S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

https://arstechnica.com/tech-policy/2026/06/sp-500-blocks-fast-spacex-entry-wont-waive-rule-for-unprofitable-ai-firms/

by maltalex • 2 months ago

1484 419 2 months ago

muadddib2• 2 months ago

Kudos to S&P 500. Vast majority of the world has no clue how trillions of $ from their pension funds is being funneled to the select few. Absolutely pathetic.

JumpCrisscross21• 2 months ago

no clue how trillions of $ from their pension funds

Pension funds don't tend to follow the S&P 500, much less automatically. They're sophisticated institutional investors like CalPERS [1] who dabble in everything from public stocks to private equity.

It's other retirement assets, e.g. 401(k)s and IRAs, that tend to follow the S&P 500. But again, with substantial variation.

S&P including these companies would have driven a lot of money towards them. But there was a lot of misinformation around the magnitude of that drive, as well as the breadth of whom it would affect.

[1] https://en.wikipedia.org/wiki/CalPERS

viceconsole• 2 months ago

In the US at least, many pension funds are not sophisticated, they're small, underfunded, and getting taken for a ride by expensive advisors who promise fantastical returns that will help dig them out of their funding ratio hole. Many would be better off using an S&P 500 index fund for their equity component instead of getting wined and dined into an illiquid, opaque private equity investment.

Telling that among OECD countries, the US is an outlier in having a much lower average funding ratio, and this despite the fantastic performance of the US stock market over the last 15 years.

zippyman55• 2 months ago

Yep!! Respect to them. I was planning to move to an equal weight index but this gives me a little more time to evaluate options.

JumpCrisscross21• 2 months ago

I was planning to move to an equal weight index

The only substantial effect I've seen of the influencers who were doomsplaining this decision was some minor churn in retirement assets from low-cost S&P 500 followers to higher-cost funds. (The market, broadly, never priced in a rebalancing of the S&P 500. So this was almost entirely whipped up by influencers.)

Broadly speaking, if you were actually considering trading on the back of S&P's decision, or worse, if you actually did, consider trimming who you follow for financial advice.

vostrocity• 2 months ago

The market may not have ever priced in a rebalancing of the S&P 500, but the S&P 500 also has never allowed entry of companies that may never become profitable.

kgwgk6• 2 months ago

The market, broadly, never priced in a rebalancing of the S&P 500

And if you had seen it what would have that pricing looked like?

zeroonetwothree• 2 months ago

They weight by free float so it would been something like 0.3%. Hardly the end of the world

ddalex• 2 months ago

"they only be stealing a tiny amount so not worth doing anything"

figmert2• 2 months ago

Why is that relevant? The rules are in place for a reason, why does it matter what the percentage is? They're not profitable. When they prove they're worth the dollars, they can be included, per the rules.

Also, S&P500 has a current market cap of $67 trillion, 0.3% of that is some $200billion. That is essentially a wealth transfer to the rich. They don't need it.

jjav• 2 months ago

They weight by free float so it would been something like 0.3%. Hardly the end of the world

That's one way to look at it. At a personal level, it's a small sliver and if it were to drop, its influence on your balance isn't much. So that's true.

Another way to look at it is that with ~200 million people owning index funds, all their funds balances together, even a tiny fraction of a percent is a massive amount of money being force-fed into spacex, which is to say, mostly into Elon's pocket (since he owns vast majority of the shares).

So why is it fair to change the rules to give this massive wealth transfer to Musk, who certainly does not need the extra money?

kmbfjr3• 2 months ago

Me losing $500 to Musk’s clever idea is still me losing money. It isn’t like this is a normal market event.

If it is not the end of the world, cover my losses.

groundzeros201516• 2 months ago

Can I have 0.3% of your portfolio for a startup? It’s such a small percentage you won’t notice.

outside12345• 2 months ago

0.3% for SpaceX, 0.3% for Sam Altman’s OpenAI garbage, 0.3% for Anthropic, 0.3% for whatever Elon’s next scam is, and … pretty soon you are talking about big numbers.

LinguaBrowse• 2 months ago

I’ve moved my S&P 500 investments to the Equal Weight index to reduce my exposure to AI. Quite aside from SpaceX, I think the large-cap tech companies are making some uncomfortably large bets on AI and any major upset could cause a domino effect.

But as so many ETFs have a significant stake in large-cap US tech stocks (the top 10 holdings of the iShares MSCI World ETF is entirely comprised US Big Tech, making up 20% of the value of the ETF), I found S&P 500 Equal Weight to be pretty attractive.

As for SpaceX itself? I feel the numbers involved all sound a bit unbelievable to me. I fear that there will be a rug-pull sometime post-IPO, and retail investors (and taxpayers, if the US Government ends up taking a stake, as they have recently indicated they might do for OpenAI) will inevitably be left holding the bag.

CuriouslyC4• 2 months ago

I've been doing research on this subject for an article I'm writing, and the only way things end well if the government gets involved is if we pass legislation deprivatizing AI data centers. Like the dark fiber laid during the dotcom, the compute is the valuable thing here that will remain after the speculative bubble has burst. The deal isn't bad for the AI companies, they can depreciate on a short schedule while still getting a payout for the capex, and being able to offer tech companies compute subsidies puts the people in a stronger position than if we're subsidizing them directly.

derf_• 2 months ago

I found S&P 500 Equal Weight to be pretty attractive.

The rebalancing required to maintain equal weights means constantly selling your winners and buying more of your losers. That creates volatility drag. Stock returns are highly skewed: only about 4% of stocks outperform the market, and are responsible for most of its gains. By keeping your allocation to those stocks small through constant rebalancing, you are missing out on a large part of their gains. The vast majority of stocks underperform.

Maintaining the equal weighting also requires constant trading, which generally means higher fees. A market weighted fund, in contrast, naturally maintains its desired balance in response to price movements, without any trading.

Also, the equal weighting ignores the amount of outstanding float for each company. If the fact that NASDAQ has not (historically) been float-adjusted (a common anti-SpaceX talking point) gave you concern, this is even worse, due to the multiple orders of magnitude difference between the largest and smallest companies in the S&P. If enough money enters the equal-weight index, this can spark large amounts of buying in (relatively) small companies that is divorced from their economic performance.

The equal-weight index has outperformed the market-weighted index in some periods (not in recent memory), but with higher volatility (so worse risk-adjusted returns). That outperformance can mostly be explained by factor tilts implicit in the equal weighting (e.g., a higher allocation to mid-cap value stocks).

You would probably be better off with a mix of market-weighted funds explicitly designed to give you the factor tilts and risk exposure you want.

Ensorceled2• 2 months ago

As for SpaceX itself? I feel the numbers involved all sound a bit unbelievable to me.

If the SEC was doing it's job, there would sanctions or jail time for those numbers.

andsoitis• 2 months ago

I was planning to move to an equal weight index but this gives me a little more time to evaluate options.

S&P requires 4 consecutive profitable quarters, amongst other requirements, so if one of the new mega caps like SpaceX or Anthropic or OpenAI get included, you’d probably want to get the benefit of their performance.

Put differently, if one previously specifically picked an index fund that is not equal weighted, why would you change from that strategy?

integricho• 2 months ago

But they haven't been good performers, and don't deserve joining s&p, and that is the point, do not make exceptions just because Elon Musk or whatever delusional billionaire says so.

enaaem• 2 months ago

Many people already have x% of their portfolio allocated to a growth fund, that might include fast growing AI companies. You need to keep the risk profile consistent. If you change the rules you mess up people's strategy.

