More on the approaching SpaceX IPO scam. The definitive explainer remains the Patrick Boyle video that we discussed Monday, but if you prefer a legacy media newspaper article, the Financial Times has also been on top of this story.
What could end up being the biggest bagholder exercise of all time — the Operation Overlord of jamming retail investors with an overpriced IPO — is opening up on several early fronts.
As Bloomberg puts it:
(Bloomberg) -- S&P Dow Jones Indices LLC is considering changes to rules governing how companies join the S&P 500 Index, a move that would potentially fast-track SpaceX’s entry after its IPO, people familiar with the matter said.
The rule change could mean that billionaire Elon Musk’s space transportation and satellite company would see a wave of billions of dollars in forced buying. Funds that track the index must buy newly added stocks, and roughly $24 trillion is tied to the S&P 500, according to Bloomberg Intelligence.
The S&P 500 news comes on the heels of Nasdaq doing everything it can to help Musk screw over its index fund investors.
From Reuters:
Under Nasdaq's "Fast Entry" rule, versions of which are being considered by some other indexes, a newly listed company would be eligible for accelerated inclusion on the Nasdaq 100 in just under a month if its market capitalization ranks among the index's top 40 current members. SpaceX is seeking a valuation of around $1.75 trillion for the IPO, one of the people said, which would make it the sixth-largest company by market value in the U.S., based on the latest share prices.
Back to Wigglesworth and the FT:
A quick reminder for those lucky enough not to have to follow this saga: A series of opaque fund-raisings and mergers have lifted the “value” of SpaceX to $1.25tn, and the company is said to be seeking to sell $50bn of shares in a 2026 IPO at a valuation of $1.75tn — despite estimated revenues of only $20bn-ish and probable losses now that it as absorbed the xAI “not-built-right” money furnace.
This is not a great look for Nasdaq, as some people have commented even more archly than us. [You should check out this link. An incredible read. -- MP] But at least Nasdaq has a primary listings business that would receive a huge boon from snatching a SpaceX IPO from its big rival, the New York Stock Exchange. Why on earth is S&P DJI also seemingly flirting with a rule-bending change to allow Elon Musk’s satellites-to-AI company a quick entry?
There are various entry requirements to ensure that the S&P 500 remains the gold standard of stock market benchmarks, and doesn’t allow just any random hot stock to jump in....
However, the rules should be seen in totality. The requirements for a certain free-float, liquidity, and a 12-month stint as a public company are broadly designed to prevent immature, dicey and easily-distorted stocks from being dumped onto the public via investment funds that are measured against or track the S&P 500.
These rules are now more important than ever before. Back in the day, indices only sought to reflect the market. Today — with tens of trillions of dollars in passive investment strategies that slavishly follow them and active strategies that at least have to be “benchmark-aware” — people naturally seek to game benchmarks for their own purposes.
Elon Musk is not a particularly bright man. His reputation as an intellect is largely a product of a press corps that was eager to create the myth of a real-life Tony Stark and of a society that can’t imagine rich people not being smart.
His tremendous success looks a lot like Donald Trump’s. Both men benefit from an unearned reputation for competence, a fanatical group of followers, a lack of shame, and tremendous good fortune, first coming to power in a time that tolerates blatant, large-scale scams and corruption.
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