An passive investors are going to get hosed by this thanks to NASDAQ cooking the rules to favor Elon and his band of misfits.
No longer will there be a year of price discovery for index funds, 15 days. Meaning index funds have to buy it at the peak of the hype cycle. Will be a huge wealth transfer from mom and pop retirement accounts to the ultra wealthy.
taurath 20 minutes ago [-]
When index funds became such a default I knew they’d change the rules.
They’re taking everything thats not nailed down. A wealth tax is the only way, it cannot continue like this.
JumpCrisscross 20 minutes ago [-]
> An passive investors are going to get hosed by this thanks to NASDAQ cooking the rules
I’m genuinely confused how a passive investor winds up tracking the NASDAQ 100 versus a broader index.
Also, if you’re picking and choosing your exposures, you aren’t passive.
yandie 37 minutes ago [-]
Now I need a fund that will honor a year of price discovery rather than 15 days. Any recommendations?
malfist 35 minutes ago [-]
Legally, any fund that tracks the NASDAQ 100 must follow the rules set by NASDAQ, so you'd want something that is neither a total market index, nor tracks the NASDAQ. Something like an S&P500 index would work
JumpCrisscross 20 minutes ago [-]
> Legally, any fund that tracks the NASDAQ 100 must follow the rules set by NASDAQ
No? Contractually, maybe. But legally you can do whatever you want with index constructions.
dmoy 29 minutes ago [-]
What is an example nasdaq 100 fund that isn't float adjusted?
charcircuit 32 minutes ago [-]
What law prevents someone from choosing to buy stocks from the NASDAQ 100 however they want for a fund?
davey48016 30 minutes ago [-]
You can make a mutual fund or ETF with any stocks you want, you just can't call it a NASDAQ 100 fund if you're not tracking the NASDAQ 100 index.
tonyedgecombe 3 minutes ago [-]
[delayed]
bluecalm 18 minutes ago [-]
You need enough customers to make it profitable at reasonably low expense ratio.
Noaidi 25 minutes ago [-]
You know what? I really don’t care. Anyone investing in anything Elon Musk owns deserves what they get.
My advice is to get out of all the capital markets and give everything you have away.
saadn92 27 minutes ago [-]
The xAI piece is the one that stands out to me. $258B for a lab that's burning $1.46B/quarter against $430M revenue, valued almost entirely on a merger anchor from four months ago.
ddp26 7 minutes ago [-]
As I wrote in the piece, I'm extremely skeptical that xAI should be valued as if it is a frontier lab.
But as you say, going back to the xAI + SpaceX merger, analysts consistently seem to value it as if it is, so I predict the public will too, at IPO time.
jmye 13 minutes ago [-]
Even if you think those are standard numbers and you're banking on growth, or whatever, I don't see any way anyone rational (or even a semi-rational AI bull) could convince themselves xAI isn't an absolute garbage company.
sharemywin 56 minutes ago [-]
Not bad for about $12-$16B in total actual revenue.
net income probably: $1.5B – $3B
P/E:500-1000
Of course people will trip overthemselves to buy it up.
brentm 3 minutes ago [-]
It's hard to imagine this turn into 50-60% short term banger starting from a $1.75T market cap, I wonder if people will actually trip over themselves to buy. I had been thinking I wanted to jump on it to flip but at that price and the macro environment it may end up cratering before a pop. Seems like a sketchy buy.
sfblah 2 minutes ago [-]
I just don't think space is as useful or profitable as people think. Time will tell.
ddp26 43 minutes ago [-]
Yeah, it's wild. But it's not like the P/E should be 30, what do you think would be fair?
That's the thing about SpaceX, some businesses are real businesses that can be modeled in normal ways, like the government launch contracts, and to some degree starlink.
Others, like ~all of xAI, and the starship stuff, are being valued completely independent of revenue. I predict the IPO investors will generally follow the analysis consensus today with those eye-popping numbers.
jmye 11 minutes ago [-]
> But it's not like the P/E should be 30
... Why not? Aside from memes, I mean.