Ensorceled2• 2 months ago

you’d probably want to get the benefit of their performance.

What performance? None of these companies have established "performance" and they are all still burning money in a race to be the industry leader.

There is no evidence these companies can be profitable without some kind of significant hardware advance.

KaiserPro• 2 months ago

Its a sensible move. The spaceX IPO is a mess, and if it doesn't go full enron I'm not sure what will happen to the wider market.

matwood10• 2 months ago

BTW, Enron was in the S&P 500 when it went bankrupt. Other fun fact is that it was replaced with NVDA.

noncoml2• 2 months ago

I moved to BP LG CAP VAL EQ CIT

hvb2• 2 months ago

Related discussion here: https://news.ycombinator.com/item?id=48405718

satvikpendem2• 2 months ago

Nice to see others are thinking the same, as I just posted the same article as a dupe of this one.

satvikpendem2• 2 months ago

Duplicate: https://news.ycombinator.com/item?id=48405718

ChrisArchitect• 2 months ago

[dupe] https://news.ycombinator.com/item?id=48405718

berlianta• 2 months ago

doesn't work, similar to https://news.ycombinator.com/item?id=48277485

sergiotapia• 2 months ago

Major W. Regular people were going to get robbed blind.

JumpCrisscross21• 2 months ago

Major W. Regular people were going to get robbed blind

Not really. One, it was unlikely to happen. The market not pricing in any rebalancing communicated that. Two, the magnitude–even for the S&P 500–would have been small. About a third of stocks are in passive strategies, about 15% in any index, and while most of that is the S&P 500, the index market is incredibly competitive.

S&P made the right move. But the tragedy this episode has revealed, at least to me, is in how venal and influential this new breed of financial influencers on YouTube and X are, and the degree to which they're willing to misinform to get clicks.

frikskit6• 2 months ago

What was unlikely to happen? It already happened in Nasdaq. It’s nice that it didn’t for S&P but for most investors it already did happen, so I’m not sure the ‘whatever’ attitude is warranted.

Also, since when is it appropriate/intellectually OK to respond to allegations of corruption by saying ‘stop freaking out, it’s only a small amount of corruption PER PERSON’.

danielovichdk• 2 months ago

Stocks and money. It's so boring.

I will go drive my old German car now, and get a bit drunk in a bottle of Nebbiolo while listening to some French lunatic with a piano.

Enjoy your trip to Mars and your self driving toy cars. The world is off its rails. Bit time.

somewhatgoated• 2 months ago

Sir this is a message board run by an US-American venture capitalist organisation; frankly what do you expect

Muromec• 2 months ago

I expect the balancers to judge and some car batteries mysteriously catching fire as a counterweight.

q3k• 2 months ago

What's your SKILLS.md? Is your flow multi-agentic?

hugh-avherald• 2 months ago

`--dangerously-skip-hype`

xeonmc• 2 months ago

just be sure do it in that order and not the other way around

tclancy• 2 months ago

Feels like there’s little danger either way. How is he going to get back out of the bottle?

MrGando• 2 months ago

Dude, are you me? :D

kome• 2 months ago

i fully fully agree with you.

abustamam6• 2 months ago

Stocks and money should be boring for most people. I'm not a financial adviser and this isn't financial advice but I believe no one with a net worth less than $2m should ever buy an individual stock. Invest in a target date retirement fund for your 401k. Same for Roth Ira. If you have more money to invest after that, invest in an index that aligns with you values (for example I invest in an ESG index for environmental, social, and governance, ie no weapons or drugs). I've kept my money boring for over ten years and my boring investments have over tripled in value. I consider it a point of pride that I don't know what the DOW is at or how much NVIDIA is trading at right now.

It always boggles my mind when someone who is middle to maybe upper middle class tries to time the market or buys/sells stocks in reaction to random news like this. At best you're going to be up maybe 50% on this trade, and you're going to pay commission to your broker, and may even need to pay taxes. At worst you're going to be down a lot and still pay the broker.

groundzeros201516• 2 months ago

It’s because you just lived through a 10 year period of the best growth for passive, and there is a tremendous amount of marketing online for passive.

I don’t disagree with your basic idea, but not being able to articulate alternatives so that you know when they make sense is going to hurt you.

We are possibly seeing a major failure mode for passive for the first time.

carlosjobim3• 2 months ago

On the contrary: People with a low net worth have very few opportunities to scratch and claw their way out of their holes in this global feudal system. They are the ones who need to be able to make high-risk, high-reward investments.

A conservative 10% return on a 2 million dollar investment is a very nice 200 000. A conservative 10% return on a 20 000 dollar investment is just 2000.

If you're not born rich in this world, there are but a few doors that are open to you to try to improve your station in life. Hard work will never help you out of the hole. Not even dangerous work. Nor will an education. At least with high risk investment you have a fair chance, and at worst you loose your savings and are back where you started. You're not going to lose your life or your limbs.

zajio1am• 2 months ago

for example I invest in an ESG index for environmental, social, and governance, ie no weapons or drugs

So, no weapons for Ukraine?

uyzstvqs• 2 months ago

I will go ride my horse, and get a bit drunk off some ale at the local pub. You go enjoy your automobile, electricity, and telephony.

Electricity is overhyped anyway. Nikola Tesla is a scammer with his crazy ideas. Not to mention the scam that is Bell's telephony. Electricity is causing a copper shortage for us common folk. This electricity bubble is built only on hype, and will pop soon enough!

flextheruler• 2 months ago

You've named technologies that people were heavily speculating on that did experience bubbles. A useful technology and a painful misallocation of resources is far from mutually exclusive.

fullshark• 2 months ago

Yeah yeah we're all above such gauche matters, it's only the entire reason SWEs have high paying jobs, paper wealth, and all the comforts that come with both, including the freedom to earn enough to walk away and act like you're above it all.

(I obviously don't know your circumstances but am commenting about a general phenomenon I see parroted by many professionally successful SWEs who seem to take glee in being ignorant of economics/finance while enjoying the spoils.)

marcosdumay3• 2 months ago

The GP is flexing the idea that he isn't from the US.

What is naive in a completely different set of ways. We really don't need more instability coming from your side.

stevenhuang• 2 months ago

Presumptuous of you to think your own preferences morally superior to the preferences of others.

vagab0nd• 2 months ago

I do enjoy my self driving car :) I've been enjoying it for the last 6 months.

And I will enjoy my trip to Mars, when there are nice hotels there. But it's gonna be a while.

It's a good time to be alive.

RobotToaster• 2 months ago

It's a risky investment, yes there's a chance it could go to the moon, but it could also plummet to earth.

Drupon• 2 months ago

Crazy to see the Twitter behavior here of really smart, well conveyed top level comments replied to by weird propaganda pushing bottom feeders.

solenoid0937• 2 months ago

HN discussion quality has deteriorated dramatically, especially for anything AI related.

lionkor• 2 months ago

I suspect this is due to fatigue. I admit I often post low quality replies under AI slop posts, simply because flagging them does nothing when they are somehow upvoted above and beyond anything human made.

