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"?
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.
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.
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.
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)
> 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.
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'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.
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.
I actually think it's a good thing. 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.
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.
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.
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.
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.
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.
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.
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.
If AI is accurate, bonds are issued in the same month as the IPO 1-2% of the time. Some examples are HawkEye 360 (May 2026), Pinduoduo (2018) and VersaTel Telecom. I didn't double check this so I don't know about the veracity, but it seems like it happens on rare basis.
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
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.
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?
>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.
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.
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.
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.
"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.)
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.
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.
> 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.
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?
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.
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 stonage with all their "anti" view 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.
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 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 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.
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.
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"?
Isn’t that how capitalism works in general?
reality distortion field in full effect.
Nasdaq, FTSE Russell, and CRSP all implemented fast-track options. Fortunately S&P kept its 12-month requirement.
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.
The S&P committee never said they would. Space X asked and the committee said no. They should not have asked.
It went through the formal process to adopt. Almost certainly public discussion online had an influence.
#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.
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.
ok but who is forced to buy the nasdaq 100?
quick search:
https://www.justetf.com/uk/search.html?search=ETFS&assetClas...
Index funds, for starters.
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.
>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.
Who forces them?
Literally the index. If you track the NASDAQ as part of your index you must obey it's inclusion rules.
Ok but there are very few indices following NASDAQ, compared to S&P 500.
[delayed]
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.
I am really curious for what reason they choose to do it? Like what is in for Nasdaq?
Getting a very popular stock on their exchange. Directly making money from it.
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 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.
If you ask me the worst thing about it is that it made a Nazi white supremacist neo feudalist the world's first trillionaire.
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%.
> 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.
You can synthetic short if you have options level 4
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.
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."
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.
The market “settling on a price” includes the actions of short sellers.
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.
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.
Isn't it all speculation always though? That's why stock picking doesn't work and ETFs are popular.
I actually think it's a good thing. 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
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.
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...
Always a FTSE truther.
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.
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.
This is effectively an increase in interest rates for SpaceX. That's how it affects them
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.
It makes borrowing money much more expensive going forward.
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.
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?
If AI is accurate, bonds are issued in the same month as the IPO 1-2% of the time. Some examples are HawkEye 360 (May 2026), Pinduoduo (2018) and VersaTel Telecom. I didn't double check this so I don't know about the veracity, but it seems like it happens on rare basis.
Normally I would agree, but SpaceX being forced into the Nasdaq at a 3x multiplier makes this a non-normal situation.
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
If the equity market says something that must make it true. Markets have never gotten valuations wrong
Article needs registration.
magnolia1234 bypass-paywalls-clean
https://archive.is/tnSeY
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.
The fact that this works by exploiting AMP is delicious.
Can you explain? I'm not sure how to Google that.
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...
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.
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
Don't worry, they made plenty with the pump-and-dump.
The thing that propelled Tesla to ridiculous heights was the massive shorting (and eventual covering). This should just drop and drop (I hope).
> 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.
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?
>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.
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.
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.
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.
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-...
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.
"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.)
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?”
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.
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.
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.
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
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.
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".
If only these people have been warned before.... </pretend_care>
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.
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 stonage with all their "anti" view 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.
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.
Is it anti-Musk to point out Musk makes wild promises that rarely come true...robotaxis at scale, xAI creating MacroHard etc etc.
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.
They are mostly jealous Europeans.
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.
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.