So this guy was pretty active in the TeslaQ community. They believed Tesla to be (extremely) overvalued in 2017-2019 on the grounds that they would never become profitable.. or something.
They lost a lot of money shorting Tesla.
https://www.reddit.com/r/teslamotors/comments/91aha1/montana...
Anyways, seems like he's keeping the grudge alive.
They were right about a couple of things back then. But majorly wrong in aggregate and with respect to the outcome.
To be fair, they were overvalued in those days as well. Just because the on-paper value went up doesn’t make their statements false, it just means we’ve continued the charade.
When I followed TeslaQ, the valuation was around 60b.
Today Tesla has 39b in accumulated retained earning (pr latest 10k, not q).
If the thesis was that Tesla would be unable to create a system that would churn out cars that could be sold at scale with an economic surplus, then we have to reject it.
I mean. Sure. Value is ultimately what someone will pay for something, and the name of the game is to buy low and sell high. People who bought TSLA made money.
The point is, it's completely irrational - like winning lottery 3x in a row. Tesla's PE ratio, depending on how you look at it, something like 200-350. That means that if nothing changes, the expected return of earnings on your investment is 0.3-0.5%. You'll struggle to find a riskless fixed income instrument paying this little.
Ok, so clearly that's not why people buy this. They hope the earnings will increase, and/or the value of the stock. Seeing as you can lock in 4.5% riskless yield for 10 years, you'd hope for at least this much from a stock - realistically much more. Let's call it 7% - still low methinks but so be it. That's 14-25x more than it earns now.
You could say you don't care about earnings - just about price increase. Sure. But even to maintain the meagre PE ratio, earnings would have to double over 10 years. But realistically - this PE seems crazy for anything other than a crazy-high-growth stock. Which maybe Tesla is now but can't be forever. If it crawls down to a meagre 50x PE in 10 years time, to make your 7% return, earnings would still need to increase 8-14x in that time.
Maybe they can do it. They now sell, apparently, about 2% of all cars. No idea if total car production is stable; if it stays the same, and their margins stay the same, Tesla would need to increase their market share 8-14x too, to 16-28%. Maybe they can improve their margins and sell fewer cars, yet make more money - but typically increasing market share comes with lower profit margins as you lower the price to sell more stuff.
This is a veery bullish scenario. This is something an investment analyst for any other stock would need to sweat blood to argue. Yet this is what youre committing to when buying Tesla today.
Of course none of it really matters at the end of the day. Prices can levitate forever given enough believers. Wars can apparently be declared won with tweets with nothing to back them up - repeatedly. But if you think reality will come at some point, this is what is needed for Tesla to make sense as an investment.
Tesla's valuation is high because investors expect them to sell goods & services other than cars, such as autonomous vehicle rides and humanoid robots for domestic & industrial use.
Who knows if they'll be able to pull it off, but an analysis that treats Tesla as a car company misses why investors have priced so much growth into the company.
And Elon has also acknowledged that they came within a hair of going bankrupt during that model 3 production ramp up. Tesla was either going to go bankrupt or become quite valuable, and their proper valuation would have been based on the unknowable odds of the two scenarios. Maybe it wa a 1% chance of going bankrupt, maybe it was 99%.
To be fair, few could have anticipated that Tesla and Musk would be unaffected by valid scrutiny and criticism.
This is also addressed in the article:
> E. DON’T TRY TO SHORT SPACEX!!
> Elon Musk is a cult figure. Moreover, he has again and again proven himself immune to any meaningful market, legal, or regulatory scrutiny.
> Musk’s detractors have been correct about Tesla’s terrible fundamentals, its Full Self-Driving lies, its robotaxi fantasies, its shaky accounting. But when they have imagined these things might affect the stock price, they have been wrong.
All that.
But also he makes products so compelling that people who dislike him drives in them. "Fuck Elon" gotta be an all time top seller among bumper stickers.
> few could have anticipated that Tesla and Musk would be unaffected by valid scrutiny and criticism.
This almost implies that the scrutiny itself, and not the economic reality, should be the reason of Teslas demise or otherwise lesser financial outcome.
Which seems a little self referential.
If Elon doesn't wash his hands after peeing, and we pointed it out, that would be valid criticism. Ewww pee-hands.
But the economic reality and aggregate outcome wouldn't change.
Like not even if the frontpage of WSJ, The Times or FT said "eww Elon pee-hands".
And that the thing - with enterprises of this scale, you could always nitpick and find some things that are suboptimal. But we gotta see it in proportion. 100mm accounting error in Tesla is not the same as a 100mm accounting error in the local McDonalds franchise. For one the error is magnitudes larger than their real economic footprint. For the other it's a rounding error.
TL;DR:
I hear you - yes there is valid criticism. We just gotta see it in proportion.
I like Teslas cars. But I don't like pee-hands.
Tesla isn't the technology, performance, luxury, infotainment, or value leader in EV's any longer. If you think the Germans know what the salute meant, and they stopped buying the cars, you can take the hint and have a lot of excellent choices.
There is no future prospect of explosive growth at Tesla any longer. That price to earnings ratio is not less absurd for having lasted this long.
I hear you. And I believe disagreement is good.
The markets were right back in 2018 - Tesla did manage to overcome their manufacturing struggles, and they did become profitable (now having retained earnings equal to ~65% of their then market cap).
The markets may well be wrong now. But they weren't back then, and the arguments haven't changed drastically.
Currently I'm sitting in Palo Alto. So I get to see a lot of Waymos and Cybercabs. I struggle to see how Waymo can compete on price if Tesla can keep production prices in the same realm as M3.
And making a car is a pretty steep barrier to entry. So that edge may take some time to compete away.
You are living in a fantasy world where, for one thing, Tesla overcoming early production problems merits and astronomical P/E ratio. For another thing you think a non-functioning robotaxi service portends some future growth. Sleep in the backseat of an FSD Tesla if you dare.
So what is the reason of Tesla having greater valuation than Toyota while making 3 car models and you can't connect Apple Car / Android Auto into either ?
Do you think that Kathie Woods trying to memestock Tesla to 2000USD/share is normal?
Or do you think that promises like 20 million cars / year within 2030 while having extremely limited amount of models were ever achievable?
Market can remain irrational longer than you can remain solvent by Keynes says everything about what happened here.
But to say there’s a “grudge” seems to ignore another market fact “past results are not indicative of future results”. He might be right this time around for all you know. Is there anything you disagree apart from saying he is a Musk hater? Otherwise this comment is just unhelpful.
