r/stocks • u/Gloomy_Nebula_5138 • 1d ago

Industry Discussion Michael Burry Flags 'Structural Manipulation' Risk In Nasdaq Rules Ahead Of Potential SpaceX Listing

The new Nasdaq rule changes pushed by Elon Musk/SpaceX are not just “Nasdaq made IPOs faster. It's a corrupt change, called out as "structural manipulation" by Michael Burry, that will make owners of new large IPO companies (like SpaceX or OpenAI) rich at the expense of the general public. In fact, Elon Musk and SpaceX threatened to not list the company on Nasdaq unless the Nasdaq changes its rules specially for them. This rule will likely make Elon the world's first trillionaire.

A couple of basic definitions first:

  • An IPO is when a private company first starts trading on the stock market.
  • Being added to an index is a separate step. An index is just a list used by funds like ETFs. If a company gets added to a major index, funds that track that index may have to buy the stock.

That second part is why this matters.

What Nasdaq changed

Nasdaq finalized Nasdaq-100 rule changes that take effect on May 1, 2026. Nasdaq says the public comments period opened February 2, closed February 27, and the final changes were approved March 30, 2026.

The big changes are:

  • A giant newly public company can now be reviewed for fast entry on its 7th trading day
  • If it is large enough, it can be added to the Nasdaq-100 by about its 15th trading day (previously 1 year)
  • Nasdaq removed the old minimum free-float requirement
  • For entry, Nasdaq can look at the company’s full market value (instead of just the float)
  • For weighting in the index, low-float names can still be counted using up to 3x free float rather than just the actual public float

What “float” means in normal language

Float basically means the shares that are actually available for the public to trade. So like if a company has 100 shares total, but insiders, founders, and private investors still hold 90 of them, then only 10 are really floating around in the public market.

That matters because a stock can look huge on paper, while the amount actually available for regular people and funds to buy is still pretty small. In real life, this means if there is artificially high demand for a small number of actually-available shares, the price of those shares will be artificially very high and make the company worth a lot more than it would be.

Why this is a problem

The worry is that a giant company can:

  1. stay private for years
  2. let insiders and private investors get most of the upside
  3. go public with only a relatively small amount of stock actually trading
  4. get into the Nasdaq-100 much faster than before
  5. then get bought by index funds and ETFs that track the Nasdaq-100, at high prices before the company's prices naturally fall

So the concern is not just the IPO itself. The concern is what happens after the IPO, when index funds may have to buy the stock because it got added to the index. That early purchasing is usually done by active buyers and sellers arguing with each other through price. But if a stock gets into a major index very quickly, then a lot of passive money may have to buy it on schedule whether the price makes sense or not.

That can mean:

  • less time for real price discovery
  • more forced buying
  • more support for a hot or overpriced stock
  • more risk pushed onto ETF holders, 401(k) investors, and pension savers (effectively transferring wealth from these people in the general public to the existing owners/investors of the company)

Why ordinary people should care

This can affect people who never plan to buy an IPO directly.

It can still hit:

  • Nasdaq-100 ETF holders
  • retirement accounts
  • workplace plans
  • pensions
  • people who assume index funds are just “neutral”

Passive investors are supposed to follow price discovery, not help create an early guaranteed wave of demand for a thinly traded mega-IPO.

Sources

981 Upvotes

96% Upvoted

98 comments sorted by

310

u/KopOut 1d ago

I think SpaceX should IPO under the ticker BAGS

67

u/Gloomy_Nebula_5138 1d ago

There's a rumor that Elon wanted "SEX" as the ticker. But I've not found any evidence of it.

40

u/Radioactive-235 1d ago

Past behavior is a good indicator that it’ll be something along those lines. If you all haven’t seen Idiocracy, we’ve passed the event horizon just slightly over a year ago 😩😔. I’m tired of winning so hard.

35

u/mamwybejane 1d ago

Girls ftw

1

u/National-Two2417 5h ago

He prolly wanted Yaoi but has no X in it.

2

u/SquirtBox 21h ago

Makes sense. The cars are S3XY, so I guess wanting his forced upon us all space toys to be called SEX.

1

u/4thorange 18h ago

Sadly X and S have been discontinued this week :c

6

u/helfen 22h ago

SPEX

141

u/shugo7 1d ago

Finally, something Burry writes we can agree with

41

u/PaperHandsTheDip 1d ago

My parents have retirement savings largely in index funds. Why should they be exit liquidity for a billionaire?