This fatigue also causes a lot of readers to skip the AI threads, meaning less self-moderation of the forum through voting.

xyzal• 2 months ago

Mind that the host of this site has an interest in keeping the hype going on ...

etempleton3• 2 months ago

One of my indices of mania. You saw similar comments for crypto, blockchain, NFT, VR.

infecto4• 2 months ago

Sadly you are absolutely correct. The quality has nosedived in the past 1-2 years. I am not sure the exact cause but one of the things I noticed is a massive uptick in users who have insane post counts with sub 1-2 year history.

Breaking the rules but it does feel very much like Facebook or Reddit where there are distinct hive minds on topics and it just becomes a pissing match between brain-dead individuals.

arkadiytehgraet• 2 months ago

It specifically has deteriorated because of the people like you, who peddle unfounded AI-hype while being on the payroll of one of the major labs and not disclosing it properly. See https://news.ycombinator.com/item?id=48270186 for more information.

Also, how would you even know the deterioration? You have been barely 2 years on this website. Once again you gave away your shill nature.

kortilla3• 2 months ago

The top level comments are not smart or well conveyed, they are just the other side of the internet echo chamber. “Good, the rich don’t need money”, etc.

I think Elon owned companies are just a third rail for any kind of intelligent discussion because it turns into Elon fan boys arguing against Elon haters.

infecto4• 2 months ago

I think you pierced the hearts of Elon haters/fan boys and are getting downvoted.

Absolutely agree with your statement. Most top comments are just upvoted from the hivemind. Elon topics are always the worst because nobody even uses critical thinking and will just upvote/downvote based on the theme of Elon = Good or Bad.

zhivota• 2 months ago

Big relief for me. As a passive investor, I want the indices to follow the same passive strategy they always have, and specifically not make exceptions for specific companies like SpaceX wanted.

Plenty of ways to get exposure to that stock without it going into the indices it is not qualified for.

sscarduzio• 2 months ago

I agree, but… Plenty? Really?

flakeoil• 2 months ago

Just buy the stock or buy a mutual fund which invests in IT, AI, Tech what have you. Sooner or later they will probably also be included in the general index funds.

prasadjoglekar• 2 months ago

Yes. Plenty is correct. Fidelity let's you buy SpaceX at IPO with only $2K in the bank.

And there are other reasons to be cautious. Many passive funds don't license the SP500 and instead mirror it with their own synthetic index. They are not bound to respect this decision.

matwood10• 2 months ago

the same passive strategy they always have

You'll be shocked to know they have changed the inclusion rules a number of times.

I suspect if in 12 months these megacaps are still megacaps, they will revisit the profitability rules. It's hard to have an index with 500 of the largest, most significant companies leaving out companies with trillion dollar market caps.

MikeNotThePope• 2 months ago

It’s a list of the 500 largest profitable companies. Gotta make some bottom line $$$ to be included. At least that’s how it’s worked in the past.

londons_explore• 2 months ago

My personal photography blogging business has a market cap of a trillion dollars too.

I have 1 trillion shares, and I sold 1 to a mate for a dollar.

Total company revenue is like 50 bucks a month and profits are nil.

Can I be in the S&P 500 too?

steveBK1232• 2 months ago

Seasoning and profitability rules are why S&P does not have as steep of a drawdown or as long as a recovery as Nasdaq over the last 30 years of market performance.

The S&P recovered from Dotcom bottom in ~7 years while the Nasdaq-100 took 15 years. Likewise Nasdaq took 3.5 years and the AI hype to recover back to its COVID highs in 2024 while S&P had the same recovery in about 2 years.

This is the downside to Nasdaq having higher returns in tech bull markets.

So the indices have a very different volatility profile by design, we should be happy to have the choice rather than have them all converge to the same product.

root-parent2• 2 months ago

This thread should be marked as dupe. But ChrisArchitect seems very picky...

Previously: "SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P" - https://news.ycombinator.com/item?id=48405718

zerobees• 2 months ago

I get what you're saying, but I think there's a contradiction between wanting to be a passive index-fund investor and having opinions like that. The core tenet of index investing is that the market knows better than you.

aloha2436• 2 months ago

Plenty of active funds also give you roughly market returns, and it's not very difficult to do the same if you're investing for yourself. The important differentiator for index funds is that they have extremely low fees and take up none of your time.

outside12345• 2 months ago

The S&P 500 has had these requirements for decades and the approach has worked. This is really a statement that they aren’t going to change what worked so that a few billionaires can manipulate it.

lokar4• 2 months ago

That's simply not true. The core tenet is to buy mechanically according to some rule. Many indexes are not "the whole market".

alsetmusic2• 2 months ago

They appear to know more than you, too. They know not to change rules that have protected their investments for a chance to get into a risky bet on the ground floor.

anonu• 2 months ago

You'll eventually get exposure to it when it gets added in 12 months. Unless there are better profitability criteria. Ultimately it's all about market returns. If other indexes add it and outperform then eventually money will shift to those funds that do better.

jgalt2122• 2 months ago

I think it will be longer than 12 months, if ever.

To join the S&P 500, a company must demonstrate positive GAAP net income in both its most recent quarter and the sum of the trailing four consecutive quarters

jaylittle• 2 months ago

More than likely none of these AI companies will exist 12 months from now. Their carcasses will be devoured by entities with enough money to buy up the scraps after the bubble pops and the market implodes.

Neither SpaceX, OpenAI or Anthropic have a future. What's a shame is that had Elon not merged SpaceX with xAI it might've actually had a future - but he had to go and ruin it.

What an idiot.

MichaelDickens• 2 months ago

What do you mean "better profitability criteria"? I don't want an index to exclude companies on the basis of profitability. I want it to hold the market.

(I also don't want them to create special exceptions. The S&P 500 has pre-existing inclusion criteria, and I'm glad they're sticking to their rules.)

groundzeros201516• 2 months ago

You’re assuming their success is a done deal. But there is a large amount of risk in these companies.

Any individual can buy as much as they want.

outside12345• 2 months ago

After 12 months the market will have sorted it out. They can’t fake it with investment banker tricks for that long.

marcosdumay3• 2 months ago

I don't think they ever got profitable for 4 consecutive quarters, if you count xAi.

Anyway, if other indexes add it, and it fails spectacularly, money will shift to those funds that do better.

8organicbits• 2 months ago

money will shift to those funds that do better

I'm not disagreeing that people invest this way, but I'd like to point out that past performance does not imply future performance, and that investors should consider factors other than just past returns.

vikramkr• 2 months ago

It's not just about returns, it's also about risk. The role of a passive index fund is to be a passive index fund. If the s&p starts chasing returns, that will reduce its utility to the market. You get higher returns by being compensated for risks that passive investors/retirement funds don't want to take. And active investors use the S&P and similar indexes for the specific risks and asset class exposures they provide. You might think the economy is going to do poorly which would be good news for some company that's anti-correlated with the economy but you need to hedge that bet for if the economy does well, so in addition to buying shares of whatever that company is you buy into some market reflectiong mix of stocks bonds etc. The role of that hedge is to have a counterbalancing asset that moves opposite your primary bet to reduce volatility, and the role of the s&p 500 is to broadly reflect the american large cap publicly traded stock component of the market. If the S&P 500 begins behaving unpredictability to chase returns as an index then buying funds that track that index is no longer doing what you need it to do. S&P index loses utility, active investors just use some other index, but passive investors with 401ks locked in to tracking the s&p are suddenly forced to buy whatever bet the index creator is making en masse driving the stock price up. That's not a good outcome for anyone except the company muscling their way in and anyone that was somehow rewarded by that addition

MagicMoonlight• 2 months ago

Yeah but the point is, after 12 months we’ll know the real price. Right now it’s just a ponzi.