It's hard to know if SpaceX will flop in a week or in a decade but what I'm pretty confident on is a lot of retail capital allocated in Tesla will be redistributed to SpaceX.
So my trade on IPO day will be long $X SpaceX, short $X Tesla. Wait 1 month. Wish me luck.
> So my trade on IPO day will be long $X SpaceX, short $X Tesla. Wait 1 month. Wish me luck.
Risky, IMO. I've been closing my TSLA shorts because I think he'll just use spacex stock to buy tsla at a very overvalued price, just to wipe out all the shorts.
Fair, but Tesla is valued at 1.6T while SpaceX is going to start at 1.75T.
If SpaceX ever has the ability to buy Tesla in an all Stock deal at a high Tesla price then SpaceX would need to expand faster than Tesla which is precisely my trade.
I liked Matt Levine's take in his latest podcast. You buy an index because you want to own the market. If you want to own the market in 2026 you want to own SpaceX and Anthropic, and probably OpenAI too.
That said, if you think this is as bad as the article claims you'll obviously buy SpaceX at IPO, then sell it when Index funds are obligated to buy.
> That said, if you think this is as bad as the article claims you'll obviously buy SpaceX at IPO, then sell it when Index funds are obligated to buy.
The price at IPO will obviously be influenced by expectations of a future purchase by index funds... as an analogy, if it became public knowledge that next week, 1,000,000 people would all be required to buy gold, the price of gold would go up today, not next week
By making inclusion near-certain and fast, the rule changes may actually reduce the post-IPO inclusion pop (it gets priced in at IPO) while increasing the IPO price itself and the volatility on rebalance day due to the float constraint.
This IPO marks and inflection point where a fund that tracks whole market value shifts in definition, because of the forced rush value nature of the rule changes.
If the fast entry rule changes hadn’t happened I would agree with you entirely.
The rule change where nasdaq adds a weighting factor to spacex's float is what causes distortions - it artificially increases the size of spacex's cap weight without actually having more shares.
Fortunately, this only affects indices that follow nasdaq, and from what i know, no other index is following this. That means it's "safe" to purchase a globally diversified, cap weighted index fund (safe as in the float isn't manipulated).
People talk of the demise of passive investing due to this, but most of the commentary fail to mention it's a specific, nasdaq thing and not a general change.
If this is expected to be bad for ETF investors, what's stopping let's say Vanguard or Blackrock from creating their own index that tracks the NASDAQ but without the new inclusion rules, and then changing their ETFs' target indexes to that one. Vanguard is investor-owned so it would be in their best interest wouldn't it?
I want to buy an index with generally fixed rules. I don't know enough of the topic to know how bad it is but if Nasdaq is literally manually tweaking SpaceX's weight, just because? Then it's not buying the market.
The point-to-point travel with starship is the one that urks me the most. It is completely unrealistic and will never happen. They have Zürich, Switzerland as a destination. There is no place in all of Zürich to facility such a thing, you will blow out every window in the city at each launch. Absolutely ridiculous that anyone would take this serious.
Also don't get me started on data centers in space idea...
When the Chinese land on the moon sometime in 2030 and the US still doesn't have a way to get there, will Elon finally reap the consequences for his lies or just the interim NASA admin that gave Space X the contract?
> When the Chinese land on the moon sometime in 2030 and the US still doesn't have a way to get there, will Elon finally reap the consequences for his lies or just the interim NASA admin that gave Space X the contract?
I dunno, data centers in space seems even more outlandish than P2P space travel. The math on the orbital data center idea indicates that these things would need hundreds of thousands of square meters of radiative cooling. Absolutely bonkers that anyone is falling for this shit.
Space manufacturing is in there too. The international space station is 27 years old. One reason to spend tens of billions of dollars on ISS was the idea that it would be used to run experiments that would make space manufacturing practical. Space manufacturing is a perennial project on ISS. Still no space factories or space products, much less profits.
But there's Starlink. What's a telecom provider worth per customer? Value starlink double or triple that, maybe. And that's about it.
> There is no place in all of Zürich to facility such a thing, you will blow out every window in the city at each launch.
While you're right, I'd be more sceptical due to politics. The people around Lake Zürich are up in arms over wind turbines. Even solar panels on mountain sides are too much (though that's hopefully less about noise.) I can't imagine the uproar if someone wanted to fire rocket engines regularly there.
Why do index funds follow the exact companies in the index itself? Is it simply a branding thing? I’m buying into S&P500 because S&P500 is a highly recognized term used to mean “The US Economy”?
I feel that what this article is telling me is that passive funds are becoming active funds by way of manipulating the index itself. Kind of like if you’re passively invested in Brazil winning the World Cup but you can’t adjust the team or tactics, so instead you move the goal posts to where they’re about to kick the ball?
Pension funds seem more selective on the other hand. It’s always been the case that you can adjust your palette based on personal preference eg green energy, no weapons, tech stocks, etc.
> Why do index funds follow the exact companies in the index itself?
The fund itself is a financial product with a fee attached. Regardless of an index's perceived "quality" funds will always be created as long as there is investor demand. In recent years there has been an explosion of exotic "thematic" ETFs with exaggerated returns & comparatively higher fees. These tend not to attract the most sophisticated crowd. You can be sure they won't perform well into the long term.
> Is it simply a branding thing? I’m buying into S&P500 because S&P500 is a highly recognized term used to mean “The US Economy”?
Absolutely, it is 100% branding. For better or for worse S&P500 is the barometer of US economic health. There's every incentive to manipulate it to score political points.
This is just the dude that's famous for getting Tesla wrong constantly? If he's convinced it's going south it's probably an easy 100% gain from the IPO.
Well, the entire stock market is a world of thievery. Are you saying do not invest in any stocks and let your money rot in a savings account due to inflation?
They will pocket millions at an inflated stock price because index funds will be forced to compete at an inflated price with low availability in order to meet their institutional obligations because of the changing rules by the indices themselves.
This line seems to sum up the Musk Inc. situation perfectly:
> Musk’s detractors have been correct about Tesla’s terrible fundamentals, its Full Self-Driving lies, its robotaxi fantasies, its shaky accounting. But when they have imagined these things might affect the stock price, they have been wrong.
> Someday, someone, somewhere will make a lot of money shorting Tesla or SpaceX. But it’s unlikely to be you.
> For now, Tesla remains better understood as a religion than a financial investment, and we can now add SpaceX to that category.