Noaidi 24 minutes ago [-]
I mean, shouldn’t the price to earnings ratio be 1? Anything higher or lower is just speculating or other words, gambling.
cheschire 15 minutes ago [-]
I remember in the 00’s when people would complain about how ridiculous a 30 PE was for tech stocks, and how no other stock was at that ridiculous price point except tech. Guess that starship has sailed.
fastball 11 minutes ago [-]
Of course not. If the P/E was 1, every single public company would be immediately gobbled up by Private Equity firms, who would make their money back after a year of operation and the rest would be pure profit.
lotsofpulp 17 minutes ago [-]
At the extremes, taking the next step is speculating because you might trip and fall and hit your head.
arealaccount 45 minutes ago [-]
According to commentators on other threads people with any index funds will be automatically buying, no need to trip over ourselves
elevation 43 minutes ago [-]
Any funds you'd recommend that would preserve the legacy 1 year watch period?
dmoy 33 minutes ago [-]
The float adjustment probably handles this for you? The tiny amount of float of that $1.75T means that for any large total market or s&p or whatever fund (VTI, SPY, etc), SpaceX is going to be a minuscule fraction of the fund.
Apple has a float of >99%. SpaceX is going to come out with 3-4% float. Since all big serious total market / whatever index funds are float adjusted, this means that SpaceX will be treated more like a company with $45B market cap, not $1.5T or whatever.
If you're buying most index funds, you should literally not care about this.
If you buy VTI, then SpaceX is going to be like what, <0.1% of the fund? That is noise.
conductr 2 minutes ago [-]
> If you're buying most index funds, you should literally not care about this.
Disagree. Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price. Granted, I’d be more concerned if the fund manager was buying it without a requirement to. The issue still remains about why are we paying so much for this stock? Make it make sense?
spprashant 18 minutes ago [-]
I am not smart with stock legal-ese but I pasting something I found in a different article here.
> To balance index integrity and investability, Nasdaq proposes a new approach for including and weighting low-float securities (those below 20% free float). Each low-float security’s weight will be adjusted to five times its free float percentage, capped at 100%. Securities with more than 20% free float will continue to be weighted at full, eligible listed market capitalization, while those below 20% free float will be weighted proportionally to preserve investability.
> The rule reportedly includes a 5x float multiplier for low-float stocks, which would require passive vehicles to treat SpaceX as if it had significantly more tradable shares than actually exist, essentially forcing funds to chase the price.
It sounds to me like a way to increase demand for low float stocks by treating the float higher than it actually is. Glad to hear the explanations about this.
danny_codes 18 minutes ago [-]
Which is how Elon gets away with fleecing the retails. Someone with 100k in VTI is giving $100 to Elon at a p/e of 1000.
You have to hand it to him, he’s the best grifter we’ve seen in years.
heyitsmedotjayb 40 minutes ago [-]
I remember when this happened with Nortel!
tliptay 8 minutes ago [-]
Grok: lots of competitors & my 4th choice in LLM models.
Starship: zero competitors & potentially makes humans inter-planetary.
Seems crazy if investors put more value on Grok.
compiler-guy 3 minutes ago [-]
These premises may or may not make sense, but the thing that matters is capturable revenue.
Humans being interplanetary would be an amazing technical tour de force. But relatively speaking, there isn’t much revenue there.
genidoi 31 minutes ago [-]
> Starship at $170B is pure option value on technology still in advanced testing.
The argument that Starship is somehow an experimental/unproven technology that might fail to materialise was absurd but plausible sounding before flight 1, there were many new technologies simultaneously being deployed to a single launch system in one go.
But after 3 tower catches of the booster demonstrating centimetres of guided precision of the entire stack, this is becoming a tired argument.