BeetleB• 2 months ago

Ultimately it's all about market returns. If other indexes add it and outperform then eventually money will shift to those funds that do better.

That's like saying that if Nvidia performs way better than an index fund, then the index fund will shift to consist only of Nvidia.

In any given year, there are plenty of index funds that outperform the S&P 500. They don't freak out over it.

S&P 500 is volatile over 5 years - I'd argue even over 10 years (see the charts at https://blog.nawaz.org/posts/2015/Dec/pay-down-mortgage-or-i...). The whole point of investing in it is for much longer windows.

So yeah, perhaps after 10 years they'll change once they'll see other index funds doing better, and have data to back up that in the long term, early inclusion didn't hurt.

asdfasgasdgasdg• 2 months ago

Well it’s just the S&P. Other big indices may include it eg the Russell 3000. But it’s not quite as big of a deal as it seems because the market cap on which they scale is the float not the whole value of the company.

zugi2• 2 months ago

Thanks for pointing this out!

It seems obvious in retrospect, but the fact that SpaceX will be "valued" at $1.75 trillion after the IPO is irrelevant when only $75 billion worth of its stock will be publicly traded.

$75 billion in float-adjusted market cap puts it around 180-190th in the S&P 500. So sure, it will likely get in there eventually, but there's no rush to bend the rules to get it in right away.

jgalt2122• 2 months ago

Same here. I was so upset about the prospect of my index funds / retirement savings being force fed 100X revenues investments in large size that I emailed my Representative and both Senators. And to add to the irony, I used ChatGPT to help me write these letters.

carlosjobim3• 2 months ago

Then move your savings into some other vehicle instead.

sahildeepreel• 2 months ago

Russel 1000 will include it in 5 days. Nasdaq in 15 days.

cmiles74• 2 months ago

It reads like greed and corruption to me.

codegeek2• 2 months ago

Agreed. S&P 500 needs to be seriously gatekeeped. We need safer boring companies in there thatbhave been peoven over a long period of time. Nothing against these companies but they are not proven and ready for S&P 500.

dehrmann• 2 months ago

What you're describing is closer to the DJIA.

jstummbillig3• 2 months ago

Let's say Alphabet shifts further to ~become a 100% AI company in the same way that Anthropic and OpenAI are. Should they be removed from the index? If not, why not?

sseveran• 2 months ago

Its cool. I will buy. And you will buy in 12 months.

alsetmusic2• 2 months ago

When we interviewed a financial planner in 2024, I specifically asked for her take on AI companies. It was a trick question. If she was bullish, we'd have walked. She had a good answer about investing in companies that are established and have stakes in AI companies, such as Microsoft.

I'm greatly relieved that at least one major institution in the markets is showing restraint and exercising caution. I'm also a little surprised at the rationality given what we've seen in the past year or so.

PaulDavisThe1st• 2 months ago

Problem is, most of the other indices have not done what S&P chose for the S&P 500. So if you have money in a NASDAQ, Russell, or FTSE index, you're going to end up with money in SpaceX. Even the S&P Global Index seems likely to include it.

The whole thing is disgusting and the financial sector should be collectively ashamed of themselves.

tick_tock_tick• 2 months ago

I mean as a passive investor this stuff should terrify you. You're learning that your "passive" is actually quite active. It's why people suggest VTI over VOO/SPY for "true" passive.

If you want to be active then keep your positions but just know and accept the active label.

l23k4• 2 months ago

I want the indices to follow the same passive strategy they always have

Okay? But the debate has been specifically about getting rid of new rules introduced in recent decades as they're incompatible with the purpose of the indices in the current situation.

root-parent2• 2 months ago

"Your 401K Is Their Exit Strategy" - https://news.ycombinator.com/item?id=48433705

jb_briant• 2 months ago

I wonder if profitable means that investment must be recouped or just if your operational expenses must be compensated by your earnings.

Anthropic is becoming "profitable" while burning a series H of 69 bns usd. Does it count as profitable?

I'm curious if someone well versed in finance can answer, because from my uneducated perspective, it's not profitable to burn billions in order to make a billion.

https://www.cnbc.com/2026/05/20/anthropic-revenue-explosive-...

JumpCrisscross21• 2 months ago

wonder if profitable means that investment must be recouped or just if your operational expenses must be compensated by your earnings

S&P requires profitability (i.e. net income) according to GAAP. That definition incorporates both ROA and operating income.

awestroke• 2 months ago

EBITDA is typically used to evaluate profitability.

JumpCrisscross21• 2 months ago

EBITDA is typically used to evaluate profitability

S&P requires GAAP profits, i.e. net income. EBITDA is above that.

ferrouswheel• 2 months ago

Finally some adults in the room.

wg02• 2 months ago

This is very smart of these folks because for just three companies, they can't ruin the trust and impeccable reputation they have built over the years.

This decision alone is worth several trillion dollars.

Allybag• 2 months ago

Well, it might be a good decision but I think the possibility of Standard and Poor one day being worth trillions of dollars more than if they had included three companies a year or two earlier than when they inevitably join the index is absolutely zero.

SwellJoe• 2 months ago

You've used the word "inevitably". Are you sure it's inevitable? SpaceX is launching at a ridiculous valuation, has two bad businesses bolted on to one modestly successful one, and all together the revenue puts the company well behind companies with a market cap vastly smaller than what they're pricing the IPO at.

This is a ridiculous situation, a ridiculous valuation, and a very risky business (data centers in space? c'mon, be serious).

bootsmann2• 2 months ago

SpaceX needs 4 profitable consecutive quarters to be included. If you have a lot of faith that they will achieve this I recommend you buy day 1 so you can ride the highs when the passive money eventually pours in.

bell-cot2• 2 months ago

... Standard and Poor one day being worth trillions ...

S&P - https://en.wikipedia.org/wiki/S%26P_Global - is a business intel & analytics firm, not an investment firm. Their S&P 500 list just one of many datasets that they manage and sell. Cleverly trying to pick future winners and losers has little potential upside for them, and could put them into direct competition with many of their customers.

SlinkyOnStairs• 2 months ago

Their job, EXPLICITLY, isn't to maximize returns.

People don't buy the S&P 500 because they buy the index because it spreads risk. That they won't get maximum returns is the intended risk tradeoff they want.

That people consider the S&P 500 as a vehicle for "maximum money" is precisely why it should be considered in a bubble. And why actions like the NASDAQ's fast-track exceptions are so concerning.

The moment you start making exceptions to the rules because "gotta push the stock index higher", it's game over for the entire economy.

sutterd• 2 months ago

A large share of invested money is passive, especially in the S&P 500. If some people pull out, it could cause a very damaging cascade. There would be a forced sale of stocks with maybe no buyers.

IAmGraydon2• 2 months ago

Calling this “smart” is like calling the decision not to shoot yourself in the face at close range with a shotgun “smart.”

It’s incredibly dumb that it was ever even under consideration.

lenerdenator4• 2 months ago

This is the US financial system.