> Falcon 9 proved SpaceX can deliver on hard engineering promises. Why isn't that track record factored into the business case here?
Toyota, NASA, many people have done it many times. They have also failed many times. Failure happens, even after successes.
Starship has come a long way but it can still fail on so many ways. They may simply not progress. The rockets may prove too expensive to reuse, or not reliable. The market might not be there.
But the valuation is as if they have already achieved it and will definitely make a fortune out of it.
> How much of the index fund manipulation concern applies to any mega-cap IPO, vs. something unique to SpaceX?
Fair question. Index inclusion typically happens when stocks have reached some equilibrium, in particular they have been trading for a while and have a fair price. Also they need a substantial amount of shares trading in public, not held by insiders.
SpaceX will be neither. The concern is that the IPO price is hugely inflated (which is possible to rig but only short term) inflating its market cap and thus it's weight in the index. Then all these index funds will be forced to fight over the small amount of shares inflating the price further.
This happens in micro scale when normal stocks enter indices, but nowhere near to this extent, and it's typically for a established, well priced securities.
It is reasonable to predict TSLA stock will, someday, drop to something roughly reflective of the value of the company. It has a long way to fall to reach that point, but, there's no reason to think it won't happen eventually. The market can remain irrational for a long time, but the facts are what they are.
Apple and Microsoft seem to be doing okay after many decades. Edison is 200 years old and is on the stock market. It is about finding the right product that will last. Tesla could be one of them if it can survive the next decade.
AAPL and MSFT have a P/E an order of magnitude lower than TSLA whilst both having revenue growth % yoy in the teens. They both make over a $100b in PROFIT a year. TSLA's? $4b and shrinking btw. Their highest P/E's since 2005 was under 50. AAPL reached 100 in June 2003 (around the time of the iTunes Store release.. mid iPod era but pre iPhone).
Comparing with MSFT and AAPL makes TSLA look even more insane.
Well, if Tesla gets merged into SpaceX at a record valuation (as was rumored is the intention recently), people with short positions would end up shorting SpaceX.
There are a lot of high stakes bets wrapped up in that company at this point already. AI, orbital launch business, communications networks, a little bit of Twitter/X, etc. And soon robots, grid battery, solar panels, electrical vehicles, autonomous driving, etc. They don't all have to work out to justify the combined valuation. Of course the facts are that quite a few of these lines of businesses are generating many billions in revenue already. It's at least a more diversified bet if a merge happens. Which might be why some share holders might prefer this. I don't have shares but I think that's a pretty rational attitude.
Still a risky bet of course. But betting that it will all fail might be the riskier one. Maybe it will just end up somewhere in between and not quite live up to expectations but still be a business generating lots of revenue with some healthy growth.
Some of the pessimists are absolutely perma-bears who hate any thing to do with Elon to the point of madness, but still doesn't change the fact that this IPO makes no financial sense no matter how reasonably you try to look at it.
I listened to all 3 hours of the Dwarkesh interview with Elon. I would really really love to see mass drivers on the moon, but all the facts were obviously made up on the spot. This wasn't just the usual Elon exaggerating. It was pure fantasy stuff. All the hard engineering questions were just being hand-waved away along with reasons of why the data centers couldn't be here on earth.
Combine that with the fact that Elon will retain complete control of SpaceX. Yeah no. I wouldn't be crazy enough to short the stock but I really don't want any of my money in it either.
There is no good financial advice which works for everyone[1]. A lot of people may make enormous money on the short term and bail out before the crash. Or it may be exact opposite.
This is about how 401ks and pensions are going to be forced to buy into (or very close to) the IPO. That affects “most Americans” whether they want to participate or not.
If Nvidia was buying 80% of their own chips, we would have the same criticism of Nvidia as we have of SpaceX. Nvidia's valuation is rational because they sell to real customers and get real cold hard cash from those customers.
The future pedo-island in Albania, ex-protected island where the Trump family promised to only develop 8% of it before developing everything, skirting every environmental rules, every foreign investment rules to destroy what was a natural park where at most you could anchor next to is the theft of the century.
My only real issue with SpaceX is that Elon has mastered the art of hiding real jewels (in this case the Starlink business) behind a whole pile of shit, and then forcing you buy the whole thing as a package.
Having X and Grok be bundled with SpaceX (muh datacenters in space) is like SolarCity on steroids.
With regards to the index discussion, my over/under on an ETF that tracks the index minus SpaceX is like two months post IPO.
Real jewels aren't trying to grow into a shrinking TAM that's being whittled away by the expansion of terrestrial wireless farther into the not yet served, but rich enough to be served countryside in places where that demographic exists.
>Real jewels aren't trying to grow into a shrinking TAM
Why do you think TAM is shrinking? It's pretty clear, to me at least, that Starlink is basically one of a kind military contractor that has a freeway to both raise prices and expand offerings.
Civilian market sure, but it's pretty clear the milltech path is going to be a money printer for satellites and it looks like you have a clear moat (i.e European sattelite companies won't be able to bid on those contracts).
Same recipe as the Mars colonization. There is absolutely zero chance of a self-sustaining colony on Mars in the next 50 years, but boy will he get rich if we try...
That whole foolishness will stop when we or the Chinese try to dig a hole in the moon to shield a moon station from radiation. Space is not for humans. Even super fit humans can't tolerate space for more than a few months.
An S-1 full of fantasies, insiders who will pocket millions, index companies that have changed the rules: it's all a recipe for regular people to have their pockets picked.
- many funds owned by the public will buy this, so people will be indirectly invested and could lose money
- if this affects the economy, it will affect everyone
All investments in equities carry risk of losing money. You also have a choice how much, if any, you are in the stock market and which stocks. As the market conditions change or the economy changes, it is your responsibility to manage your own investments.
How is that supposed to answer the question? It seems like you completely ignored it and decided to share unrelated complaints, the things you describe are not even vaguely theft-adjacent.
Most have their pension automatically track index. Nasdaq changes rules so that the pension funds are forced to buy stock while very volatile and likely overpriced.
Pension funds are perfectly capable of switching to a different product if they don't want index funds that reflect the market. But they do want index funds that actually reflect the market, so they want these rule changes.
The management of those indices is just doing exactly what the vast majority of their customers want.
>What? Absolutely not. They are doing what the President is telling them to do.
This is a paranoid delusion.
These rules were never on particularly solid ground, it's only natural to see them gone when you have significant upcoming IPOs changing the structure of the market. It is the job of these indices to keep up with that.
