kreuger's financial empire has been described by one biographer as a Ponzi scheme... Another biographer called Kreuger a "genius and swindler", and John Kenneth Galbraith wrote that he was the "Leonardo of larcenists".
No. Google has them too.
That's absolutely still "recent" when discussing corporate governance.
Google is also pretty new in the terms I was talking about only slightly older than Facebook. I mean going back to the 80s/90s or earlier, pre current FAANG at least.
Interestingly enough, strong corporate governance and independent directors do not produce better returns. This is a central point in Eric Rees's book Incorruptible.
https://leeds-faculty.colorado.edu/bhagat/bb-022300.pdf
guys a successful founder who lucked out and now has an academic hobby. I'd read other people if i were you.
1. He cites existing academic literature that is peer reviewed such as the link I provided.
2. If his claims are incorrect and poorly sourced, feel free to call them out. But his research appears to have been rather exhaustive on this topic.
3. If there are other sources that contradict these claims and are well researched, links are welcome
Ad hominem.
yes. sometimes that's valid tho.
Is it abuse of power or company success? Wouldn’t shareholders vote out any crazy successful ideas Elon had? Likely bankrupting companies at their early stages?
That's why companies usually don't have a bunch of competing owners from the start. You do your big risky moves early on when you have the novel vision and a big blank check from a VC. Public stockholders aren't going to be as risk tolerant because the ROI is never going to be as high as what the early VC would get. Going public is growing up, you can't do the fun risky stuff you did when you were a young startup with more cash than sense. When you do want to do something fun as a public company, you have to do it carefully because you're dealing with other people's money now.
More and more, "abuse of power" and "company success" seem to be intertwined.
Meta would be an excellent example of that.
I just realized that dictatorship is in a way the same thing. Look at Singapore. It is super successful because of "right" dictatorship. Libya was somewhat a good example with their insane water infrastructure and social programs.
No one ever votes out the guy running the ring toss at the carnival either. What if your man only plays rigged games so he can resist anyone looking at the books or having a voice?
You dropped your "/s".
Good. Marking comments with /s makes us dumber.
This is not reddit, people actually read and understand sarcasm (most of the time)
Poe's law means you should still give some indication that you're making a joke.
HN is closer to Reddit than you think, there's just a little more ceremony to it.
I can't comprehend for the life of me that people put their life savings in what Elon Musk is doing. Are people not seeing how he's lying about the future all the time?
He said he aimed to have 5000 Optimus robots out by end of 2025, 50000 by 2026 and 10 times that in 2027.
He promised in 2015 that full autonomous driving would arrive in 2 years and we aren't there yet 11 years later. He even said in 2016 that there would be coast-to-coast autonomous driving in 2017.
He promised manned missions to Mars by 2024-2025 in multiple interviews between 2011 and 2016.
He promised in 2016 that there would be solar roofs expansions by 2017 that didn't pan out, he promised AGI by 2025 in 2024.
Elon Musk has repeatedly lied about outcomes of his ventures, gotten crazy valuations based on those exaggerations and now people are starting to finally wake up that he isn't as good as his ego.
He claimed that he would unearth billions of dollars of government fraud, only to lie about that too. Instead his team cut aid programs and have contributed to an estimated 700,000 deaths so far.
https://www.newyorker.com/news/the-new-yorker-interview/the-...
I recall the Boyle video in this claimed the whole affair cost $100B or so and achieved nothing. So, typical Musk outcome.
It's crazy to believe that stopping the funding of US backed NGOs directly kills people. Literally just make up bullshit numbers and virtue signal. This is a reason why the US is trillions in debt. We need more than DOGE. We need real cuts to mandatory spending. Otherwise buckle up - they are going to inflate their way out of the debt.
> It's crazy to believe that stopping the funding of US backed NGOs directly kills people.
Why? Have US-backed NGOs never saved a single life with their spending?
You can argue it's not worth the spending, perhaps, but you really can't argue that it's not happening somewhere.
> This is a reason why the US is trillions in debt.
This is a tiny, tiny, nearly invisible fraction of that reason.
"No Snowflake in an Avalanche Ever Feels Responsible" You're right - we need to cut more. We'll save more lives if the US government stops the rate at which it is currently spending. The interest on our debt is currently larger that our military budget. The government can sell bonds to cover some of this debt but when it doesn't have money to cover mature bonds it needs to sell more bonds at a higher interest rates. It makes the deficit worse. The fed will respond with printing more money causing inflation. Inflation hurts the middle and lower classes the most. You either make massive cuts, or burden your productive wealth creating classes with taxes. We have a massive SPENDING problem.
