Hi @tomsmithidg ,

I was thinking the same but also wondering.... they are only floating a small part of the company right? do we think that is having such a large factor? (genuine question to learn)

They are only floating a small amount but the index weighting is based on the market cap being float adjusted I heard on a podcast.

So even though it's a big market cap the small float reduces the required exposure.

Unless that's inaccurate or I've misunderstood.

No idea @navrock1 , maybe our illustrious leader @Strawman knows how it works?

The competition for capital is real, so i'm sure it's having an impact. But how much of an impact is super hard to say.

Anecdotally, ive heard a lot of the brokerages here in Australia have been inundated with expressions of interest, and it's hard to think of something more sexy than rockets, robots and AI. So you know a lot of people will be chomping at the bit for a piece of the action, even if that is the extent of their investment thesis.

And yes, it's only some of the stock being floated so the total market cap doesnt represent the required capital. But a small proportion of a big number is still big!

It's all very interesting, but I'm personally happy to watch from the sidelines. I just dont have a strong enough view or a deep enough understanding of these businesses to have any hope of knowing at what level value lies.

I remember years ago when Facebook listed I made the case that although the business was sound and had every chance of growing well, there was too much hype and the valuation was ridiculous. The share price was $38 at the time... (it's a LOT higher today)

Investing is hard :)

I have been watching markets falling, Nasdaq had a massive fall, the Kopsi in South Korea even further, European markets too. A lot of it is in tech stocks. It got me wondering if it is investors moving to cash to position themselves for the Space X IPO and even the Anthropic and Open AI IPOs.

It could be that, but it could also just be that the Nasdaq is up ~30% off it's March/April lows in the space of a couple of months (the Kospi was up almost 80% over the same period!!). I think it's more like narrative following price and it sounds sexier if you're a broker trying to sell Space X to say the market is falling because people are getting cash out to buy the IPO rather than the market needed a pullback.

First put the giga-IPOs’ size in context. In nominal terms, the record for capital raised by a debut listing is held by Saudi Aramco, which in 2019 pulled in $29bn ($38bn in today’s money) when it floated in Riyadh. SpaceX, Anthropic and OpenAI are collectively targeting $200bn-odd. Yet this is a rounding error in America’s bourses. Firms in the broad Russell 3000 share index have a total market value of $77trn; those in the narrower (but more widely tracked) S&P 500 index of big companies are worth $65trn.

As a consequence, investors in index funds will not immediately see their portfolios change much. Although Nasdaq has already shortened the “seasoning” period before index inclusion to 15 trading days and FTSE Russell has slashed its waiting time to five days (with S&P Dow Jones reportedly considering something similar), most share indices weight firms in proportion to the value only of shares they have released for public trading (the “free float”). For SpaceX, this means just the $75bn or so of stock it intends to issue in June—so its initial weight in the S&P 500 will be around 0.1%. The NASDAQ 100 is an exception, and has changed its rules to weight companies at up to three times their free float, in an apparent effort to woo Mr Musk. Even so, SpaceX’s probable initial weight in this $40trn index will be only around 0.5%.

@Strawman Can I vote on this post by @Chagsy for post of the day? It displays the calm, second level thinking that we all wish we could utilise at will and which I think occurs with a much higher frequency in these forums than in other places on the web.

Just not from me unfortunately but I am learning to stop and question a bit more thanks to posts like this one.

Ha ha. Thanks @Bushmanpat ! Would love to take all the credit but it’s a copy and paste from an article in the Economist- I usually credit all my plagiarism but was just about to hop on a plane; so on this occasion didn’t.

@Chagsy regardless of the source, it's still the kind of analysis that encourages us to push emotion and gossip to the side and look properly at what's in front of us, regardless of what the voices in the peanut gallery are yelling. And it's good to be reminded of this fact regularly, so kudos to you my friend. Enjoy your holiday.