I'm sorry but you're very naive. The rules were changed because it was advantageous to SpaceX and the richest man on Earth.
Those rules were implemented to protect the index from being skewed when an IPO happens because the IPO is exactly the moment where the stock may be overvalued and very volatile (compared to all the other stocks that are in the index). We especially don't know at IPO time if the company is changing the structure of the market because it's too soon. And in fact, we won't know for a couple more weeks or even years; but by that time the price will have stabilized.
The index is supposed to be slow at rebalancing to minimize costs and make it practical for providers as well.
And as I write this comment, I've just read that they cancelled the changes[1]. Which completely proves your last sentence wrong.
>I'm sorry but you're very naive. The rules were changed because it was advantageous to SpaceX and the richest man on Earth.
The rules were changed in the mid-90s because of a significant amount of big IPOs which did not have a reasonable path to profitability. That's not even close to the situation we're in right now. Both OpenAI and Anthropic are clearly solid businesses.
> We especially don't know at IPO time if the company is changing the structure of the market because it's too soon. And in fact, we won't know for a couple more weeks or even years; but by that time the price will have stabilized.
This is largely magical thinking. How many more weeks should I wait before $TSLA will stabilize?
>And as I write this comment, I've just read that they cancelled the changes[1]. Which completely proves your last sentence wrong.
Or maybe deranged Americans just turned this non-political issue into a political one, and S&P global thought this was not a hill worth literally getting shot in their office for? I don't know, that'd certainly be my primary concern in their place. Wouldn't it be yours?
> The rules were changed in the mid-90s because of a significant amount of big IPOs which did not have a reasonable path to profitability.
Could you give me a link to read up on that?
> Both OpenAI and Anthropic are clearly solid businesses
Maybe you're an insider so you have more information than me; I'm not so I don't know.
> How many more weeks should I wait before $TSLA will stabilize?
TSLA is mature enough since their IPO to be included in an index.
> Or maybe deranged Americans just turned this non-political issue into a political one, and S&P global thought this was not a hill worth literally getting shot in their office for?
No, it's probably because major fund providers and other market participants (including retail) saw through the subterfuge. Indexes and providers and retail investors have nothing to gain from the former proposed changes. It was very obviously a play by SpaceX to force passive investors to buy into the stock, therefore pumping the price up.
That's not how pension funds work though. Pension funds are extremely conservative. They invest on horizons spanning decades. They can't just make decisions from one month to the next.
The very short time frame of an index accepting Tesla is the problem.
It's like telling a train "quick, make a right here"
And how do you suppose these rules were originally introduced? Do you believe that the reasoning was particularly solid then, and is it directly applicable in the current situation?
Yes. These rules were introduced, because that's the purpose of pension funds. To invest in very long-term ideas and assets. That's their whole purpose.
I'm not sure if we're debating here about the purpose of pension funds, or their strategy of investing in index funds. The first one doesn't change, the second one, maybe.
I'm willing to bet that most funds will just change their reconstitution process to give themselves a much longer period to add new IPO stocks to their portfolios and end up avoiding most of the drama.
On the other hand if they don't I'm making popcorn because the lawsuits and political fallout if / when this goes wrong is going to be epic.
So this guy was pretty active in the TeslaQ community. They believed Tesla to be (extremely) overvalued in 2017-2019 on the grounds that they would never become profitable.. or something. They lost a lot of money shorting Tesla. https://www.reddit.com/r/teslamotors/comments/91aha1/montana...
Anyways, seems like he's keeping the grudge alive.
They were right about a couple of things back then. But majorly wrong in aggregate and with respect to the outcome.
To be fair, they were overvalued in those days as well. Just because the on-paper value went up doesn’t make their statements false, it just means we’ve continued the charade.
Or maybe that's just what value is, what someone else would pay for something.
and it turns out people can be convinced to overpay for hot air and "futurism"
does that make it truly valuable?
When I followed TeslaQ, the valuation was around 60b. Today Tesla has 39b in accumulated retained earning (pr latest 10k, not q).
If the thesis was that Tesla would be unable to create a system that would churn out cars that could be sold at scale with an economic surplus, then we have to reject it.
I mean. Sure. Value is ultimately what someone will pay for something, and the name of the game is to buy low and sell high. People who bought TSLA made money.
The point is, it's completely irrational - like winning lottery 3x in a row. Tesla's PE ratio, depending on how you look at it, something like 200-350. That means that if nothing changes, the expected return of earnings on your investment is 0.3-0.5%. You'll struggle to find a riskless fixed income instrument paying this little.
Ok, so clearly that's not why people buy this. They hope the earnings will increase, and/or the value of the stock. Seeing as you can lock in 4.5% riskless yield for 10 years, you'd hope for at least this much from a stock - realistically much more. Let's call it 7% - still low methinks but so be it. That's 14-25x more than it earns now.
You could say you don't care about earnings - just about price increase. Sure. But even to maintain the meagre PE ratio, earnings would have to double over 10 years. But realistically - this PE seems crazy for anything other than a crazy-high-growth stock. Which maybe Tesla is now but can't be forever. If it crawls down to a meagre 50x PE in 10 years time, to make your 7% return, earnings would still need to increase 8-14x in that time.
Maybe they can do it. They now sell, apparently, about 2% of all cars. No idea if total car production is stable; if it stays the same, and their margins stay the same, Tesla would need to increase their market share 8-14x too, to 16-28%. Maybe they can improve their margins and sell fewer cars, yet make more money - but typically increasing market share comes with lower profit margins as you lower the price to sell more stuff.
This is a veery bullish scenario. This is something an investment analyst for any other stock would need to sweat blood to argue. Yet this is what youre committing to when buying Tesla today.
Of course none of it really matters at the end of the day. Prices can levitate forever given enough believers. Wars can apparently be declared won with tweets with nothing to back them up - repeatedly. But if you think reality will come at some point, this is what is needed for Tesla to make sense as an investment.
Tesla's valuation is high because investors expect them to sell goods & services other than cars, such as autonomous vehicle rides and humanoid robots for domestic & industrial use.
Who knows if they'll be able to pull it off, but an analysis that treats Tesla as a car company misses why investors have priced so much growth into the company.
It remains the case even then that they have to create an insane amount of value, not merely to grow but to catch up to their current valuation.
But hey Pokémon cards and meme coins and NFTs don't generate any revenue and yet you can make money buying and selling. Up to a point typically.
