alt Hacker NewsSpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
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The decision means companies like SpaceX would not be eligible for inclusion in the S&P 500 until at least one year after its listing and would also need to satisfy the index’s existing requirements for profitability and public float.
Sudden outbreak of common sense.
SpaceX is going "public" with only 4% of the stock being sold to outsiders. The S&P 500 requires a 50% public float. That may disqualify SpaceX for a long time.
Although GOOG and META are listed, despite control being held by insider shares of a different class. There was a time when the NYSE did not permit companies with more than one class of stock to be listed on that exchange. (Except F, FORD, which predates the NYSE). That was lost some time around 1990 or so.
This seems a sensible thing to do. If you change the rules on how things end up on your index, you force everyone using that index to reevaluate it. Your index is now perceived as more volatile (and probably is), and all the finance people need to reevaluate the risk of their index funds and decide if it is now 'growth', 'high growth' or whatever bucket it belongs in based on the new risk profile. And then all the portfolios need to be rebalanced. Which all takes time, more time than was being proposed. The sensible thing to do is to create a new index with the new rules.
What a pleasant surprise. I was positive S&P would get strongarmed into the bamboozle like Nasdaq but it seems they have a bit more integrity. Good for them.
Having lived through a couple big market busts over the past 30 years, it's interesting to see that almost all of them were caused by a loosening of standards.
e.g.
- DotCom boom was letting companies IPO even if they had no revenue
- Great Recession was due to loosening credit restrictions for mortgages e.g. giving people NINJA (no income, no job) loans
so very curious to see how this plays out.
Important to note:
Nasdaq changed its rules recently so SpaceX can join the Nasdaq 100 Index, a cohort of the largest non-financial companies listed on its exchange, in just 15 trading days, down from a three-month minimum. FTSE Russell adopted a similar approach, shortening the waiting time to five trading days.
Although it’s good they stood by their rules, elsewhere Reuters points out
> S&P Global said it would modify entry rules for its broader S&P Total Market Index and Dow Jones U.S. Total Stock Market Index, creating a pathway for SpaceX to join those less widely followed indexes.
So not really as principled as it seems
https://www.reuters.com/business/finance/sp-global-keeps-fas...
The market is more unpredictable than it’s been in a long, long time so I hesitate to make a firm prediction but to me the odds that SpaceX will be a successful IPO over a 3-6 month window are significantly lower now. S&P inclusion basically requires funds to hold a position by default, and per their own estimates $20tn of assets are indexed/benchmarked to the S&P.
This does seem sensible and I’m glad most of my holdings are in s&p funds.
Just to play devils advocate though, what are the downsides of not having 3 of the biggest 10 in the world not in your fund, if you hold to track broad market performance? Wouldn’t that have a massive blind spot on AI related growth?
Whether or not I personally think ai is over hyped or not, the whole point of these ETFs is to make sure I don’t get a say in the matter, since I’m a terrible stock picker
Good thing they're not dropping the profitability requirements. Ed Zitron would be proud.
All that wailing and gnashing about Spacex ipo 'forcing' index fund to invest and thus 'loot' poor people's retirements... when all you had to do was just...add a waiting clause.
It can still be a passive fund, not the end of the world.
Index trackers hire talented people surely they can add a waiting clause in their tracks too, just like S&P.
If your index isn't adding waiting clause, it's simply because they are greedy.
This made my day. The fast track entry is 100% a pump and dump setup.
It’s a huge relief. This was one of the largest frauds about to be forced upon so many unsuspecting investors. Epic in proportion.
It seems MSCI will add them, maybe? See: https://www.msci.com/indexes/markets-in-motion/megacap-ipos
But it's written in a rather confusing manner so I'm not certain.
Those mega IPOs are the latest grift to unload overpriced shares before the whole AI tulip bubble explodes in everyone's face.
The insiders know it, which is precisely why those IPOs are happening right now. Employees and VCs don't want to be holding the bag. small-time investors will be.
Also, SpaceX is going to unlock more and more on their float at around the same time most indexes will have to buy it. It has been engineered to socialize the losses.
I'm happy SP didn't agree to fast track any of those, unlike VTI and Nasdaq100. I spent the weekend to rebalance all my retirement accounts to make sure none of them are going to fast track those grifty IPOs. Unfortunately, I cannot do that for my taxable accounts as it would generate a tax-event.
So relieved to see this!
I was quite concerned about this, so this is really good news.
In Spain, it's much better to use mutual funds rather than ETFs (for tax reasons) so I didn't have as much choice of funds to avoid these IPOs.