"Smarts" has nothing to do with anything there and never has, so at least IMO, it's noteworthy that they didn't just sell out the index.

balls1872• 2 months ago

It had nothing to do with smarts. They held a public comment about the changes and responded accordingly.

galleywest200• 2 months ago

You would be surprised how many supposedly "smart" people ignore public comments about changes.

khriss2• 2 months ago

A lot of comments here are saying that the impact on the S&P would have been 'minimal' since the S&P is float weighted. So SpaceX would have been ~0.3% of the index.

The point isn't that the impact would have been minimal. It's that changing the rules to suit the rich and connected is the literal definition of crony capitalism. Why should SpaceX get exemptions from entry requirements to the S&P when every other company before it didn't?

Trying to justify it based on an argument that it would have been 'just' $200 billion, is absurd since that $200 billion is coming largely from the public via index funds that would have been forced to buy SpaceX shares.

JumpCrisscross21• 2 months ago

It's that changing the rules to suit the rich and connected is the literal definition of crony capitalism. Why should SpaceX get exemptions from entry requirements to the S&P when every other company before it didn't?

The S&P grandfathers in loads of shit. Google and Berkshire got to be the only special babies with multiple classes of stock for a few years.

The S&P tries to represent large cap American stocks. There was a genuine debate around whether SpaceX et al represent large cap stocks. Elon et al tried to put their thumbs on the scale, of course, but that wasn't the driving concern, this has been a debate that has been happening for a while.

The weird thing is linking it to Elon is absolutely titillating. So that's what influencers did. It's a maddening story. But it really isn't true, and it was even less true when the S&P rule changes were being misrepresented as faits accomplis.

khriss2• 2 months ago

Google and Berkshire got to be the only special babies with multiple classes of stock for a few years.

Wasn't this after their entry into the index?

ExoticPearTree• 2 months ago

Why should SpaceX get exemptions from entry requirements to the S&P when every other company before it didn't?

I could give you a lot of non-stocks related examples of why rules should not be set in stone.

matwood10• 2 months ago

Why should SpaceX get exemptions from entry requirements to the S&P when every other company before it didn't?

The rules have never been set in stone and changed a number of times since the S&P 500 was created. The current set of rules are based around the old way of companies IPOing and growing into something that could be included. Now, companies are staying private longer and IPOing with huge valuations.

Take AI/Elon emotion out of it for a second, and there is a rational debate to be had if multiple 1T+ market cap companies should be accommodated for in an index that's supposed to represent the 500 largest/most influential US companies. If these companies are still in the 1T+ ranges a year from now, I suspect the S&P may change some rules to get them in with the idea that the market has spoken.

dmix• 2 months ago

The definition of crony capitalism is when the corporations collude with the government.

blobbers2• 2 months ago

Good. Financial grift needs to end. Passive investment has become slightly too passive. S&P saved us. We weren't so lucky when they were rating bonds before the GFC. Glad they seem to have grown some ethics and are not bending the knee to the rocketman.

trumpdong2• 2 months ago

As a rule, no one in the financial industry has ethics. They're doing this because they think it'll be more profitable.

groundzeros201516• 2 months ago

Of course. And maintaining public trust in the quality of their top brand ETF is a good way to make money.

ncruces2• 2 months ago

Anyone knows what MSCI World will do?

flexagoon2• 2 months ago

Same question. It seems like they have had fast track rules for a pretty long time and will include SpaceX

https://www.msci.com/indexes/markets-in-motion/megacap-ipos

ncruces2• 2 months ago

So the funds will have to buy within 10 days of the IPO.

But I assume at least it's based on the free-float market cap?

spacebacon• 2 months ago

Smart choice imo. One pass with the SRT wipes their moat out overnight.

https://github.com/space-bacon/SRT

psychoslave5• 2 months ago

A bit tangent, as I never had a single thought about investing any of the few precious attention moment into financial theaters.

if I get it this is an index to invest in common in distributed wallets chosen and managed by an organization named S&P?

I'ld be interested in something similar, but aiming at growing cooperatives, non profits, externally checked for alignment organisations striving to benefit humanity as a whole. It doesn't have to be something that have strong garanties of direct personal financial profits, just no way it makes me in personal bankrupts, zero personal gain would be ok, staying ahead of inflation nice to have, and having some profits back would be acceptable.

Please be kind or hold from losing time and energy for everybody with aggressive answers.

I'm just considering ways to make sure as few as possible resources end up in the control of techno fascists.

matt_kantor• 2 months ago

something similar, but aiming at growing cooperatives, non profits, externally checked for alignment organisations striving to benefit humanity as a whole

There are a lot of investment funds like this, usually called something like "ESG" (environmental, social, and governance) funds.

psychoslave5• 2 months ago

Hey thank you very much for your reply, it's deeply appreciated, this helped to start a rich research on the matter.

groundzeros201516• 2 months ago

sounds like a non-profit service project, not an investment.

psychoslave5• 2 months ago

How is that incompatible?

aswegs8• 2 months ago

Dodged a bullet... seems like they still have integrity.

glimshe• 2 months ago

They don't make decisions like that out of wisdom and restraint. I imagine they got calls from Vanguard and others after index funds themselves got calls from institutional investors.

tigerlily• 2 months ago

Meanwhile the NASDAQ fell 4.18% Friday just been. This seems more than just a coincidence, people have been talking about pulling investment ahead of the SpaceX IPO, and the latest market activity makes me think the discontent is tangible now.

bwfan1232• 2 months ago

What happens with IPOs is that wealth is converted to money by owners. When that happens the wealth bubble deflates because there are a lot of sellers and few buyers. After the IPOs (spacex,openai,anthropic) buckle up for turbulence.

phplovesong• 2 months ago

This is REALLY GOOD news for every passive investor. They try to game the system with this one, big time. There should be hearings about this, and new laws need to put in place to prevent something like this.

alecco• 2 months ago

Yesterday:

"SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P" (bloomberg.com) https://news.ycombinator.com/item?id=48405718

Ars used to do deep insightful articles a couple of days after the news but today it's just regurgitated blogspam that is 2 days old news. And way more political. It's sad.

dtgriscom• 2 months ago

"Denied Fast Index Entry" is a much more honest title than "Rejects SpaceX", which is just click-bait.

bluecalm• 2 months ago

Fast entry rules are terrible. There is an old adage IPO - It's Probably Overpriced. Warren Buffet explained why: It's the issuer who chooses the price and time to enter the market. They will pick circumstances that suits them best. The chances that an IPO is a better deal than multiple other companies available in the auction market at that time which didn't get to choose the timing is close to 0 and it's not worth thinking about it - just don't buy IPOs ever.

I don't care about profitability, sustainability, ESG scores or anything like that. If the market is pricing unprofitable company at hundred of billions maybe there is a good reason for it. I do care about market having time to evaluate the company so index funds buy at fair prices. For this you need time and enough float and volume. Time being the main factor.

bwfan1232• 2 months ago

Fast entry rules are terrible just don't buy IPOs ever

Of late the markets have become a casino. There is a large retail population that bets on options. Betting on IPOs is just another opportunity for such folks. By bending the rules Elon and others are trying to make it a more favorable bet for retail ensuring a near-term pop.

