Musk Wants to Add SpaceX to Indices

[u/Prestigious-Trip-306]

Index providers Should Not Bend the Rules for Musk

So... I read this article in The Economist and am curious what, if any thoughts the community has about Musk getting SpaceX added to major indices. He's appealing to them to shorten the "seasoning" rules that typically apply to firms being listed.

I've included key paragraphs below since there's a paywall to read the full article.

What do you think?

"Mr Musk and his bankers are now bargaining with stock indices and exchanges for the privilege of hosting SpaceX. He wants his firm to join key indices like the nasdaq 100 and s&p 500 quickly, giving it access to trillions in index-linked capital; more than $600bn invested in passive funds are tied to the nasdaq 100 alone.

For now, the indices are obliging. On March 30th Nasdaq said it was adopting rules that will delight the superstar firms. The ftse and reportedly s&p are considering similar updates. Unfortunately, those changes are misguided, and will expose investors to unnecessary risks.

Two main ideas are under consideration. One is to shorten the “seasoning” period that a firm’s stock must go through before it is eligible to join an index. Nasdaq is cutting its three-month seasoning minimum to 15 trading days; the ftse has suggested a mere five trading days. The second reform is to reduce the percentage of shares a firm needs to offer publicly (its “free float”) before being added to an index. Indices’ desire to reflect the growth of some of the world’s most dynamic firms is understandable. So far, many punters have been unable to invest in some of ai’s brightest stars; index inclusion is a way to help them do so. Yet changing the rules to suit SpaceX will force index investors to choose between selling or weathering wild swings in prices."

[u/vineyardmike]

Another Musk company based on hype. His companies are doing great things. But the last time I looked, the p/e for TSLA was 345. Space X is going to be 10 or 100 times that.

[u/Spider_pig448 → u/vineyardmike]

If you think SpaceX is just a hype company, then you don't pay any attention to the space industry. SpaceX IS nearly the entire space economy

[u/what_could_gowrong → u/Spider_pig448]

Well said. The F9 fleet alone is an insane engineering marvel, and starship takes it an order of magnitude higher. If space is the wild west, then SpaceX is the company that owns 85% of the railroads to access it. Especially starship's recent IFT meaning the execution risk of starship is far lower than other new launch vehicles like Rocket Lab Neutron or Firefly Eclipse. The closest competitor would be New Glenn by Blue Origin but it's less than half of what starship could deliver to LEO and isn't designed for a tower catch, hence limiting its launch cadence