> "No Snowflake in an Avalanche Ever Feels Responsible"
You're trying to prevent the avalanche with a hair dryer that isn't even aimed at the snow.
> We have a massive SPENDING problem.
Guess what we'll have if we let China become the hegemon by removing all our international soft power initiatives?
Gotta hit on a few things there in no particular order:
- USAID's final budget was $34 billion. That's already very real money, but it came from the discretionary budget - that giant bill of spending where the government decides what to spend money on: schools, roads, housing, and so on. The entire discretionary budget for 2025 was $1.9 trillion, so USAID made up almost 2% of all the US' federal discretionary spending!
- Nothing USAID was doing was irreplaceable. The vacuum their exit has created is being rapidly filled by a wide mix of other interests. So saying they are saving a life when they are just another replaceable entity, even if a rather large one, is misleading. It's kind of like saying Google is why we have web browsers.
- USAID and the CIA worked hand-in-hand. For instance one project was USAID/CIA starting a fake social media site [1] in Cuba specifically with the goal of trying to create an insurrection, which would undoubtedly be very bloody had they succeeded. So in your calculus you need to account for deaths caused by USAID as well.
- Many of their programs seemed geared towards the creation of dependencies rather than working to ensure the self sustainability of various places. I think this likely ties into the above issue. Teach a man to fish and you feed him for life, give a man a fish a day and you now control that man because he's dependent upon you. Sociopathic intelligence agencies blending with philanthropy is a rather horrific combination.
[1] - https://en.wikipedia.org/wiki/ZunZuneo
> so USAID made up almost 2% of all the US' federal discretionary spending!
So, tiny; a fraction of what we spend on much less useful things like the Iran war or huge gifts to ICE.
30 years of that level of USAID funding would only get us to a single one of those trillions in debt.
> The vacuum their exit has created is being rapidly filled by a wide mix of other interests.
Yeah, we don't really want China vacuuming up all of Africa. It was already looking like a growing problem before the USAID cuts (https://www.congress.gov/crs-product/IF11304).
> So in your calculus you need to account for deaths caused by USAID as well.
I mean, your one example cited didn't work and resulted in zero deaths. If we get to count that sort of thing, we'd have to start accounting for the soft power benefits of USAID (and those the CIA gets from the trade), too. Goodwill, intel, not having a bunch of polio infections come into the country via air, etc.
> Teach a man to fish and you feed him for life, give a man a fish a day and you now control that man because he's dependent upon you.
How does "deplete their fishing grounds (and other resources) for hundreds of years" figure into the analogy?
Yes the Iran war is also a waste of money. Money being wasted in one place is hardly an argument to do it in another place. And the whole point of discretionary spending is that it's money that could have been spent on society instead of e.g. setting up fake social media sites to try to cause chaos in another country. And because of spending I think we often lose track of what it means. $34 billion is $100 from every man, woman, and child in the US. That's a lot of money, wasted every single year. And yeah after all is said and done Iran will cost hundreds more. Add Ukraine and we're up to the thousands. Add Iraq and we're getting into the tens of thousands soon enough. Imagine if all of this money was spent domestically.
The reason China is succeeding in Africa largely gets back to my critiques of USAID. China's pharma companies are establishing production factories within Africa for the local production of trade-level quantities of pharmaceuticals meaning they'll be able to provide not only for their own needs, but have enough production to turn drugs into exports. In the future Africa could even viably start to become a destination for medical tourism. The US could have done this and much more with the vast sums of money we blew on USAID, but we didn't. We preferred exploitable dependency creation paired alongside some corporate welfare for US big pharma. It's yet another example of the focus on short-term benefits while ignoring long-term costs. It's not like African nations don't realize what we're doing, while we then go and try to lecture them about the Chinese debt trap.
If US backed NGOs were distributing life saving medications (e.g. for HIV-AIDS via PEPFAR, to give only one example) and then that distribution was withdrawn, causing recipients to die because they could no longer access medication, what other conclusion should we draw?
Maybe we should have elected Hillary Clinton then?
(This is a reference to Bill Clinton's extremely successful "Reinventing Government" initiative which actually balanced the federal budget until the next republican came along...)
> This is a reason why the US is trillions in debt.
Trump's OBBBA will be another reason, expected to add several trillion in the next few years. So yeah, real cuts are probably needed, but the DOGE people aren't achieving that in net.