Kudos to S&P for standing up and sticking it to the man. And, woe to JP Morgan, Morgan Stanley etc for pushing overpriced paper, and on nasdaq etc for bending rules. This will be remembered later as the peak (my opinion).

shmoil2• 2 months ago

If you have any doubts, I highly recommend to review the stock price history of GPRO(GoPro), BYND (Beyond Meat), CGC (Canopy Growth), TLRY (Tilray).

These are just some somewhat recent IPOs that come to mind, I am sure I am forgetting some.

In the case of GPRO, look up their first quarterly reports after the IPO. Pure comedy gold.

beernet3• 2 months ago

This comparison is nuts and invalid. Each of Anthropic/OpenAI/SpaceX has more revenue than the mentioned companies combined at IPO time.

Doomers gonna doom

shmoil2• 2 months ago

And scammers gonna scam.

newsicanuse• 2 months ago

Don't be one of those cluless techbros

thinkingtoilet• 2 months ago

Open AI has never made a cent of profit.

Lord-Jobo• 2 months ago

Is revenue the only metric we care about for this? Seems like stability and p-e ratio should at least be a factor? Which you can’t get until the ipo has actually settled.

Peaches4Rent• 2 months ago

If only hackernews had /remindme like on reddit

0x10ca1h0st• 2 months ago

This is a duplicate thread.

Previously: "SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P" - https://news.ycombinator.com/item?id=48405718

emsign• 2 months ago

Thank goodness my portfolio is safe from these junk papers.

mgianluc• 2 months ago

Thats good honestly and a big relief

everdrive• 2 months ago

I'm quite relieved as the S&P should be stable and slow. But with that caveat said, is this why the S&P 500 dropped off a cliff on Friday? If so, why?

oceansky• 2 months ago

Impossible to know for sure. But I would speculate a lot of investors are "bullish" on these three companies and would rather invest more on them.

droidjj• 2 months ago

The general consensus is stocks nosedived after the strong jobs report, because strong labor market means its more likely Fed will hike interest rates to curb inflation.

throwawaycan• 2 months ago

No. All index dropped on Friday.

steveBK1232• 2 months ago

Quite the opposite.

It dropped because tech dropped and it still has a lot of tech.

This is why QQQ was down far more than SPY, as QQQ is more tech heavy and will be adding these companies.

enraged_camel• 2 months ago

Jobs numbers came way stronger than expected, and previous two months also got revised up.

Strong job numbers + increasing inflation = overheated economy = goodbye interest rate cuts. In fact, there's a significant chance that rates will go up this year. Perhaps even more than once.

That means cost of borrowing will increase, which is bad for business growth.

cascades42• 2 months ago

The story being reported is that the unexpectedly strong US jobs report will push the Fed towards a rate hike, which often is correlated with a drop in stock prices.

https://www.nbcnews.com/business/markets/tech-stocks-sink-rc...

lenerdenator4• 2 months ago

Is that... no, it can't be.

squints

Is that an institution working for long-term stability instead of short-term gain?

looks through binoculars

Holy hell... it is!

site-packages1• 2 months ago

This would have been so disastrous. What a great move.

kburman• 2 months ago

I wonder if Elon would now reconsider IPO.

IAmGraydon2• 2 months ago

The IPO is in less than a week. I believe it’s a bit too late for that.

germandiago• 2 months ago

Responsible decision as things stand today.

mattbrewsbytes• 2 months ago

Letting new stocks marinate in the market and get 4 quarters of SEC filings along with following all the GAAP accounting practices will definitely help evaluate them before inclusion. The last large boom/bust cycle had a couple of companies, at least, that were doing illegal things. I'm not stating that these three are, just that nobody knows and the process should play out.

I do wonder if any of these three companies are using AI to do their accounting and bookkeeping. What happens when there are AI hallucinations affecting those outcomes?

dylan604• 2 months ago

I would expect actual human professional accountants to be involved somewhere in the due diligence stage of those approving the IPO. Then again, I know nothing of the IPO process, and am definitely thinking of mergers and acquisitions due diligence and hoping something exists for IPOs.

evolve2k• 2 months ago

The software that most accountants use is leaning into AI as hard as it can and unlike coders, accountants are being sold the benefits but can’t directly see the shortcomings and don’t have the programming know how to engage with the technical nuance.

Like many other sectors quality is gradually turning to slops as people “let the AI do it”.

atomicnumber3• 2 months ago

Right now I am not seeing a great track record of rich people being punished for crimes. The only one so far is Epstein and he was only punished for being caught.

slashdave• 2 months ago

Not accountants. Lawyers. And lots of them. Claims merely need to be factual, and can be conditioned on any number of factors as long as these factors are explicitly listed.

Then a big "risks" section is added basically excusing all the authors of responsibility when something "unexpected" happens.

dmboyd• 2 months ago

Reading the Spacex S-1, there’s a notable footnote (notable in that it’s a unique disclosure amongst all filers in the context it’s presented and is not required by any FASB standard). It calls out that land is not a depreciable asset.

That really didn’t need to be said and it seems to be sourced from memes from Reddit. It is the kind of infantile patronizing feedback you would get if you asked for comments on financial statements from chatGPT.

RiverStone• 2 months ago

Can you elaborate? That’s an interesting observation. What memes were you referring to?

jstummbillig3• 2 months ago

just that nobody knows

I don't understand. Guilty until proven innocent, because they... are too successful? What could possibly be the generalizable idea here?

Should we have a speed limit for too successful companies, even if they might be doing super valuable work? Who would we trust to be the judge of the potential havoc that bad capital allocation in such a moment might cause?

EDIT: To be more clear, I don't have any particular qualms with the S&P committee maintaining it's position. That part I find mostly interesting and goes towards the second paragraph.

The first one is reserved for the quote, which I do have qualms with. "Nobody knows" feels a bit weak when the implication, that someone could be doing something illegal, turns into a guiding principle.

dijit• 2 months ago

if you can't maintain success for 4 quarters then you weren't really successful.

iterateoften• 2 months ago

More like its a regulated space and it makes basic sense to have regulations

lokar4• 2 months ago

How do you know they are successful? The normal way we judge that in companies is with several quarters of public financial filings, independently audited and following GAAP standards.

wat10000• 2 months ago

“Innocent until proven guilty” is for the courts. It doesn’t apply elsewhere.

If somebody comes up to you on the street and claims to be the wallet inspector, should I cry “guilty until proven innocent!” when you refuse to hand yours over?

These rules ensure some stability before a company gets included in an index. That’s all. No company has a right to be included just because of their valuation at some moment.

dannyw• 2 months ago

These companies are allowed to go public and anyone can buy their shares.

Since the start, the S&P 500 has had a simple and consistent profitability screen. Your company must be GAAP profitable in the past quarter, as well as for your past four quarters when summed up.

The S&P 500 committee isn’t targeting these companies. They are simply choosing to keep the rules they’ve had in the beginning. And when these companies can deliver one year of profitability, like every single company added to the S&P 500 since inception, they too can join the index.

Refusing to change longstanding rules that make sense (remember: companies are supposed to be profitable!!) isn’t unfair.

quickthrowman2• 2 months ago

The headline should actually say “S&P 500 index maintains existing rules for inclusion” They are not actively rejecting any of the three companies, any of them can join the S&P 500 once they meet the inclusion rules, but none of the three companies meet the criteria at the moment.