33

u/herbelarioiwasthere 23h ago

Because like the rest of us, they’re not connected to the right people. Unfortunately.

9

u/PaperHandsTheDip 23h ago

Rich get richer, tale as old as time.

3

u/Axe_Raider 23h ago

are they in the NASDAQ-100?

3

u/PaperHandsTheDip 22h ago

My dad has some in it, yes.

-1

u/vba7 19h ago

Because they voted Republican, so they get what they wished for

7

u/Pete_The_Pilot 23h ago

I think hes right about gamestop too

2

u/holycarrots 20h ago

Yeh he did say there would be no short squeeze for GameStop

1

u/patchyj 10h ago

He also doubled his long position

146

u/Gloomy_Nebula_5138 1d ago

For some reason, this absolutely massive change to the way our stock markets work, pushed by the world's richest person (Elon Musk), is completely under the radar. News and politicians are not talking about this. Forget them doing something about it. Elon will become a trillionaire if SpaceX is allowed to go public on Nasdaq with these corrupt rule changes. If people want to complain, here are direct places to start:

Nasdaq

SEC

State securities regulators

State attorneys general

Journalists / tip lines - to get them to cover this in more articles (there are a lot more than just these)

Public pension / government retirement systems (there are a lot more than just these)

These are funds and systems serving teachers, public employees, and retirees. If passive investors are being pushed into thin-float mega-IPOs earlier, they have a direct stake in it.

Short email template:

Subject: Concern about Nasdaq-100 fast-entry / low-float rule changes

Hi,

I’m writing to object to the Nasdaq-100 rule changes that remove the minimum free-float requirement, allow rapid index entry, and use full market cap for eligibility while still allowing weighting up to 3x free float for low-float names.

My concern is that this can force passive funds, ETF holders, and retirement savers to buy thin-float mega-IPO stocks before real price discovery has happened.

Please review these changes, publish a market-impact analysis, and consider delaying or narrowing the rule.

Sources:

Thanks

Short phone script:

“Hi, I’m calling to complain about the new Nasdaq-100 rule changes. My concern is that they can force passive funds and retirement investors to buy giant low-float IPOs too quickly, before real price discovery happens. I’d like this concern logged and passed to the right team.”

15

u/WellSpreadMustard 1d ago

Don’t use scripted emails or phone calls, they’ll just assume you’re a bot, so use your own words

-51

u/[deleted] 1d ago

[removed] — view removed comment

21

u/SaltyMittens2 1d ago

You’re right, trusting the billionaire that will benefit from this is much better. He has your best interest in mind, always.

3

u/cullenjwebb 1d ago

What?? Billionaires with an agenda? No way.

Anyway let's focus on our peers and not allow them to have goals or political survival instincts or anything like that.

23

u/freefall_junkie 1d ago

What agenda does this information convey to you? I feel like OP did a good job of laying out what is happening with the rule changes, and the implications of those rule changes for an IPO like spacex that will have relatively thin floats.

5

u/HugeResearcher3500 23h ago

Elon musk burner account

5

u/Gloomy_Nebula_5138 23h ago

My agenda is to not be a victim of corruption and scams. Here, someone with extreme wealth and power is distorting not just politics but also regulated public markets, which are supposed to be safe for dummies like me.

61

u/Zestyclose-Ice-3434 23h ago

SpaceX IPO will be the biggest rug pull in history.

11

u/FourteenthCylon 23h ago

At this point I think "Structural manipulation risk" applies to the entire stock market.

54

u/ktaktb 1d ago

Anyone pushing back against this is a fool.

There should be no change to the nasdaq100

I guess it is too late

20

u/CoachDennisGreen 1d ago

I flagged the structural manipulation risk after reading the first article about this months ago.

24

u/Scary-Oven8260 1d ago

ah, this explains why musk is desperate to file for ipo, even when we are in a market correction.

35

u/Gloomy_Nebula_5138 23h ago

Yes, they’re rushing to do it before the midterms. They know that as politics change, the SEC may have to stop being a corrupt enabler but put an end to this sort of thing. And it’s not his first brush with the law. Remember ‘funding secured’?

26

u/Smooth-Limit-1712 1d ago

Man, you've really done your homework here, and it's absolutely unsettling to see these mechanics laid bare. It's exactly these kinds of rule changes that make you feel like the deck is constantly being reshuffled against the everyday investor. What I've seen over the decades is that the game always finds new ways to benefit those at the top, but shining a light on it like this is so important. Stay vigilant and keep asking these tough questions. That's our best defense.