To clarify, Elon himself opposed OBBBA because of the deficit. My point is that anyone cheering on DOGE for cuts but staying silent on the administration's generally bad record on spending, has an ideological bias that is not purely about fiscal responsibility.
Well, rational or not, anybody that put a significant life savings into early TSLA and kept it there is retirement money rich now.
Lots of rational people kept shorting, thinking sanity would prevail, and ended up losing bigly.
It is hard to estimate how rational the market is.
“the market can stay irrational longer than you can stay solvent”
Every company you mentioned has made more progress in those spaces than anyone else, and they are all clear progress towards the goals discussed.
You're mistaken.
Name 3 accomplishments he made and I'll show you world class work done elsewhere by other companies. The only thing he did which was notable was Starlink and I'll gladly grant you that. China is about to eat Starlink's lunch with their own tech.
Again I think people overestimate Musk's contributions to the world.
1. Starlink, which you provided
2. Made the modern EV relatively commonplace; no other manufacturer was taking it seriously until Tesla succeeded, and took many years to catch up, although they have
3. Re-usable rockets / higher launch cadence leading to significantly cheaper costs to put things in space. No major competition yet.
Falcon rockets, starlink, Tesla. They all pushed the envelope in their field. Are the stocks overpriced? Yes. Did they do impressive technical work? Also yes. They might get surpassed by competitors, but that is to be expected for all companies. But they clearly did something special there. And I deff am no Musk fanboy, but you have to give him the credit for establishing those systems.
I think the fact that China is copying SpaceX's tech is a testament to SpaceX's success
There's also the bit about people talking shit about other people they're not even close to, to feel like they matter. Ahh well
Hey guys Elon Musk sucks haha high fives all around, great
Tesla may not have pioneered fundamental technology, but it put together a combination of price and utility that nobody matched at the time. Find me anything in 2018 like a Model 3 that wasn't a compliance car.
Profitably reusable rockets were a major accomplishment. People like to argue against this. Every argument I've seen is either saying it doesn't actually save money or it wasn't new, neither of which is correct. It's very hard to argue with the numbers here; SpaceX is now launching more into orbit than every other launch provider combined.
I think the main reason people downplay these things is precisely because his own claims are so exaggerated. Doing 165 orbital launches in a year just doesn't sound impressive when he promised we'd be sending people to Mars years ago.
"Every company you mentioned has made more progress in those spaces than anyone else"
Lies. Waymo beats Tesla in FSD. Optimus is nothing while China has full fucking martial arts robots. It's 2026 where's that 2025 manned Mars mission? Where's that 2025 AGI promise (currently running itself in circles.) His solar roof tile idea was a bunk plan and any regular roofer could've told you that.
China made a fucking electric car that can KITT jump. The only way Teslas get off the ground is when they hit curbs at batshit insane speeds.
Elon and his companies, outside of SpaceX, are generally frauds. Down to PayPal, which thinks it has a right to YOUR MONEY if you even so much as sneeze wrong (theft by contract.)
I can't buy a Waymo right now. I can buy a Tesla though.
Yeah, but the topic of discussion is presumably FSD that actually works ;-)
And before people jump in to say "have you tried it, it works" yes I have a Tesla and FSD has tried to kill me multiple times already. Including jumping a damn red light after slowing down to a stop so I was absolutely unprepared to react.
Credit where it's due, it's a pretty nice car and even the self-driving technology is decent, despite being hobbled by Elon's nonsensical allergy to LIDAR or other sensors. But it is being marketed as "FSD" and it is very much not FSD, and I can't believe more is not being done to prevent the needless deaths that are inevitable because of this.
That simply isn't true. Progress toward a goal isn't the same as leading the field.
Autonomous driving is the clearest counterexample: by March 2026 Waymo had logged over 220 million rider-only miles with nobody in the driver's seat, and was doing 400,000+ rides per week across six US metros. Tesla's consumer product is still officially "Full Self-Driving (Supervised)," and Tesla itself says it does not make the car autonomous. Mercedes has Level 3 certification. Tesla has none.
Optimus missed the stated 5,000 robots in 2025. As of July 2026, Tesla still isn't selling it and is only preparing manufacturing capacity. Meanwhile Agility's Digit is in commercial warehouse deployment today. Solar Roof is worse: Musk targeted 1,000 installations per week, and Wood Mackenzie estimated Tesla averaged about 21 in 2022. Tesla's disputed the number but offered no replacement count.
SpaceX is the real exception. It genuinely leads, and the engineering is remarkable. But it's still a decade overdue on "crewed Mars by 2024." That's the point: on the one venture where "more progress than anyone else" is actually true, the promise is still failing by over a decade.