It’s not active rejection, they simply don’t meet the criteria to join the S&P 500 yet. The inclusion rules don’t completely prevent garbage stocks from being added, but it helps keep out the most egregious frauds, but even then an Enron will happen every so often.

adgjlsfhk1• 2 months ago

they aren't being specially punished. they are being made to follow the rules that quickly to every other company that IPOs. These rules aren't arbitrary. They exist because without them, retirement accounts would be vulnerable to companies doing all sorts of nonsense to manipulate the indexes.

latchkey2• 2 months ago

Cerebras is a good example here. Largest IPO of 2026 and as of Friday, down 33% from their top and about $15 away from their initial price.

CFO was at Bird (a SPAC flop) and CEO was previously charged by the SEC with a felony... for cooking the books.

Everyone wants you to believe that a giant wafer is the future (and soon enough layers of wafers), but a P/E of $500, just doesn't make sense for a company selling AI fast tokens.

Especially with a whole bunch of other solutions just waiting for tapout and competing with everyone else for more and more memory allocations to be able to hold the models.

galactushonor• 2 months ago

How much new software does the world need in perpetuity?

Do we need that software so fast? We are able to manage our complex world just fine with support people answering questions within next 48 hours.

gymbeaux2• 2 months ago

(P/E ratios aren’t expressed in dollars)

So a PE of 500 means it would take 500 years for the earnings of the company to equal the current market cap (price per share X number of shares). This implies absurd (almost certainly impossible) growth over the next 500 years. Of course anyone expecting to pull their investment out and spend it on retirement can’t be looking at a 500-year investment horizon. I suppose the 1% can, though. What the hell else are they going to spend their cash on?

ethagnawl• 2 months ago

That is a great question re: accounting and I can readily see both sides of it playing out. On one hand, they know not to trust the output and on the other, they're way too high on their own supply.

reilly3000• 2 months ago

What happens if the auditors use software that consumes the model provider they are auditing? Seems like an obvious conflict of interest for the model, no?

I think that’s not how that works today, but I’m sure that it could and will one day.

ls612• 2 months ago

How is this any different than Microsoft? I suspect all of the big four use AD and Windows in their enterprise yet that isn’t a dealbreaker for auditing MS’ financials.

ebiester• 2 months ago

If it’s like other things, the auditors of Anthropic will have a contract with OpenAI and vice versa.

bushbaba• 2 months ago

Easy to test against by going multi model audit

tim3333• 2 months ago

These things get checked pretty carefully by humans. They can get sued for fraud. But some of the future estimates can be swayed by hallucinations, both AI and Elon Musk etc.

You can also game things a bit like Anthropic is showing better figures just now due to an introductory discount on getting compute from xAI. Those tend to fade out with time.

gymbeaux2• 2 months ago

Sure but there’s no way Enron was the last Enron. Also keep in mind something can be “legal” and still misleading to shareholders. I’m sure there are loopholes, some of which may have been reintroduced by Republicans in the last 20 years.

highfrequency• 2 months ago

In particular, good to marinate beyond the (typically 6 month) lockup period during which investors cannot sell stock

zugi2• 2 months ago

using AI to do their accounting and bookkeeping

A friend gave AI access to his accounts to summarize his finances.

On reviewing the AI-generated report, he spotted a $500 monthly loan payment that he didn't recognize. He asked AI where it came from, and AI admitted that it was a mistake.

Perhaps in its training data, most people have a $500 loan payment, so AI just stuck one in there.

oarla3• 2 months ago

Probably it estimated future AI subscription costs.

opsnooperfax2• 2 months ago

Or maybe the AI made up the part about making it up. There’s no way to tell. Don’t use a model to validate itself.

tdesilva• 2 months ago

is this the ChatGPT finance features they launched in May? it keeps asking me to integrate my finance data, but I have doubts about how useful it would actually be (not to mention some distrust about how well they would actually protect my data).

komali2• 2 months ago

I pointed Claude at a read only API account for our ERP, where our accounting happens, and it was pretty useful for helping figure out some historical missing data we left off when we were importing pre-ERP stuff. It did start losing the plot pretty quickly though and get confused about which actor was which (e.g. some of our customers are also our suppliers).

Yizahi• 2 months ago

I always wonder, just how many payments per month do these people have that they need to "summarize" them instead of scrolling through history in about 1 or 2 minutes max? It would probably take me longer to type in a concise LLM query and fiddle with access,APIs, permissions and stuff, than to view all my expenses for a year.

And on the same note, regardless of how many transactions there are, how come people are unaware about some of them? How does that happen? Do you have loan payments you take and then pay monthly but then get a 29 day amnesia every month on schedule? Were they banned by their bank from the banking app or something? I have ADHD (real, shittier one, not an Instagram version) which makes me forget both long term and short term things all the time, for decades. It doesn't prevent me remembering which big transfers I need to do, or done already, and what is the balance now or typically end of month. Just what kind of financial empire with offshore tax evasion accounts necessitates some 3rt party "audit" of one's individual finances?

outside2344• 2 months ago

SpaceX is a junk stock. It has no place in the S&P 500

balls1872• 2 months ago

I left my comment saying it was a bad idea.

outside12345• 2 months ago

Great. When the market floats it down to a fair valuation of $70B it will be a great add to the S&P 500.

fhe• 2 months ago

S&P 500 is already heavily skewed towards tech companies (Apple, Google, Meta, Amazon, Microsoft etc.). I think it's something like 40% of S&P500 is tech. If SpaceX/OpenAI/Anthropic are added, tech risks would be even more concentrated, which is bad for diversification.

jackfischer• 2 months ago

Putting aside the diversification argument, the three combined would be about ~5-6%. Definitely noteworthy but not really earth shattering

runfuyngunasdlj• 2 months ago

The effective altruists* at Anthropic are not happy about this.

*People who justify stealing from others by lazily giving a small pittance away according to a list some other guy showed them and they thought about for 5 minutes.

blondie9x• 2 months ago

Everyone watch out for other indices like CRSP US Total Market Index, which trade as the ETF VTI and mutual fund VTSAX.

There are countless other indices that are not well known to request seasoning time of these mega companies.

Shifting to S&P 500 seems prudent at the point. Besides S&P does anyone know which indices will be safe from these IPOs?

rdiddly• 2 months ago

Anyone care to explain to me why any of them even considered it? What's the specific upside from the perspective of an index provider? Seems to me like all it does when you bend the rules is erode trust, so whatever the upside is, it must be pretty significant since it comes at such a high cost to the credibility and trust placed in the applicable index and the market itself.

tim3333• 2 months ago

SpaceX got NASDAQ to change their rules so I guess people thought S&P might be similar. NASDAQ probably did it because they make money by the listing going to them rather than the NYSE.

doctorpangloss• 2 months ago

Did you consider they are adding SpaceX to the index because it is a good idea?

peterlada• 2 months ago

And also Market Cap-wise. Space X will be top 8 in the world. The other two are top 20 too.

linuxhansl• 2 months ago

Thank god some sanity prevails.

Adding these to the index immediately would force passive index funds (multiple trillions of $) to buy this stock, and thus not allow the market to make performance based decisions.

It's truly a shame that the NASDAQ caved and I will definitely reduce my position in such index funds (I have less trust in it now).

dash23• 2 months ago

I’m seeing a lot of naive optimism about this decision.