I know the author is not making that case at all here, but it seems like one the core reasons to undervalue SpaceX is that Starship might not work out, and this all sounds exactly like how reusability might not work out for the Falcon 9 from 10 years ago.
kibwen 15 minutes ago [-]
The question is not even whether or not Starship works. Starship is, in theory, designed with the idea of getting many, many payloads to Mars. However, getting payloads to Mars is not currently something that anyone is paying for; even NASA isn't going to focus on Mars for at least another decade (likely more). And in the meantime, it's not like we don't have rockets capable of getting payloads to Mars (the Saturn V was fully capable of doing so in the 60s). Likewise in the meantime, the Artemis plans that look to require a dozen+ launches for a single moonshot aren't painting Starship in a favorable light.
So what is the near-to-medium-term economic prospect of Starship? That's the question. You can't just say "bigger rocket make more money", because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice. To use an analogy, we have jumbo jets, but most flights are not on jumbo jets.
bpodgursky 32 seconds ago [-]
> there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice
Well, they are going to live with multi-customer payloads if Starship can do it for a tenth of the price. There's already a large market for ride-sharing and it's only going to get bigger.
fastball 8 minutes ago [-]
> because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice
This is only true because we are so completely beholden to the tyranny of the rocket equation with the current status quo. With the $/kg (and payload volume) that Starship would unlock, the entire ELO/GEO/Interplanetary/Deep Space market looks very different.
Labs in space. Hotels in space. Weapons in space. Much more interesting satellites in space. More government science missions. etc
enslavedrobot 20 minutes ago [-]
The viability of direct to cell connectivity at scale is unproven. This is actually the core value of SpaceX in the next 3-5 years.
The other core value generation product will be financial transactions. It is unproven whether X money will be adopted for friction free transactions across national boundaries and whether the company can compete in the financial services sector.
ddp26 25 minutes ago [-]
Yeah, I might have stated this poorly. In the forecast it's just a question of expected value, I don't give almost any probability to "Starship is worthless".
My 50% CI on Starship's fair market value at IPO time is $123b - $227b, with a 80% CI even wider, not based on my own modeling, but based on anchoring to analysts that give credible arguments.
soperj 26 minutes ago [-]
> and this all sounds exactly like how reusability might not work out at all for the Falcon 9 from 10 years ago
I think a lot of it depends on whether they can make the reuse of the second stage work without having to redo stuff constantly like the shuttle. Reusing the booster will obviously save tons of money and make launches cheaper, but they're competing with themselves here. How big is the launch market with cheaper launches? We don't actually know.
maxerickson 19 minutes ago [-]
How are they doing with their mass to orbit projections?
AlexandrB 14 minutes ago [-]
The tower catches are great, but the payload rating has been reduced several times now[1] and with it the economic argument for how Starship will make launching much cheaper than today as well as suitability for lunar/Mars launches. For Starship to be revolutionary enough for this kind of valuation it has to not just work, but outperform current solutions.
SpaceX has basically admitted as much by promising Starship 2 & 3 with larger payloads (that Starship 1 was already supposed to deliver).
Compared to Falcon 9 Starship has still more quality issues than the Falcon 9 at the same test stage
Izikiel43 18 minutes ago [-]
They caught it 3 times already!?
I missed 2 and 3 it seems.
proteal 29 minutes ago [-]
It’s also one of the thinnest floats IPO’ing. They’re only selling less than 5% of the company. That introduces a lot of sensitivity in the valuation, not to mention there exists a bit of game theory around fund managers needing to join in to maintain nominal returns with their peers.