The criticism isn't that nothing comes to pass. It's that concrete near term promises repeatedly fail and get replaced by bigger ones. When a valuation depends on being uniquely far ahead, competitors catching up erases that premium fast.
From what I can tell, the sad truth is that people think “he’s a billionaire / trillionaire, I want to be involved with that.”
It’s a variant of the people who pick “Jay-Z” in the meme question “would you rather have half a million dollars or lunch with Jay-Z?”
Salesforce often does product announcements to determine how the market might respond before they ever build anything. The very thing they're selling may not exist and might not even be possible as they describe it.
I think it's a way some businesses just do business and the market has not issued a correction to that. Maybe it should?
Yeah yeah yeah he lies all the time but Tesla cars exist and are awesome and the company is worth more than all other car companies combined going on how many years now? Do you really believe you have some unique insight that the rest of the market has not discounted? Spacex was probably just over valued and this sell off has nothing to do with “people starting to finally wake up that he isn’t as good as his ego”. I suspect the best thing you could for yourself, at least as far as the stock market goes, is humbly acknowledge you know nothing and just buy index funds.
Are they waking up? I haven't seen evidence of it yet.
His success is like the best case study in the world of how our current economic system is solely for the benefit of a privileged few.
He is obviously a liar, a conman and morally suspect. But he has mastered the art of lying in a way that people want to believe. So much so that he can separate fools from their money to the tune of billions.
When you can do that, every economic institution on the planet wants a piece. It's a firehouse of ill gotten cash, and those supporting his staggering rise to power are there to grab a bit of filthy lucre for themselves. It's a wealth transfer than comes along maybe only a few times in a generation.
Everyone knows he's a complete fraud even as they enable him to pull off all these stunts.
Some people, many people, recognize him as a serial liar/exaggerator, but think he will make them rich too. Eventually that probably stops being true.
It's almost like TeslaCharts might have been on to something..
Like Trump, he excels at self promotion, and a lot of self promotion is about being able to lie fluently.
For such people, lying comes as easy as breathing. No wonder they do it all the time.
Article needs registration.
magnolia1234 bypass-paywalls-clean
https://archive.is/tnSeY
The fact that this works by exploiting AMP is delicious.
Can you explain? I'm not sure how to Google that.
Not a recommendation for this fork of the extension, just the first I found googling.
https://github.com/aspenmayer/bypass-paywalls-chrome-clean-m...
https://github.com/aspenmayer/bypass-paywalls-chrome-clean-m...
Google pushed this AMP thing to make pages load faster but via them as a powergrab so using amp to archive articles is using the system against itself if you squint real hard and oversimplify the various actors in the situation.
Really slick!
There's a weird "Cloudflare" captcha on that site. I can't get past that either. :)
Oh well… the article probably hasn't anything useful or important to say anyway. Time to move on.
Sorry what does the magnolia thing mean?
https://gitlab.com/magnolia1234/bypass-paywalls-clean-filter...
That’s making me sign in?
i signed in only to find that link 404s (which makes sense for why it asked to sign in, in the first place)
Use your words.
Heading for junk? It's absolutely junk and trash. Every retail investor that I know that bought SPCX, did so to make a quick buck. It's even worse than crypto, at least some people believe crypto has value and will take over or replace fiat currency. No one that I know who bought in SPCX did so believes the space data center story or going to mars. There's certainly value in launching things into space, but none believed the valuation with the profit, but the figured Elon has the midas touch and they could cash out before the music stopped.
The title is quite biased, it's telling us what to think even before we read the article
the title of a piece is a summary of it. it tells you what the writing is going to argue
Which is all sorts of backwards. Debt has liquidation preference over equity. And equity market say spacex has trillion+ of supposed equity buffer before it cuts into debt value
This is incorrect. SpaceX has a trillion in Market Capitalization, not a trillion in Equity. These two concepts are no the same. The equity value is the theoretical intrinsic "worth" of a company, and has a very simple definition: Equity = Assets - Liabilities.
Market capitalization takes into account the future value of the business, while equity (an accounting concept) only looks at present day cash & liabilities.
When a company gets liquidated, the future growth/value of the business is, pretty obviously, zero, so the "market cap" is irrelevant. What matters is what is left over once all debts are liquidated.
SpaceX's equity at the time of their IPO was $34 Billion (it's in the S1!). You can also see in their S1 that their cash decreases by about $8B a year, so unless things change they should be underwater in about 4 years.