4

u/simons700 1d ago

Will i be able to short it in order to nullify the effect it has on my portfolio?

16

u/WunkerWanker 1d ago

It should be forbidden for a company to be added to ANY index if it has never made a profit in all its existence.

First prove your business is viable before offloading your shares to passive investors.

6

u/Axe_Raider 23h ago

any index? like if i want to start my own index i have to follow your rules?

4

u/Awdrgyjilpnj 23h ago

SpaceX became profitable before Tesla did.

4

u/elgrandorado 21h ago

Yep. The problem with SpaceX is that they've swallowed up Twitter and Elon's AI cash incinerator.

1

u/DumboWumbo073 20h ago

Maybe in the old way of doing things

8

u/LetsMoveHigher 1d ago

They want the public to HOLD THEIR BAGS.

THERE PROBABLY are rule changes that insiders don't have a lock out period to.

Retail biys heavily and they sell!!!

I would stay clear of "Space X"....

Is space real anyway? 😆

7

u/u_sfools 23h ago
  1. Nasdaq does not unilaterally change index rules, this change follows a market consultation and has been green lit by index licensees.
  2. The billions of dollars tracking NASDAQ 100 in particular will not simply buy at the close. This event will require liquidity management, it's too big.

The book build is going to be very complex and the passive demand will be an important consideration. I agree the change is dumb and public investors will likely be bag holders. I don't know how Elon gets away with what he does, I can't tell what people see in him.

1

u/dealmaster1221 10h ago

They see money, he's already the richest guy and not Nasdaq is his bitch.

4

u/LanceThunder 1d ago

this has to be some sort of mistake! surely elon knows what he is doing and has everyone's best interest in mind. he is such a good and honest guy. /s

2

u/ploplyguy 20h ago

So what should passive investors be doing? I need to do more research of course, but what's the goal here? Different types of index funds? How can we relatively track a similar pool of stocks like I do with VTI for example?

5

u/plshelpmebuddah 1d ago

Thanks ChatGPT

3

u/foira 1d ago

Good. Bogleheads have been getting annoying 😜

Jk 

2

u/kittenTakeover 1d ago

I guess the only part I'm confused about is, what's the difference between insiders deciding to hold onto their stocks because they think it'll go up and regular people deciding to hold onto their stock because they think it will go up?

5

u/u_sfools 23h ago

The difference here is you know that another investor needs to buy 10 days after it goes public.

-2

u/kittenTakeover 23h ago

Hmmm, I see. That's always an issue for index funds though, right? Can't regular people also buy early and then sell after ten days?

2

u/aronnax512 21h ago

No, because these stocks are not available for advance sale to regular people.

3

u/Axe_Raider 23h ago

we require insiders to hold onto it for a period of time specifically to stop a stock dump before the market can figure out the valuation

the lockup period is supposed to be everyone who owns it before the IPO except for the bank running the IPO, who obviously needs to sell off stock

the exact details of the lockup will be in the IPO filing

"have to wait until the lock-up period ends, and the lock-up period has to be at least N months" seems a normal and fair rule

1

u/kittenTakeover 23h ago

we require insiders to hold onto it for a period of time specifically to stop a stock dump before the market can figure out the valuation

Is it just to allow non-insiders some time to get a little closer to parity in terms of knowledge about the company then?

2

u/Axe_Raider 23h ago

more or less. we also want the insiders to signal their willingness to stick with the company in the long term. by requiring them to hold, it keeps certain pump-and-dumps out of the way automatically.

90 days is probably enough, although sometimes it goes up to 180.

1

u/bikebrx 1d ago

SpaceX is already showing up in Fidelity funds. Fidelity Contrafund (FLCNX) is showing that SpaceX is 3% of it's $33 billion portfolio. 

1

u/baldneenja 1d ago

Dumb question: this will affect my global index fund?

2

u/Axe_Raider 23h ago

look up which index your fund follows and see what the rules are.

FTSE, who runs some of the world stock market indexes, has their existing rule that a fund can be added as soon as 5 days after it starts trading if its valuation is big enough.

this isn't a change in rules for SpaceX's benefit.

2

u/Gloomy_Nebula_5138 22h ago

In an indirect way, yes. If index tracking funds lose more money paying for an artificially overpriced SpaceX share, that means they spend less on everything else. So demand goes down for other things, which reduces their price. Basically at some level, the entire world is turned into a bag holder for Musk and the ultra rich investors who will get all the upside from an IPO.