And Elon has also acknowledged that they came within a hair of going bankrupt during that model 3 production ramp up. Tesla was either going to go bankrupt or become quite valuable, and their proper valuation would have been based on the unknowable odds of the two scenarios. Maybe it wa a 1% chance of going bankrupt, maybe it was 99%.
To be fair, few could have anticipated that Tesla and Musk would be unaffected by valid scrutiny and criticism.
This is also addressed in the article:
> E. DON’T TRY TO SHORT SPACEX!!
> Elon Musk is a cult figure. Moreover, he has again and again proven himself immune to any meaningful market, legal, or regulatory scrutiny.
> Musk’s detractors have been correct about Tesla’s terrible fundamentals, its Full Self-Driving lies, its robotaxi fantasies, its shaky accounting. But when they have imagined these things might affect the stock price, they have been wrong.
All that. But also he makes products so compelling that people who dislike him drives in them. "Fuck Elon" gotta be an all time top seller among bumper stickers.
> few could have anticipated that Tesla and Musk would be unaffected by valid scrutiny and criticism.
This almost implies that the scrutiny itself, and not the economic reality, should be the reason of Teslas demise or otherwise lesser financial outcome. Which seems a little self referential. If Elon doesn't wash his hands after peeing, and we pointed it out, that would be valid criticism. Ewww pee-hands. But the economic reality and aggregate outcome wouldn't change.
Like not even if the frontpage of WSJ, The Times or FT said "eww Elon pee-hands".
And that the thing - with enterprises of this scale, you could always nitpick and find some things that are suboptimal. But we gotta see it in proportion. 100mm accounting error in Tesla is not the same as a 100mm accounting error in the local McDonalds franchise. For one the error is magnitudes larger than their real economic footprint. For the other it's a rounding error.
TL;DR: I hear you - yes there is valid criticism. We just gotta see it in proportion. I like Teslas cars. But I don't like pee-hands.
Tesla isn't the technology, performance, luxury, infotainment, or value leader in EV's any longer. If you think the Germans know what the salute meant, and they stopped buying the cars, you can take the hint and have a lot of excellent choices.
There is no future prospect of explosive growth at Tesla any longer. That price to earnings ratio is not less absurd for having lasted this long.
I hear you. And I believe disagreement is good. The markets were right back in 2018 - Tesla did manage to overcome their manufacturing struggles, and they did become profitable (now having retained earnings equal to ~65% of their then market cap).
The markets may well be wrong now. But they weren't back then, and the arguments haven't changed drastically.
Currently I'm sitting in Palo Alto. So I get to see a lot of Waymos and Cybercabs. I struggle to see how Waymo can compete on price if Tesla can keep production prices in the same realm as M3. And making a car is a pretty steep barrier to entry. So that edge may take some time to compete away.
You are living in a fantasy world where, for one thing, Tesla overcoming early production problems merits and astronomical P/E ratio. For another thing you think a non-functioning robotaxi service portends some future growth. Sleep in the backseat of an FSD Tesla if you dare.
Grudge? I would say he was spot on. And he still is.
How exactly do those numbers add up in your mind?
At around $60B valuation sometime in 2018, how was TeslaQ spot on?
Are you maybe claiming that Tesla is lying in their current disclosures?
So what is the reason of Tesla having greater valuation than Toyota while making 3 car models and you can't connect Apple Car / Android Auto into either ?
Do you think that Kathie Woods trying to memestock Tesla to 2000USD/share is normal?
Or do you think that promises like 20 million cars / year within 2030 while having extremely limited amount of models were ever achievable?
Tesla has been able to demonstrate significant growth which Toyota hasn't.
>Do you think that Kathie Woods trying to memestock Tesla to 2000USD/share is normal?
Frankly, I don't see why any sane adult would care enough to have an opinion.
>Or do you think that promises like 20 million cars / year within 2030 while having extremely limited amount of models were ever achievable?
I doubt the timeline was, I don't see why the model range would really be an issue.
> Tesla has been able to demonstrate significant growth which Toyota hasn't.
That doesn't mean much when Toyota was already a behemoth company, it's much harder to grow when you are already enormous.
Market can remain irrational longer than you can remain solvent by Keynes says everything about what happened here.
But to say there’s a “grudge” seems to ignore another market fact “past results are not indicative of future results”. He might be right this time around for all you know. Is there anything you disagree apart from saying he is a Musk hater? Otherwise this comment is just unhelpful.
It's hard to know if SpaceX will flop in a week or in a decade but what I'm pretty confident on is a lot of retail capital allocated in Tesla will be redistributed to SpaceX.
So my trade on IPO day will be long $X SpaceX, short $X Tesla. Wait 1 month. Wish me luck.
How do you know that this isn't already priced by quant firms?
More like: why would you think it's not already priced in. Answer: I'm super special!
I'm not special, this is a pretty basic idea so there's no edge here but that doesn't mean there's no trade.
Also, you'd be surprised at how simple the most profitable Quant strategies are.
Even if it's expected most can't do the trade because we're Pre-IPO.
Also, realized move always carries more value than expected because of uncertainty.
Musk's plan is to merge Tesla and SpaceX into one company.
New name: Stark Industries?
No, something more original more relatable: X Technologies. /s
It will unironically be named X, because Musk has an obsession with the letter since the PayPal days.
> So my trade on IPO day will be long $X SpaceX, short $X Tesla. Wait 1 month. Wish me luck.
Risky, IMO. I've been closing my TSLA shorts because I think he'll just use spacex stock to buy tsla at a very overvalued price, just to wipe out all the shorts.
Fair, but Tesla is valued at 1.6T while SpaceX is going to start at 1.75T.
If SpaceX ever has the ability to buy Tesla in an all Stock deal at a high Tesla price then SpaceX would need to expand faster than Tesla which is precisely my trade.
I liked Matt Levine's take in his latest podcast. You buy an index because you want to own the market. If you want to own the market in 2026 you want to own SpaceX and Anthropic, and probably OpenAI too.
That said, if you think this is as bad as the article claims you'll obviously buy SpaceX at IPO, then sell it when Index funds are obligated to buy.
> That said, if you think this is as bad as the article claims you'll obviously buy SpaceX at IPO, then sell it when Index funds are obligated to buy.