By „equity buffer“ I don’t mean equity in the balance sheet sense you seem think.
In this case the gap between the value bond market and equity markets assign to spacex is equal to market cap ie a trillion.
If equity markets are right there is a trillion of spare equity buffer ( ie equity in the enterprise value sense not accounting equity) before endangering bonds and the bond people are idiots for marking their bonds down. If bond market is right equity is worthless and equity people are silly to push it to a trillion market cap.
Either way someone is wrong by a trillion.
If the equity market says something that must make it true. Markets have never gotten valuations wrong
On the other hand the bond markets are pretty reliable too. It's all old school professionals in there not /r/wallstreetbets memekings pumping up their fav stonk
are you not a true believer of the efficient market?
Anyone still buying anything the right-arm-raising guy is controlling is out of his or her mind.
Quite honestly IPOs and the stock market in general is a Ponzi scheme. This is something I would never have said before. I am not a skeptic. I invested in the markets for years and made money on Amazon, Google, twilio, and so many others. But I also lost a lot of money buying near or after the IPO. The game is rigged. Those who put money in post IPO in the 12 months after are left holding the bag for years. It takes 10+ years to recover that. The people who invested pre IPO, the VCs, the bankers, etc. they are getting a good deal. In the case of VCs they are taking early risk. Not at the late stage. But earlier. In many cases it's been a long hold. Again 10+ years. But anyone coming in at the IPO you are buying at a peak when someone decided that's the perfect time to hype it. We're all catching a falling knife. Doesn't matter if the business fundamentals are sound. They become disconnected from realities of the market when it all gets tulip crazy.
These things have a way of working themselves out. But look at almost all IPOs and the next 12 months the stock is down 50+% so I'd rather wait. And honestly when I buy, it's to hold 10+ years, not make a quick buck and it's because I believe in the value. You can believe in SpaceX but also still believe the market and the dynamics of IPOs is almost criminal for retail investors.
It's almost as bad as crypto token sales tbh.
This isn't backed by any evidence though. Jay Ritter maintains an extensive amount of data on IPOs here:
https://site.warrington.ufl.edu/ritter/ipo-data/
And his data shows that IPOs for the most part perform about as well as their respective market. That is large multi-billion dollar IPOs perform about as well as the broad market, and smaller IPOs (which constitute the vast majority of IPOs) perform about as well as other small-cap companies.
In other words, investing in IPOs doesn't give much of an advantage or disadvantage compared to investing in other similarly sized companies.
What's true is that most stocks, including IPOs, don't do well in the long run. The half-life of a publicly traded company is something like 10 years.
Also, the OP just does not understand how the market works anyway. Surely if it was obvious that investing in fresh IPOs is a bad move, all of the big boys (banks, hedge funds etc) would short them to the point of equalising anyway. Maybe not to the absolute efficient point, but still, why do people think they can see such a huge obvious trend, and also assume that other people cannot see it?
Banks generally cannot make these kind of directional bets, and the Gamestop saga has shown that it's very risky for short interest to get too high against retail excitement. So if an IPO is heavily overvalued, the level of pressure required to bring it down immediately may not materialize for structural reasons. I made a modest amount of money from SPCX falling, and I'm sure some hedge funds made much more than me, but I and I expect they would have stayed far away if short interest had been higher.
>Doesn't matter if the business fundamentals are sound.
The business fundamentals are rarely sound for modern IPOs, especially anything Elon adjacent. His companies are just as bad as crypto token sales in terms of their hype. Heck, some of the stock price appreciation of Tesla _was_ driven by their ownership of crypto for a year or two.
Stocks, especially without dividends and negligible voting rights, are basically baseball cards for companies.
That is funny comparison looking how baseball card markets have gone recently. Which is extreme increases in prices for little logical reasons. Or has baseball massively increased in popularity? (Honest question)
I would guess it’s the same force driving absurd stock valuations — the money supply doubled around COVID and all the new money has to pool up somewhere. Some of it ends up in stocks and real estate, but once those become obviously overvalued it starts pooling up in more fringe investments like trading cards. It’s the same dynamic that created exotic mortgage backed securities that led to the 2008 financial crisis. There’s literally trillions of dollars of capital that’s slowly losing value from inflation and the owners of that capital are desperate to find investments that will preserve or increase their wealth.
And on lower end for many it feels that they are out of options. So flipping or speculating on anything they can get their hands on is only way to make it in life now. Pokemon cards is biggest example of this. People camping and literally fighting over in essence scraps for very small amount of product to then just resell it to someone else. Who probably speculate on it themselves or need for it to run some type of other scheme like gambling...