Excellent. I was getting ready to reposition due to the risk.
This is the right decision. These indices are intended for stable, profitable companies with a proven long term business model. It’s not ment to be a casino.
The market has plenty of other options available for folks that just want to bet the house on red and hope for the best.
Thank goodness. I was v concerned about the implications of this.
See also S&P press release, "S&P Dow Jones Indices Consultation on Treatment of MegaCap Companies - Results":
* https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-...
Two words - Thank Goodness.
Before the flood of money from the index funds arrive, I'd love to see what's the right valuation for them.
How can we get the other indexes to also follow this too
As far as I know, will still be included in the NASDAQ 100 (since NASDAQ changed their rules already and SpaceX will be listed on that exchange).
At least someone still has some backbone.
I wonder how much of this decision is driven by recent media coverage about ETF holders getting screwed
Note that Nasdaq and Russel did put in place fast entry rules. S&P is the only one that didn’t.
https://www.nasdaq.com/articles/new-fast-tracks-account-olde...
Interesting from a sentiment perspective. The market is pricing in inclusion before it happens. By the time it's official the alpha is usually gone.
https://podcasts.apple.com/ca/podcast/the-rational-reminder-...
Long listen but a very thorough and nuanced discussion by a bunch of smart investment / finance guys in Canada. No click-bait-sky-is-falling content.
Keeping newly-publicly listed companies off an index keeps outliers from screwing with the index. It's no secret that companies that have recently gone public tend to be considerably more volatile than companies that have been public for a while.
I see a lot of comments saying things to this effect: "S&P 500 is just a metric/benchmark, not a fund, so it should consider the whole market even if that includes a newly-listed but very large company." And yeah, the S&P 500 is an index, not a fund.
But you know what is a fund? SPY, VOO, IVV, FXAIX, and loads of others. Regardless of what institution(s) manage your retirement accounts, you are almost certainly benefitting from the S&P 500 filtering out post-IPO fuckery.
I wouldn’t buy an ETF for an index fund that includes non dividend paying stocks
Looks like US society and its systems are well and alive despite the usual doom and gloom.
What is prompting SpaceX to IPO all of the sudden?
I'm personally convinced that this is Musk trying to get out of debt from his Twitter purchase.
Huge win for investors, given that S&P 500 funds are by far the largest index funds on the market, with VOO, IVV, and SPY being the 3 biggest ETFs.
> SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P
Good. Looks like there's still a bit of sanity left in this world.
Thank god.
I don’t know. Will this just delay bubble burst as people will be just waiting for the index inclusion?
It’s popular to trash these IPOs now but I bet if spacex or the big AI companies don’t follow the same pattern as other IPOs and the stocks just keep climbing and making the shareholders a bunch of money, I can’t wait to see people saying stuff like “the market can stay irrational longer than you can stay solvent!” and giving explanations on why they knew this was going to happen all along and why the rule changes were actually a good thing!
Proof that inherent market efficiency is bullcrap if we need popular sentiment to get companies excluded for being obvious grifts.
I am currently reading a book about the post war history of the Amsterdam stock exchange and it's quite funny reading about the booms and busts.
Although I am in my 40s I had already forgotten a lot- but yeah I was there in the 1990s. Repressed traumatic memories. Dutch consumers really soured on stocks when that house of cards collapsed.
I would say "it is happening again" but at least now we have bots who trade for us in milliseconds (although those didn't save anyone in 2008).
Now the other golden question: Will they still require profitability?
very mature decision by s&p, but at the same time will this not hurt spacex and other big IPOs? i thought the reason these mega IPOs are coming is because investors have run out of money and they companies need access to broader market capital to sustain. without 401k and other funds, won't this just hasten the bubble burst? am i missing something?
This feels like massive news that general public won’t ever hear.
Good. I'm surprised, though, that the usual fanboys/stans aren't converging on this to protest how unfair the S&P is.
Baffling number of total-paywall links on the front page here these days.
Huge relief. Thank God!
Thank fucking g-d.
Paywalled.
Good. Indexes are supposed to be slow-moving, precisely due to their entry requirement of sustained profitability that skews towards mature companies.
All that an inclusion of these new companies would accomplish is a bailout of their stockholders by pension funds and ETFs where millions of regular people shoulder all the downside risk.
SpaceX and OAI stock will be available through Robinhood, Questrade and all the other retail investor markets. Individuals can make an informed choice to trade it there, rather than have it automatically added to their index fund without having any say.