The price at IPO will obviously be influenced by expectations of a future purchase by index funds... as an analogy, if it became public knowledge that next week, 1,000,000 people would all be required to buy gold, the price of gold would go up today, not next week
By making inclusion near-certain and fast, the rule changes may actually reduce the post-IPO inclusion pop (it gets priced in at IPO) while increasing the IPO price itself and the volatility on rebalance day due to the float constraint.
yes! Michael Munger expressed it beautifully: "anything that is going to happen has already happened"
This IPO marks and inflection point where a fund that tracks whole market value shifts in definition, because of the forced rush value nature of the rule changes.
If the fast entry rule changes hadn’t happened I would agree with you entirely.
The rule change where nasdaq adds a weighting factor to spacex's float is what causes distortions - it artificially increases the size of spacex's cap weight without actually having more shares.
Fortunately, this only affects indices that follow nasdaq, and from what i know, no other index is following this. That means it's "safe" to purchase a globally diversified, cap weighted index fund (safe as in the float isn't manipulated).
People talk of the demise of passive investing due to this, but most of the commentary fail to mention it's a specific, nasdaq thing and not a general change.
That'd be a valid response if NASDAQ hadn't changed the rules and let SpaceX sidestep previous index inclusion criteria.
If this is expected to be bad for ETF investors, what's stopping let's say Vanguard or Blackrock from creating their own index that tracks the NASDAQ but without the new inclusion rules, and then changing their ETFs' target indexes to that one. Vanguard is investor-owned so it would be in their best interest wouldn't it?
I want to buy an index with generally fixed rules. I don't know enough of the topic to know how bad it is but if Nasdaq is literally manually tweaking SpaceX's weight, just because? Then it's not buying the market.
why would i want to take ownership in something that very clearly looks like a scam on paper.
this IPO is to pay debts for failing tech.
The point-to-point travel with starship is the one that urks me the most. It is completely unrealistic and will never happen. They have Zürich, Switzerland as a destination. There is no place in all of Zürich to facility such a thing, you will blow out every window in the city at each launch. Absolutely ridiculous that anyone would take this serious.
Also don't get me started on data centers in space idea...
When the Chinese land on the moon sometime in 2030 and the US still doesn't have a way to get there, will Elon finally reap the consequences for his lies or just the interim NASA admin that gave Space X the contract?
> When the Chinese land on the moon sometime in 2030 and the US still doesn't have a way to get there, will Elon finally reap the consequences for his lies or just the interim NASA admin that gave Space X the contract?
In all likelihood, neither.
And even that pales in comparison to their estimate of a $22.7T (T!) market for their AI "enterprise applications".
As a point of reference, the GDP of the United States is roughly $30T.
I dunno, data centers in space seems even more outlandish than P2P space travel. The math on the orbital data center idea indicates that these things would need hundreds of thousands of square meters of radiative cooling. Absolutely bonkers that anyone is falling for this shit.
Space manufacturing is in there too. The international space station is 27 years old. One reason to spend tens of billions of dollars on ISS was the idea that it would be used to run experiments that would make space manufacturing practical. Space manufacturing is a perennial project on ISS. Still no space factories or space products, much less profits.
But there's Starlink. What's a telecom provider worth per customer? Value starlink double or triple that, maybe. And that's about it.
> There is no place in all of Zürich to facility such a thing, you will blow out every window in the city at each launch.
While you're right, I'd be more sceptical due to politics. The people around Lake Zürich are up in arms over wind turbines. Even solar panels on mountain sides are too much (though that's hopefully less about noise.) I can't imagine the uproar if someone wanted to fire rocket engines regularly there.
"Also don't get me started on data centers in space idea..."
I may have bought a few bridges in my day, but at least bridges are a thing that exists.
I live in Zürich and feel uncomfortable about this.
There is no way people in Switzerland will vote yes to this.
You don't even need a vote. It's technically not feasible, it is that far fetched from reality.
Why do index funds follow the exact companies in the index itself? Is it simply a branding thing? I’m buying into S&P500 because S&P500 is a highly recognized term used to mean “The US Economy”?
I feel that what this article is telling me is that passive funds are becoming active funds by way of manipulating the index itself. Kind of like if you’re passively invested in Brazil winning the World Cup but you can’t adjust the team or tactics, so instead you move the goal posts to where they’re about to kick the ball?
Pension funds seem more selective on the other hand. It’s always been the case that you can adjust your palette based on personal preference eg green energy, no weapons, tech stocks, etc.
> Why do index funds follow the exact companies in the index itself?
The fund itself is a financial product with a fee attached. Regardless of an index's perceived "quality" funds will always be created as long as there is investor demand. In recent years there has been an explosion of exotic "thematic" ETFs with exaggerated returns & comparatively higher fees. These tend not to attract the most sophisticated crowd. You can be sure they won't perform well into the long term.
> Is it simply a branding thing? I’m buying into S&P500 because S&P500 is a highly recognized term used to mean “The US Economy”?
Absolutely, it is 100% branding. For better or for worse S&P500 is the barometer of US economic health. There's every incentive to manipulate it to score political points.
>I feel that what this article is telling me is that passive funds are becoming active funds by way of manipulating the index itself.
It's wrong. They're undoing a previous manipulation and making the index more accurately reflect the market.
Explain to me how adding weights to the float is undoing a previous manipulation and not manipulating the numbers.
That's the Nasdaq-100 lol who cares? Are you buying it? It is literally just an arbitrary bucket of stocks.
That's just deflection to avoid answering. I wonder if it's a product of cognitive dissonance or if it's voluntary.
It's perfectly legitimate for me to reject outright the idea that anything Nasdaq-100 does matters.
Why do you think anything that Nasdaq-100 does would matter?
This is just the dude that's famous for getting Tesla wrong constantly? If he's convinced it's going south it's probably an easy 100% gain from the IPO.
That's not an argument for. Maybe we don't want to live in a world of thievery, or be thieves ourselves.
Well, the entire stock market is a world of thievery. Are you saying do not invest in any stocks and let your money rot in a savings account due to inflation?
What thievery happens in the stock market?
HFT is nothing short of skimming off the top at scale.
It's still not thievery by any definition of the word.
You don't have to argue the opposite of a prediction to disbelieve sources with poor track records.
The other stuff is bad, but surely "insiders who will pocket millions" is normal for an IPO?
They will pocket millions at an inflated stock price because index funds will be forced to compete at an inflated price with low availability in order to meet their institutional obligations because of the changing rules by the indices themselves.
This line seems to sum up the Musk Inc. situation perfectly:
> Musk’s detractors have been correct about Tesla’s terrible fundamentals, its Full Self-Driving lies, its robotaxi fantasies, its shaky accounting. But when they have imagined these things might affect the stock price, they have been wrong.