It really is weird market from outside. Like millions of cards waiting to be encapsulated in plastic with tiny label on them naming a number. Depending on number the value can go up multiple times. Each of these paid at least something like 20 dollars...
Warren Buffett famously said IPO stands for “It’s Probably Overpriced”.
It’s been true for over twenty years that the majority of IPOs drop below their IPO price and stay there. Maybe your brokerage has some shares before IPO day that they’ll let you buy, but you’re still taking a big risk. Buy shares on the open market? Yeah, you’re the sucker they were looking for.
There's been a massive change to public markets in the last decade and the retail path to making money seems to have closed. I made a some money on IPOs using a laughably simple heuristic:
"Is the company market cap low? Do they have a decent product? Is it plausible they'll 10x? Yes -> Buy some amount I can afford loosing"
For example, Tesla IPO'd at $5B cap, it was perfectly plausible to believe they'd be worth $50B some day. Shopify IPO'd at $1.3B, Square at $3B, 10x was perfectly believable. Uber IPO'd at $75B, I did not believe they'd be worth $750B any time soon, or ever. Do I believe SpaceX will be worth 20T in like 10 years? Lol. Fmao even.
Today's IPOs at $1T+ means that private money figured this out and cut the retail public out, IPOs seems to be a really terrible deal these days.
What you’re saying is entirely vibes-based. The actual data utterly contradicts your claim (see sibling).
I don't think so. It's strident and it may be eliding some details, but the idea is IPO shares are available to institutional investors first and that adds a tax for retail investors that is probably not worth paying. A suspicious mind might go so far as thinking the institutional investors don't necessarily care about the underlying metrics at IPO up to a certain number of shares: they know that whatever X opens at, they can get 1.25X for the shares immediately after.
>There is a massive downside to premature inclusion of a stock that is initially overvalued Define “massive”. SpaceX is only 1.2% of QQQ.
Elon musk is the Elondyssey to himself.
I'm impressed with the general public. I thought these guys would get away with their hype train. Nice surprise.
A much larger percentage of bond traders are institutional, compared to equities, where retail is very active in some names.
So I wouldn't really give too many points to "the general public" for this one.
Don't worry, they made plenty with the pump-and-dump.
but they did. they already got their money. it's the investors who are going to take a bath, not spacex
The next time SpaceX wants to sell some bonds they will take a bath. Even if this isn't immediately screwing Elon or SpaceX, it indicates a much higher interest rate next time they issue bonds
The thing that propelled Tesla to ridiculous heights was the massive shorting (and eventual covering). This should just drop and drop (I hope).
The financial press failed to run headlines damning the SpaceX IPO, or all the ongoing false promises Elon makes.
And now they report that investors, many of whom are their customers, are suffering...
Between Matt Levine and the FT, I saw plenty of damning (or at least skeptical) coverage throughout the entire lead-up.
This particular author/publication has been beating this drum about Elon and his many companies for years now, fwiw.
> has now widened from the initial +175bps to a whopping +231bps doing more than two-thirds of the work.
2.31% spread over treasuries is heading for junk bond status?
It's a lot closer to junk (approx 2.7%) than it is to investment grade (approx 0.8%):
https://www.macrotrends.net/3006/high-yield-spread
https://www.macrotrends.net/3042/us-corporate-bond-spread
No, but the fact that they're the worst-performing BBB bonds, the company is burning cash, and the equity being down 38% since its peak after 1 month of trading is indicative of the market's…suspicions.
We'll see what ratings agencies think of the health of the company.
If only these people have been warned before.... </pretend_care>
Can we have a separate anti-Trump, Elon, etc. section on hacker news? So I can separate this noise from the real news. I'm no pro Elon, but this stock went from 150 to 200, and there was no news on HN. Now it dipped from 150 to 136 and suddenly it's on HN front page. The headline should be: "Traders trading".
10% drop 1 month after IPO is normal for a stock. It doesn't mean it's heading for junk bond status.
Stocks and bonds are different things, and the bond issue is separate from the IPO. Both are ways for companies to raise money, SpaceX did both. This thread's nominally about the bond, but for some reason everyone's talking about the stock.
Bonds are not the same thing as stocks.
Musk biggest mistake is that he wanted to start another bubble while the last bubble didn't pop yet. This is against the handbook of a Wall Street thief, bad, bad Elon.
Keep an eye on Rocket Lab. Peter Beck is legit.