> They’re only selling less than 5% of the company
Wait for the lock-up terms.
boringg 30 minutes ago [-]
Anyone in this thread know how much SpaceX investors got diluted when they bought xAI/GROK?
jdross 18 minutes ago [-]
It was 1T post merger with xAI being 250B of it, SpaceX being 750B
bobtheborg 11 minutes ago [-]
Having never really looked at valuations, my ignorant mind can get from Starlink's 10M subscribers to a $380B valuation. If you make $100/mo/user that's 12B/yr and that with a higher 50x P/E ratio is 60B. If you go to 100x, that's $120B.
vesnanomikai 22 minutes ago [-]
the xai/grok valuation is wild. my little RAG app's inference costs on a few A10s are already a pain to manage; i can't imagine their
Tesla's highest market cap in 2010 was $3.3B. Tesla has more net income, sometimes multiples more, per year, from 2021 to 2025.
For comparison, it is routine to see sale prices of 3x to 5x revenue for many, many kinds of everyday businesses that have much less potential than Tesla.
There are very, very few businesses whose shares one could have purchased in 2010 that performed better over the subsequent 15 years. That is about as objective as one can get about determining whether or not something was under or over valued (in 2010).
paxys 39 minutes ago [-]
Everyone is so confident in their reading of tea leaves
ddp26 33 minutes ago [-]
I read your comment as being glib, but in forecasting this I was really puzzled how much to anchor to how analysts tend to value these businesses.
I ended up largely deferring to them, e.g. predicting the public will value xAI at $258 billion ($222b - $310b) at time of IPO, even though I've elsewhere been skeptical that xAI should be valued like a frontier AI lab.
It's a keynesian beauty contest
rvz 34 minutes ago [-]
All these IPOs are extremely bearish and mirroring the 2019 race-for-the-exit IPOs out there.
Of course once again, you are "not allowed" to be early into pre-IPO companies which is where the actual money is made.
The moment several companies start IPOing, you are already too late for those multiples and have to wait for a massive crash until these stocks reach all time lows after IPO.
righthand 36 minutes ago [-]
Wall Street, ICE jobs, bs AI valuations, etc is proof that there are just enough stupid people in this country to ruin it all for the rest of us.
Rendered at 18:00:38 GMT+0000 (Coordinated Universal Time) with Vercel.
No longer will there be a year of price discovery for index funds, 15 days. Meaning index funds have to buy it at the peak of the hype cycle. Will be a huge wealth transfer from mom and pop retirement accounts to the ultra wealthy.
They’re taking everything thats not nailed down. A wealth tax is the only way, it cannot continue like this.
I’m genuinely confused how a passive investor winds up tracking the NASDAQ 100 versus a broader index.
Also, if you’re picking and choosing your exposures, you aren’t passive.
No? Contractually, maybe. But legally you can do whatever you want with index constructions.
My advice is to get out of all the capital markets and give everything you have away.
But as you say, going back to the xAI + SpaceX merger, analysts consistently seem to value it as if it is, so I predict the public will too, at IPO time.
net income probably: $1.5B – $3B
P/E:500-1000
Of course people will trip overthemselves to buy it up.
That's the thing about SpaceX, some businesses are real businesses that can be modeled in normal ways, like the government launch contracts, and to some degree starlink.
Others, like ~all of xAI, and the starship stuff, are being valued completely independent of revenue. I predict the IPO investors will generally follow the analysis consensus today with those eye-popping numbers.
... Why not? Aside from memes, I mean.
Apple has a float of >99%. SpaceX is going to come out with 3-4% float. Since all big serious total market / whatever index funds are float adjusted, this means that SpaceX will be treated more like a company with $45B market cap, not $1.5T or whatever.
If you're buying most index funds, you should literally not care about this.
If you buy VTI, then SpaceX is going to be like what, <0.1% of the fund? That is noise.
Disagree. Buyers of index funds should care about fiduciary and waste. This is what this seems like at this price. Granted, I’d be more concerned if the fund manager was buying it without a requirement to. The issue still remains about why are we paying so much for this stock? Make it make sense?
> To balance index integrity and investability, Nasdaq proposes a new approach for including and weighting low-float securities (those below 20% free float). Each low-float security’s weight will be adjusted to five times its free float percentage, capped at 100%. Securities with more than 20% free float will continue to be weighted at full, eligible listed market capitalization, while those below 20% free float will be weighted proportionally to preserve investability.