> Someday, someone, somewhere will make a lot of money shorting Tesla or SpaceX. But it’s unlikely to be you.
> For now, Tesla remains better understood as a religion than a financial investment, and we can now add SpaceX to that category.
I've never understood Tesla's valuation as greater than the entire automotive industry combined.
But as a 95% FSD user, I'm living (and loving) the Full Self-Driving lie.
Falcon 9 proved SpaceX can deliver on hard engineering promises. Why isn't that track record factored into the business case here?
Is the argument that SpaceX the business fails, or just that the IPO price is disconnected from reality?
How much of the index fund manipulation concern applies to any mega-cap IPO, vs. something unique to SpaceX?
> Falcon 9 proved SpaceX can deliver on hard engineering promises. Why isn't that track record factored into the business case here?
Toyota, NASA, many people have done it many times. They have also failed many times. Failure happens, even after successes.
Starship has come a long way but it can still fail on so many ways. They may simply not progress. The rockets may prove too expensive to reuse, or not reliable. The market might not be there.
But the valuation is as if they have already achieved it and will definitely make a fortune out of it.
> How much of the index fund manipulation concern applies to any mega-cap IPO, vs. something unique to SpaceX?
Fair question. Index inclusion typically happens when stocks have reached some equilibrium, in particular they have been trading for a while and have a fair price. Also they need a substantial amount of shares trading in public, not held by insiders.
SpaceX will be neither. The concern is that the IPO price is hugely inflated (which is possible to rig but only short term) inflating its market cap and thus it's weight in the index. Then all these index funds will be forced to fight over the small amount of shares inflating the price further.
This happens in micro scale when normal stocks enter indices, but nowhere near to this extent, and it's typically for a established, well priced securities.
Thanks. This clarifies a lot
This is just eds. Same guy here: https://en.wikipedia.org/wiki/TSLAQ
He's got some kind of beef with Elon and has predicted TSLA stock will crash many times.
It is reasonable to predict TSLA stock will, someday, drop to something roughly reflective of the value of the company. It has a long way to fall to reach that point, but, there's no reason to think it won't happen eventually. The market can remain irrational for a long time, but the facts are what they are.
This is like ANY company. What company will last forever. Not many.
Not every company trades at 387 PE on 2%-3% growth. I can't name any that do.
F sells an order of magnitude more cars (~$190 billion in revenue), and has a market cap of $62.8 billion vs TSLA market cap of $1.59 trillion.
TSLA is ridiculous. Any sane investor would look at those numbers and run as far and as fast as they can.
Somehow people will read this fact and say it's not overvalued because it hasn't crashed yet.
Apple and Microsoft seem to be doing okay after many decades. Edison is 200 years old and is on the stock market. It is about finding the right product that will last. Tesla could be one of them if it can survive the next decade.
AAPL and MSFT have a P/E an order of magnitude lower than TSLA whilst both having revenue growth % yoy in the teens. They both make over a $100b in PROFIT a year. TSLA's? $4b and shrinking btw. Their highest P/E's since 2005 was under 50. AAPL reached 100 in June 2003 (around the time of the iTunes Store release.. mid iPod era but pre iPhone).
Comparing with MSFT and AAPL makes TSLA look even more insane.
Well, if Tesla gets merged into SpaceX at a record valuation (as was rumored is the intention recently), people with short positions would end up shorting SpaceX.
There are a lot of high stakes bets wrapped up in that company at this point already. AI, orbital launch business, communications networks, a little bit of Twitter/X, etc. And soon robots, grid battery, solar panels, electrical vehicles, autonomous driving, etc. They don't all have to work out to justify the combined valuation. Of course the facts are that quite a few of these lines of businesses are generating many billions in revenue already. It's at least a more diversified bet if a merge happens. Which might be why some share holders might prefer this. I don't have shares but I think that's a pretty rational attitude.
Still a risky bet of course. But betting that it will all fail might be the riskier one. Maybe it will just end up somewhere in between and not quite live up to expectations but still be a business generating lots of revenue with some healthy growth.
SpaceX is an even bigger scam, if that's possible.
What is EDS. It's mentioned in the Substack comments as well.
Elon Derangement Syndrome I presume.
Some of the pessimists are absolutely perma-bears who hate any thing to do with Elon to the point of madness, but still doesn't change the fact that this IPO makes no financial sense no matter how reasonably you try to look at it.
I listened to all 3 hours of the Dwarkesh interview with Elon. I would really really love to see mass drivers on the moon, but all the facts were obviously made up on the spot. This wasn't just the usual Elon exaggerating. It was pure fantasy stuff. All the hard engineering questions were just being hand-waved away along with reasons of why the data centers couldn't be here on earth.
Combine that with the fact that Elon will retain complete control of SpaceX. Yeah no. I wouldn't be crazy enough to short the stock but I really don't want any of my money in it either.
There is no good financial advice which works for everyone[1]. A lot of people may make enormous money on the short term and bail out before the crash. Or it may be exact opposite.
[1] Psychology of money
Only the rich own stocks. Most Americans have either no assets or debt.
This is about how 401ks and pensions are going to be forced to buy into (or very close to) the IPO. That affects “most Americans” whether they want to participate or not.
How do we minimize our exposure to this IPO?
SpaceX a failure at 83% of mass to orbit. Yoikes.
The launch business is impressive relative to the launch industry, but in terms of company capital value, it is a very small part of the company.
I'm rooting for SpaceX, but even I can see that there's some extremely dicey work being done to mask the enormous sinkhole of XAi (and Twitter).
83% mass to orbit of a market of what size? The valuation should absolutely reflect the size of market company operates in.
If Nvidia was buying 80% of their own chips, we would have the same criticism of Nvidia as we have of SpaceX. Nvidia's valuation is rational because they sell to real customers and get real cold hard cash from those customers.
No.
The future pedo-island in Albania, ex-protected island where the Trump family promised to only develop 8% of it before developing everything, skirting every environmental rules, every foreign investment rules to destroy what was a natural park where at most you could anchor next to is the theft of the century.
This is just american capitalism in america.
> before developing everything
Have they cleared all the landmines and UXBs already?!?
That was fast.
* https://www.theguardian.com/world/2025/jun/24/trump-family-k...
My only real issue with SpaceX is that Elon has mastered the art of hiding real jewels (in this case the Starlink business) behind a whole pile of shit, and then forcing you buy the whole thing as a package.