Is this a real concern? SpaceX is doing amazing in terms of business.
SpaceX-the-space-launch-business is doing amazing things, which is part of what makes it so sad that the financials and buzz is all for SpaceX-the-enterprise-AI-business.
Their S-1 projects $28 trillion TAM, with 93% of that attributed to AI, ~6% to connectivity via Starlink, and only ~1% for space launch capability.
Of their $20 billion CapEx spent in 2025, 60% was spent towards AI data-centers, 20% was spent towards Starlink satellites, and ~20% was spent towards actually building Starship and Falcon 9. That's gone up to nearly 80% towards AI in Q1 2026.
Of course, "AI" makes up only ~20% of their current revenues.
So... this company is priced as an AI startup but it's actually a satellite internet and space launch business.... or is it? Shame to see the coolest thing that Elon did be eaten by the AI monster.
https://www.sec.gov/Archives/edgar/data/1181412/000162828026...
It depends on if you mean the space part or the nascent AI mega company SpaceX is pretending to be. The ipo claimed the space launches would only be a small part of their future profits and business and that they'd reach a 7 trillion dollar TAM or etc - this isn't a good sign for that promise.
if people aren't buying the bonds, then people do not believe that they are doing amazing.
The drop in price is a bad metric to judge this by since bond prices depend on the yield of other items.
Here's the key point in the article: A month ago, the bond was priced at +175bps yield above treasuries with similar maturity, now it's priced at +231bps.
Cheap capital masked a lot of risk. The current rate environment is exposing it.
These are bonds that were issued a few weeks ago.
My take is that the resumption of that war in Iran makes it more likely that interest rates will rise, and rising rates means falling bonds prices.
yeah, as the article said bond prices have fallen slightly over the time period but this is much more bond buyers seeing increased risk SpaceX isn't going to have the cashflow or ease of further equity raises to pay them back in the long run. (With it being bonds the upside of "but what if SpaceX actually does become bigger than the present US economy" is capped too)
I don't see a future in which those bondholders don't get paid back.
The company has plenty of revenue, and if needed can just turn off the r&d tap and become a boring company. Terrible for the shareholders obviously, but the bond holders will be fine.
This assumes that SpaceX's decision maker decides to prioritise cuts to repay bondholders over R&D to see if they can innovate their way to bigger profits, which doesn't seem a sure bet (tbh I'd put SpaceX under its current management very low on the list of companies likely to do this)
I mean the bond yield is 6.65% over US Treasury returns of 4.75% so it's not like everyone's running in fear of their imminent collapse either. But they're less confident than they were when Elon company valuations looked immune to gravity.
Another example of complete idiocy on this board.
Yep spacex can afford to have a declining value of equity… its talent who are mostly paid with stock will leave for its competitors - increasing the probability of bankruptcy. Putting the company in a tail spin heading for default.
So how are the bond holders gonna get paid in the event that happens? Oh in bankruptcy court? Lmao.
Raising equity is not a loophole either - ebit and ebitda drive measures of default risk.
Most of you on here should never ever talk about finance. It’s like you learned how to discount a cash flow and have it all figured out lololol
It's wild to watch HN root for Tesla, spacex, starlink, etc to fail just because they don't like Musk. If HN gets their way, we'll regress back to the stone age with all their "anti" views on tech these days (even anti datacenters). I guess it's good that the influence of the HN crowd doesn't flow into China/Asia where they are aggressively mimicking Musks vision. At least Asia will have a future.
I'm very pro tech. Because I'm pro tech, I honestly wish there were more ethical companies in the space. It can be hard to find US tech companies to cheer for. My main business-related challenge with Elon is his public predictions are so wildly ungrounded. Skepticism is absolutely warranted.
Two things:
Is it anti-Musk to point out Musk makes wild promises that rarely come true...robotaxis at scale, xAI creating MacroHard etc etc.
It certainly is a contrast from the Tesla years. But overall I think the current consensus is:
- we don’t believe in startups (low quality scams)
- we don’t believe in technology. (It’s surveillance and distraction).
- we don’t believe in markets (regulate the RAM)
- we don’t believe in agency (unruly rule breakers)
And honestly we’ve seen a lot of events that strengthen those positions. Some of it is age as well. I’m just interested to see what comes next with so little faith in the industry.
I can't identify one item on that list that I think would be fair to consider a consensus.
Really? Do you want to try one out?
I don’t see very many articles interested in new startups. It’s usually about them failing. I often use market explanations in my comments and these are not received favorably.
Consensus means there is general agreement, but those statements are highly disputed.