The risk S&P takes by doing this is that they will still be forced to buy SpaceX, but a year after everybody else. Given that there is a massive amount of capital that you know will have to buy this stock in 12 months, that itself provides speculative reasons to buy it now.

The indices are in an unenviable position: a race to the bottom. The S&P 500 may be setting up its index funds simply to be the last buyer in a Ponzi scheme.

There is no guarantee that the market will find the “true value“ of SpaceX in the 12 month interval. Markets are frothy and speculative already, and they now have a built in exit liquidity provider.

3eb7988a16632• 2 months ago

The only decision they are making is to maintain their existing rules. Which is what a slow-moving, conservative financial instrument should do.

S&P may very well end up buying SpaceX, but it will be through the standard mechanism they have been using for decades. Not in a last second bum-rush deal that NASDAQ made to grant special favors.

One year from IPO, the insider lock-up periods will have expired, so insiders who want to get out will have had an opportunity to dump their shares in a risk-based approach without a guaranteed payout from index funds.

dash23• 2 months ago

Unfortunately, repeating the word “conservative” does not stop you from becoming the last buyer of overpriced stock, which others are buying exactly so they can unload onto you.

paulsutter• 2 months ago

Even as a SpaceX shareholder I have to say this the right decision, and it's what a person would expect.

NASDAQ has an incentive to offer early entry into the index (they want SpaceX to list on their exchange), whereas S&P has no incentive for early inclusion; it could only increase risk for them. Even if they /wanted/ to add SpaceX early, that could create a precedent with unpredictable consequences.

Since most shareholders I know plan to hold for another 20 years, waiting a year to get into the S&P average seems fine. Congratulations to S&P for sticking to principle.

nickandbro• 2 months ago

I don't know why they should even consider, all have IPOs that are valued too high compared to their revenues.

exegete• 2 months ago

That's nice, but there's more to it:

However, the S&P Dow Jones Indices did “carve out one concession” by changing the investable weight factor rules for “lower-profile benchmarks” such as the S&P Total Market Index and Dow Jones US Total Stock Market Index, according to Quartz. That could allow an IPO faster entry into those indexes.

I think these total market indexes are used as benchmarks for US total market ETF's and funds?

lenerdenator4• 2 months ago

If they're having trouble accumulating more capital, perhaps SpaceX/OpenAI/Anthropic's major shareholders could just try to compete with other investments on the open market instead of trying to soak index funds.

noncoml2• 2 months ago

Personally I move my 401k out of S&P500 to BP Large Cap Value, until the dust settles. Better safe that sorry. If the fears are unfunded and I end up losing some potential growth, the safety is worth it

fsckboy2• 2 months ago

S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

S&P 500 rejects MPT when it decides not to issue a waiver from its ordinary rules which require at least a year long track record, a rule that is clearly a throwback to slower days when companies would invariably grow their way to be among the largest 500, and not IPO at that size. This old fashioned view throws a monkey wrench into the universally recommended, least-risk MPT/CAPM investment strategy of diversification because investors will need to individually buy these individual stocks to balance their ETF portfolios to reduce their overall risk, and then sell these stocks when they get added to the indices, incurring capital gains taxes that they wouldn't otherwise pay.

im3w1l2• 2 months ago

You raise an interesting point. What about the rules change regarding the free float made for SpaceX? That was something I considered a bigger problem than the express listings, and for me the express listings kinda got tainted by association with that.

fsckboy2• 2 months ago

There is economic inefficiency in many aspects of real world markets, so while a perfect world might be better, we don't have access to that. The problem with "restricted" float is that all the demand for investment (in that company, in that sector) cannot be met except by price inflation. But the market will respond by setting a market price for the investment and a market weight for that investment, and we must assume that includes skepticism and risk of dilution factored in, and from that point MPT says you want that weight in your portfolio, even though there might hypothetically be more desireable scenarios that are not available.

(now, large growing companies need public investment in order to grow, so it might be said that there is some value to regulations as a cudgel, "no access to public capital markets if you don't open yourselves up more," but again, we can still rely on market pricing once decisions like that are made)

NVIDIA is something like 8% of the S&P 500, and these companies are projected to be higher: you can't ignore sectors like that if you believe in diversification to squelch unrewarded risk

LASR• 2 months ago

Ridiculous in the first place.

Ekaros• 2 months ago

Is there any global indexes that include only companies which have been profitable in past? Say with same criteria of 1 quarter with 4 consecutive positive quarters overall? Might lose some gains, but probably also cut away lot of more risky bets.

CitrusFruits• 2 months ago

I've been considering VTV lately, it's somewhat close to what you're describing. It tracks CRSP US Large Cap Value which has more rules in place to be considered for inclusion than S&P 500, but isn't crazy exclusive.

mewse-hn• 2 months ago

Something that I don't think is taught enough is that it's very, very difficult to beat the market. If someone is asking you for money and promising that they'll beat the market, alarms should be ringing in your brain. A common ploy is to start up a dozen funds, let them run for five years, then pick the most successful one - look, our fund beats the market! Invest with us! Five years of returns, we're proven! It's a scam. Past performance does not indicate future returns.

This is to say that your idea isn't bad, it's just that if someone had a strategy to beat the market they'd be using it already, and other investors would be looking for a way to screw over that person and leave them holding the bag. That's why passive investments are diverse and fairly low risk - they should ideally track the whole market rather than trying to pick winners and losers. Index funds are good for this.

ralph842• 2 months ago

Imagine Anthropic had gone public a year ago when it had a $61.5 billion valuation. Index fund investors would be up in arms demanding this change after missing out on the 15x run to $965 billion.

christina97• 2 months ago

The point is that that’s a valuation on paper, made up by a small group of investors that have a strong incentive to have the number be high. Would the number have gone up like this if it were a public company?

ralph842• 2 months ago

Who knows, it could have gone up more. Sandisk just did 40x in a year as a public company. That's the point of an index, buy everything so you don't miss out on the outliers that provide most of the return.

oarla3• 2 months ago

I don’t have any background in finance, but what is stopping these companies from creating their own index and promoting it heavily? They have the market cap and the capital backing to do it I presume.

macNchz• 2 months ago

Because that doesn't force tons of passive investment dollars to participate. Being a part of the S&P500 doesn't require heavy promotion, they'd just get a slice of the investment from the millions of people who auto-invest money each month in retirement programs that buy S&P500 funds (among other things). There are already other indexes and funds where you can invest in high-tech/growth companies, but the people who are interested in that level of risk are already investing in them. These companies want to slip into the S&P because they'd get investment from people who are not specifically investing in high-risk/high-growth companies.

oarla3• 2 months ago

Thanks, makes sense now why they’re pushing for it.

dang• 2 months ago

Recent and related:

SpaceX, Other Mega IPOs Denied Fast Index Entry by S&P - https://news.ycombinator.com/item?id=48405718 - June 2026 (509 comments)

msie• 2 months ago

Yay! Some sanity for once!

gyb997• 1 month ago

Firstly,A Business Must Be A Business.

mmob• 1 month ago

Hooray! Finally a smidgen of common sense prevails. Let's hope it stays this way until such companies demonstrate their worth (or not).

brianmartin039• 1 month ago

Would SpaceX really want to be in the S&P 500 though? All that quarterly reporting and shareholder pressure might slow down what they do. Maybe this is a blessing in disguise.

S&P 500 rejects SpaceX, also blocking entry for OpenAI and Anthropic

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