Having X and Grok be bundled with SpaceX (muh datacenters in space) is like SolarCity on steroids.
With regards to the index discussion, my over/under on an ETF that tracks the index minus SpaceX is like two months post IPO.
Real jewels aren't trying to grow into a shrinking TAM that's being whittled away by the expansion of terrestrial wireless farther into the not yet served, but rich enough to be served countryside in places where that demographic exists.
>Real jewels aren't trying to grow into a shrinking TAM
Why do you think TAM is shrinking? It's pretty clear, to me at least, that Starlink is basically one of a kind military contractor that has a freeway to both raise prices and expand offerings.
Civilian market sure, but it's pretty clear the milltech path is going to be a money printer for satellites and it looks like you have a clear moat (i.e European sattelite companies won't be able to bid on those contracts).
it'll be a small from our pockets individually. but it'll add up to what elon needs.
this is the new playbook.
> this is the new playbook.
Same as the old playbook, just scaled up. Tesla got billions from state subsidies and selling carbon credits.
Same recipe as the Mars colonization. There is absolutely zero chance of a self-sustaining colony on Mars in the next 50 years, but boy will he get rich if we try...
That whole foolishness will stop when we or the Chinese try to dig a hole in the moon to shield a moon station from radiation. Space is not for humans. Even super fit humans can't tolerate space for more than a few months.
An S-1 full of fantasies, insiders who will pocket millions, index companies that have changed the rules: it's all a recipe for regular people to have their pockets picked.
How can a public sale ever be a theft?
Maybe you didn't know this but:
All investments in equities carry risk of losing money. You also have a choice how much, if any, you are in the stock market and which stocks. As the market conditions change or the economy changes, it is your responsibility to manage your own investments.
How is that supposed to answer the question? It seems like you completely ignored it and decided to share unrelated complaints, the things you describe are not even vaguely theft-adjacent.
Most have their pension automatically track index. Nasdaq changes rules so that the pension funds are forced to buy stock while very volatile and likely overpriced.
Those poor pension funds, unable to make their own decisions. Forced to keep all of their money in $NDX forever.
It must be terrible to be so utterly powerless.
Pension funds use (you guessed it) index funds like your average passive investor.
Sure we can hate pension funds but fuck the management of those indexes.
Pension funds are perfectly capable of switching to a different product if they don't want index funds that reflect the market. But they do want index funds that actually reflect the market, so they want these rule changes.
The management of those indices is just doing exactly what the vast majority of their customers want.
What? Absolutely not. They are doing what the President is telling them to do.
The customers of indexes are providers of funds (Vanguard, BlackRock, ...). In turn, people like you and me are clients of those providers.
Indexes are changing the rules thanks to lobbies by the world's richest people so they can get even richer by dumping their overvalued stocks.
If you are not a SpaceX investor, you are losing money. Including pension funds.
>What? Absolutely not. They are doing what the President is telling them to do.
This is a paranoid delusion.
These rules were never on particularly solid ground, it's only natural to see them gone when you have significant upcoming IPOs changing the structure of the market. It is the job of these indices to keep up with that.
I'm sorry but you're very naive. The rules were changed because it was advantageous to SpaceX and the richest man on Earth.
Those rules were implemented to protect the index from being skewed when an IPO happens because the IPO is exactly the moment where the stock may be overvalued and very volatile (compared to all the other stocks that are in the index). We especially don't know at IPO time if the company is changing the structure of the market because it's too soon. And in fact, we won't know for a couple more weeks or even years; but by that time the price will have stabilized.
The index is supposed to be slow at rebalancing to minimize costs and make it practical for providers as well.
And as I write this comment, I've just read that they cancelled the changes[1]. Which completely proves your last sentence wrong.
[1]: https://press.spglobal.com/2026-06-04-S-P-Dow-Jones-Indices-...
>I'm sorry but you're very naive. The rules were changed because it was advantageous to SpaceX and the richest man on Earth.
The rules were changed in the mid-90s because of a significant amount of big IPOs which did not have a reasonable path to profitability. That's not even close to the situation we're in right now. Both OpenAI and Anthropic are clearly solid businesses.
> We especially don't know at IPO time if the company is changing the structure of the market because it's too soon. And in fact, we won't know for a couple more weeks or even years; but by that time the price will have stabilized.
This is largely magical thinking. How many more weeks should I wait before $TSLA will stabilize?
>And as I write this comment, I've just read that they cancelled the changes[1]. Which completely proves your last sentence wrong.
Or maybe deranged Americans just turned this non-political issue into a political one, and S&P global thought this was not a hill worth literally getting shot in their office for? I don't know, that'd certainly be my primary concern in their place. Wouldn't it be yours?
> The rules were changed in the mid-90s because of a significant amount of big IPOs which did not have a reasonable path to profitability.
Could you give me a link to read up on that?
> Both OpenAI and Anthropic are clearly solid businesses
Maybe you're an insider so you have more information than me; I'm not so I don't know.
> How many more weeks should I wait before $TSLA will stabilize?
TSLA is mature enough since their IPO to be included in an index.
> Or maybe deranged Americans just turned this non-political issue into a political one, and S&P global thought this was not a hill worth literally getting shot in their office for?
No, it's probably because major fund providers and other market participants (including retail) saw through the subterfuge. Indexes and providers and retail investors have nothing to gain from the former proposed changes. It was very obviously a play by SpaceX to force passive investors to buy into the stock, therefore pumping the price up.
That's not how pension funds work though. Pension funds are extremely conservative. They invest on horizons spanning decades. They can't just make decisions from one month to the next. The very short time frame of an index accepting Tesla is the problem. It's like telling a train "quick, make a right here"
And how do you suppose these rules were originally introduced? Do you believe that the reasoning was particularly solid then, and is it directly applicable in the current situation?
Yes. These rules were introduced, because that's the purpose of pension funds. To invest in very long-term ideas and assets. That's their whole purpose. I'm not sure if we're debating here about the purpose of pension funds, or their strategy of investing in index funds. The first one doesn't change, the second one, maybe.
I'm willing to bet that most funds will just change their reconstitution process to give themselves a much longer period to add new IPO stocks to their portfolios and end up avoiding most of the drama.
On the other hand if they don't I'm making popcorn because the lawsuits and political fallout if / when this goes wrong is going to be epic.
The same way other pseudo-capitalistic deals that you can't walk away from are theft. Like what we in America health insurance.