Maybe “dominant view” is a more accurate term? (On HN)
I don't think any of those could be fairly described as a dominant view in general.
> even anti datacenters
Now, I'm a computer guy, love tech and have nothing against datacenters. But the recent anti-datacenter sentiment is not some luddite reaction. Data-centers cause serious social changes in property prices, electricity costs, water waste etc. Sure, there is a need for more datacenters and more compute, but lets not diminish the very real worries by the people or communities affected.
And contrary to what many of these hyper-scalers and the senators/politicians they lobby want to make you believe, datacenters do not bring in enough jobs to make it worth it for many of these communities.
Once a datacenter is built, minimum staff is required. And this is now very obvious since many of these companies are now also preaching for datacenters in space.
I think the biggest change in public sentiment in datacenters is a reaction to the extreme scale they're being deployed at these days. They're really vastly unlike datacenters of the past. The power densities are so much higher, they're so much larger, and they're getting vastly more environmental waivers and tax subsidies than ever before.
A quiet, average-sized warehouse-like building in an industrial area with a big power substation next to it often didn't bother a lot of people. A giant monster of a building being built in what was previously people's backyards with howling on-site power generation that got installed without any kind of air quality reviews because they're allegedly "temporary" and starts sucking the groudwater dry is a whole different story.
This is a datacenter: https://maps.app.goo.gl/pzSsUHXPaUuLGaDa9 I doubt many people even know its a datacenter. Its pretty much any other office building.
This is also a datacenter. I imagine just about everyone living nearby knows its a datacenter. https://maps.app.goo.gl/wR4NgcWQVhJAy5Gy6
I don't understand why people cast skepticism or not-devotion as "hatred." There's a whole spectrum for opinions to fall on; I don't care for sports but that doesn't mean I hate baseball.
I don't just dislike Elon Musk like he's some jerk I don't agree with. This isn't a baseball game where he's the other team's star pitcher and we should put aside our differences when the game is over.
Elon actively interfered with US elections, and has done untold damage through his DOGE stunt. He uses his vast wealth in ways that have done real damage to the US, the US economy and in support of people who are dismantling American rights.
The boogeyman of "China/Asia" won't make me "support" a man who uses his money to make America worse. I do not support his actions and I do no wish to fund them regardless of the technology they create.
I'm pretty sure the founding of SpaceX doesn't mark the end of the stone age.
They are mostly jealous Europeans.
This is the explanation for most anti-US industrial power comments on here. The rest are chinese bots or people who have overdosed on biased news (which is not a phenomenon exclusive to one side or another).
I don't actually hate Musk. Although he has done bad, I think he has done far more good than bad. He has, for one, directly improved my quality of life on the transportation front.
The guy's vision is a world where children don't get the medicine they need and fascism rules (he gave a nazi salute, unironically). DOGE has killed people. Has killed children.
Guy was doing Nazi salutes at Trump's inauguration. If he wanted support from normal people, he should have remained within normal political norms, not do Nazi salutes. I don't think it is normal to expect sympathy after that, people will be revolted and would want him to fail. They should not be judged for this opinion, it's pretty vanilla. Normal people still carry conscience, an innate justice system. Otherwise we won't even have justice system if we start giving people an out based on fame, talent etc.
If anything people are severly downplaying him being an unstable alt-nazi edgelord or whatever he self identifies as. As his fan club gets smaller it gets more fanatic, too. A lot of Twitter AI on Mars fan fic.
The fact that people like you are still pushing the subjective salute thing as incontrovertible fact makes it hard to find any common ground. Serious people in the media, even the ones heavily biased against Elon, don’t harp on it the way online people do.
Subjective? This is gas lighting. He put on his angry face, lips together and all. It was no subjective or ironic John Cleese nazi salute. It was a nazi salute. Then he went on to starve kids on medecine to death. I mean. Like. Really? Is this still in dispute?
i do not want to find common ground with people who do nazi salutes or those who excuse them. i want consequences these people because they wish harm upon me or excuse those who wish harm upon me. there is no "center" with this subject; there never has been, because nazi behavior forces the binary.
It's not like the salute is a singular event. Just look at him on X. Most of what he talks about today is his support for racist political movements (like Reform UK and AfD). That's when he's not tweaking grok to insert "white genocide" into responses for recipe requests.
There's a pattern here. The man's brain was utterly broken by the social media platform he bought, and he's an overt fascist at this point.
What you said is a more substantive argument than the lazy “Nazi salute, end of story” that somehow doesn’t get shot down enough here.