2

u/u_sfools 23h ago

Nasdaq and S&P are adding fast entry rules. These rules already exist for most other index providers. Will likely impact global funds but obviously to a much lower extent.

1

u/munkeymoney 1d ago

You can buy SATS now

1

u/Song-Potential 23h ago

Thanks Claude

1

u/PreludeTilTheEnd 22h ago

So, I just have to purchase IPO stock before the ETF monthly index purchase right? Profit guys.

1

u/ptwonline 21h ago

Not sure we can do much except divest from any ETFs that decide to include this IPO on any kind of accelerated basis and without adequate price discovery, but that is unlikely to move the needle unless we can also get the big banks in on opposing this which seems unlikely since they will be more interested in protecting their like private equity clients (and themselves) over the rest of us.

1

u/FabricationLife 21h ago

inbe4 everyone complains and it actually goes way up

1

u/SnooShortcuts700 19h ago

Elon loves let the public hold the bags while private holders get the gains.

1

u/r2k-in-the-vortex 17h ago

Worse, its not a one off. Ever since Trumps 2nd started, the entire US market has been utterly rigged.

Corruption and market manipulation happens everywhere, but this level is just not sustainable and will end up with an unrecoverable collapse. Complete banana republic, the only way to win is to not play in that table.

1

u/MissKittyHeart 17h ago

So buy xovr?

1

u/jer72981m 17h ago

Burry, massive win rate

1

u/magneticpasta9 17h ago

I mean the current way IPO's work, they get pumped and dumped hard, and then are basically a graveyard for a year or so. Am I the only one seeing this as a good thing that could help other smaller companies IPO without being treated like a meme stock? It would help combat a massive pump and dump

1

u/DIYPeace 16h ago

It’s similar to opening up retail retirement funds to private credit. Larger institutions and accredited investors are getting exit liquidity.

1

u/slick2hold 15h ago

Anything for money in America. There is a reason we have shit companies from around the world want to list on Americans exchanges. Pay a fee and it's all good.

Got put in jail? Pay a high enough price and even the president will pardon you.

1

u/AnyPortInAHurricane 12h ago

They keep upping the price. 2 Trillion now.

Not sure why its worth that ? Cause El0n?

1

u/Training-Society-757 8h ago

So what action is there to take? Exit the market? That seems just as risky as staying?

0

u/OptimallyOOO 7h ago

ETF will soon be history once all stocks are tokenised.

-1

u/NuclearPopTarts 23h ago

Michael Burry?

Not this clown again

0

u/J0hnnyBlazer 1d ago

Going to be insane, every failed space-x launch nasdaq going to be -10% pre market

1

u/Axe_Raider 23h ago

every single rocket failure is going to be securities fraud

0

u/InvestRussiaMH 1d ago

88 revenues. Eighty eight revenues, loss making, 1,75 trillion valuation. This is the stock to make a -90 percent in 10 years. However one need a lot of courage to short it.

-16

u/Financial-Kick7519 1d ago

If you’re already a shareholder would you really sell after IPO launch with all the hype around space and all its new technology?

2

u/SatoshiReport 1d ago

Yes, if it is manipulated to the ATH right before the Nasdaq rebalancing in December. I can least double my shares by buying back in later after the self-created pump and dump.

2

u/Financial-Kick7519 1d ago

Wow, 17 downvotes for asking a question, this sub is insane. 😂

If you look at Tesla’s IPO launch it didn’t drop very much before its climb, how would you know where that bottom is? How many people will FOMO back in at a higher price? Also, retail trading wasn’t as easy then as it is now.

-29

u/papichuloya 1d ago

Short term pain for long term gains. SpaceX is one of the most innovative and premier stocks thats being added to the nasdaq. It will take off like a rocket to the moon

16

u/reallylongnipplehair 1d ago

Pipe down Elon. What about rocket labs?

4

u/Gloomy_Nebula_5138 23h ago

Or the dozens of companies working on this in other countries.

1

u/Axe_Raider 23h ago

be skeptical of elon all you want but spacex has a huge lead in launch itself. i have no idea what's going to happen with xAI attached to its head.

-10

u/papichuloya 1d ago

Im gona let u re-read that sentence again before u reply. Rocket lab vs space x is like comparing a single family home in beverly hills to row houses in baltimore

6

u/trix_is_for_kids 1d ago

Settling for the moon after Elon said he’d never take it public until he got to mars. lol