> The rule reportedly includes a 5x float multiplier for low-float stocks, which would require passive vehicles to treat SpaceX as if it had significantly more tradable shares than actually exist, essentially forcing funds to chase the price.
It sounds to me like a way to increase demand for low float stocks by treating the float higher than it actually is. Glad to hear the explanations about this.
You have to hand it to him, he’s the best grifter we’ve seen in years.
Starship: zero competitors & potentially makes humans inter-planetary.
Seems crazy if investors put more value on Grok.
Humans being interplanetary would be an amazing technical tour de force. But relatively speaking, there isn’t much revenue there.
The argument that Starship is somehow an experimental/unproven technology that might fail to materialise was absurd but plausible sounding before flight 1, there were many new technologies simultaneously being deployed to a single launch system in one go.
But after 3 tower catches of the booster demonstrating centimetres of guided precision of the entire stack, this is becoming a tired argument.
I know the author is not making that case at all here, but it seems like one the core reasons to undervalue SpaceX is that Starship might not work out, and this all sounds exactly like how reusability might not work out for the Falcon 9 from 10 years ago.
So what is the near-to-medium-term economic prospect of Starship? That's the question. You can't just say "bigger rocket make more money", because there exists a useful upper to the size of payloads that companies actually want to ship to LEO in practice. To use an analogy, we have jumbo jets, but most flights are not on jumbo jets.
Well, they are going to live with multi-customer payloads if Starship can do it for a tenth of the price. There's already a large market for ride-sharing and it's only going to get bigger.
This is only true because we are so completely beholden to the tyranny of the rocket equation with the current status quo. With the $/kg (and payload volume) that Starship would unlock, the entire ELO/GEO/Interplanetary/Deep Space market looks very different.
Labs in space. Hotels in space. Weapons in space. Much more interesting satellites in space. More government science missions. etc
The other core value generation product will be financial transactions. It is unproven whether X money will be adopted for friction free transactions across national boundaries and whether the company can compete in the financial services sector.
My 50% CI on Starship's fair market value at IPO time is $123b - $227b, with a 80% CI even wider, not based on my own modeling, but based on anchoring to analysts that give credible arguments.
I think a lot of it depends on whether they can make the reuse of the second stage work without having to redo stuff constantly like the shuttle. Reusing the booster will obviously save tons of money and make launches cheaper, but they're competing with themselves here. How big is the launch market with cheaper launches? We don't actually know.
SpaceX has basically admitted as much by promising Starship 2 & 3 with larger payloads (that Starship 1 was already supposed to deliver).
[1] https://www.americaspace.com/2024/04/20/starship-faces-perfo...
I missed 2 and 3 it seems.
Check out Matt Levine commentary, which goes into more detail (SpaceX Indexing) https://www.bloomberg.com/opinion/newsletters/2026-03-31/are...
Wait for the lock-up terms.
The SpaceX IPO: retail investor notes
https://news.ycombinator.com/item?id=47612775
SpaceX files to go public
https://news.ycombinator.com/item?id=47604155
For comparison, it is routine to see sale prices of 3x to 5x revenue for many, many kinds of everyday businesses that have much less potential than Tesla.
There are very, very few businesses whose shares one could have purchased in 2010 that performed better over the subsequent 15 years. That is about as objective as one can get about determining whether or not something was under or over valued (in 2010).
I ended up largely deferring to them, e.g. predicting the public will value xAI at $258 billion ($222b - $310b) at time of IPO, even though I've elsewhere been skeptical that xAI should be valued like a frontier AI lab.
It's a keynesian beauty contest
Of course once again, you are "not allowed" to be early into pre-IPO companies which is where the actual money is made.
The moment several companies start IPOing, you are already too late for those multiples and have to wait for a massive crash until these stocks reach all time lows after IPO.