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birb_cromble  3d ago (text post)   725 thread views

Weekly Finance Thread (without clever alliteration)

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The conspiracy parts of the internet (i.e. the most entertaining parts) are freaking out about the SpaceX IPO and changes to various market indices that will be Bad News. This seems to the background. The S&P500 is not one of the indices, though, according to that link. Anything to it, or usual internet financial panic?

SpaceX is an overpriced unprofitable business and the type of fuckery Musk has done to push it into big indices is incredible, but the fact that literally everyone and their dog is aware of this makes me think it will be a non event. Some people are predicting SpaceX IPO to be a liquidity vacuum and the claim is not baseless, but again - literally everyone is aware of this and is salivating for things (ie semis and other shiny stuff) to go down because SpaceX is gonna print like 100 new billionaires and thousands of millionaires in the next 6 months thanks to insane valuation and fast unlock schedule. What's more likely to happen is all these guys waiting for a dip get left on the sidelines, coping that next big IPO, which I think is Anthropic, is what tips the market and gets them a good entry

The only reason Musks can do fuckery to push it into indices is because a lot of people want to buy the stock and will let him IPO 50+ billion at a 2 trillion valuation.

He personally will likely not cash out much in the IPO. And it really is a great company I would love to buy at some point. I am likely hoping that the mess up the IPO like Meta and I get to buy it between $500b and a trillion. Starlink has potential to be a cash flow machine. xAI is interesting but I have no idea if frontier models will be profitable and it’s going to burn a ton of cash. And SpaceX innovation is insane.

I won’t buy the IPO though unless I see an opportunity arb the indexes but I would really like to own it someday.

The bigger issue isn’t the etf inclusion it’s an issue that our biggest companies don’t go public now because of regulations (complicated). It should have been listed years ago. Valuations on it are tough but it’s obviously a very valuable company.

There's definitely some fuckery afoot. The NASDAQ 100 is changing specifically to allow SpaceX to list early and the S&P is "considering it". The NASDAQ 100 specifically is pretty bad because they don't float adjust their holdings. On top of that, SpaceX has an unusual lockout structure that lets holders unload early.

Beyond that, the share voting structure is fairly unique. Musk holds a special share of stock that has 10x voting power, so you're never going to have input as a minority owner.

Per their S-1, SpaceX's only profitable line of business is starlink, and starlink may only be profitable because they're booking many of its costs to the rocket division. Even if they aren't, we're starting to see competition that will hurt those numbers. Their other lines of business are not profitable - xAI, in particular, is nothing but a highly efficient money incinerator at this point. One of their biggest revenue lines is renting hardware to Anthropic.

Altogether, this IPO looks almost custom-designed to leave excitable retail investors holding the bag.

Altogether, this IPO looks almost custom-designed to leave excitable retail investors holding the bag.

I'm not concerned as much with excitable retail investors as I am boring folks like myself with lots of ETFs tied to indices.

If you're holding a lot of QQQ, you might want to consider your risk tolerance.

Morningstar is not bullish.

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