Can the stockmarket swallow Anthropic, SpaceX and OpenAI?

For SpaceX (and possible the others):

Yes it can, since they changed the rules to force over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.

From https://x.com/Hedgeye/status/2060435253928604065:

"Rule changes for the SpaceX $SPCX IPO:

Index providers waived the profitability requirement and cut the seasoning window from 90 days to 5.

This forces over $30 trillion in passive 401k and retirement money to buy SpaceX at IPO valuations.

Bloomberg Intelligence estimates S&P 500 funds must absorb 19% of SpaceX's float within 6 months.

Russell 1000 and Nasdaq 100 funds will absorb 24%.

The rules built to protect passive investors:

1. S&P 500 has required 12 months of trading and 4 quarters of GAAP profitability since 2002. Both waived.

2. Nasdaq cut its inclusion window from 90 trading days to 15.

3. FTSE Russell cut its to 5.

All three benchmarks are now structured to buy SpaceX at IPO pricing."

All these things are apparently valued at trillions of dollars these days. Where's the trillions, or hundreds of billions worth in improved quality of life? What has gotten better other than the ability to produce more crap?

Maybe to counter some of the apparently widely expected doom and gloom:

- bubbles are notoriously unpredictable and generally don't happen when they are loudly and widely proclaimed to happen any minute now.

- large scale infrastructure spending tends to be really good for economies. These three companies are creating lots of jobs that are mostly related to construction, energy infrastructure, hardware spending, etc. That's a lot of money flowing to suppliers and regions where that spending happens.

- While overly pessimistic sentiments about AI and space companies are widespread they aren't much more rational than the overly optimistic ones. The realist scenario could actually be that, AI and especially Agentic AI is already quite useful and the total addressable market for that is obviously larger than it is today. The question is how large. Likewise, dropping the cost of launching stuff into orbit by one or two orders of magnitude, should create a much larger market for launching stuff there. Including possibly some AI relevant compute.

The valuations of these companies are probably on the high side and I'd expect post IPO share values to drop quite a bit and would not personally consider buying anything until after that happens. But that won't necessarily trigger a stock market crisis or a collapse of these well financed companies. All the spending these companies are doing is very real and the profits of their suppliers are going to be equally real. So some of those share value losses might be offset by gains for other stocks and economic growth. The stock market and economy aren't zero sum games.

However, there are worrying macroeconomic trends happening at the same time (Iran conflict, Ukraine war) that are disrupting global markets already. But you could argue that dumping tens or hundreds of billions into e.g. energy infrastructure and data centers isn't the worst way to counter those for a country like the US. The big picture might actually be pretty positive. Especially if we can dodge global economic misery via a prolonged Gulf conflict that at this point seems to serve no point whatsoever for anyone except perhaps Israel.

Maybe we changed the rules so that our capital markets can protect our champions from large Chinese buy pressure at lower post-IPO valuations. Plus, these companies have probably had to demonstrate earnings stability (yes, unaudited) in order for the rules to be waived.

Is the text of the waiver and its reasoning anywhere? I guess I'll read tfa.

Anthropic at $1t for an IPO vs Google at $23b in 2004 sounds insane but Google's revenue at the time was $2.7b while Anthropic's already at $47b, so a valuation at about 20x vs 10x revenue. Anthropic also has very high revenue growth (50x since 2024), it doesn't seems quite as insane as it could be.

At least on SpaceX the float is really low. The Market only needs to "swallow" ~$100Bn in volume of shares (across the 3), which the NYSE does _daily_.

the really interesting thing will be how much will other stocks go down because the passive dollars are chasing the new shares and have to sell to rebalance?

So they're not just racing to gain dominance in AI, they're also racing to IPO before the music stops?

IPOing and getting a bunch of cash, even if your stock subsequently suffers in the crash, is a lot better than being unable to get that capital infusion before the house of cards collapses.

If I buy the SpaceX stock it's 100% certain to go down. If I don't buy it it will rocket to the moon.

Is there some sort of way I can positively monetise this?

Net buying of corporate equities by American households, trusts, funds and non-profits has averaged $660bn per year for the last few years [1]. $200bn is not fundamentally a stretch for the American equity markets, let alone capital markets more broadly.

[1] https://www.federalreserve.gov/releases/z1/20260319/html/f22... line 16, 2023 to 2025

two thoughts, the top three s&P 500 etf's have $2.7t in aum (and there are a lot of other etfs, mutual funds, and direct indexers on top of that) - so the dollars don't seem to be the problem.

I think its a little insane to have the seasoning rule for an index be inside the lockup period

> Firms in the broad Russell 3000 share index have a total market value of $79trn

I sometimes try to get people to worry about the catastrophic state of American public finances by pointing out that the net national debt, including unfunded liabilities, is estimated to be $175T [0]. The government could appropriate all the equity from the top 3000 largest companies, and also the entire real estate market, and it still would not be able to pay its debt (RE market is $55T).

[0] https://balajis.com/p/americas-175-trillion-problem

The way I've been thinking about it: there is too much money trying to pour into the market. That's why valuations are so high.

Maybe getting more of these big private companies public will bring valuations down a bit.

(Just my impression. No math or financial studies behind it :)

Mercedes would have a market cap of $2 trillion according to the ARR valuations. Instead, it has $150 billion revenue, $5 billion profit and a $50 billion market cap.

Like Mercedes, Anthropic is not a growth stock because it has already been foisted on everyone.

From Matt Levine’s column today:

> The index demand is not 100% of the stock available in the IPO, or 110%, or even 50%. But it’s plausibly more than 25%. It’s not a short squeeze, but it’s a lot. Add a reported 30% allocation to retail, and arguably a majority of the IPO is being sold to price-insensitive investors. That is one way to get a high IPO price.

Everything will be fine. You may see a little bit of dump here and there, but it'll come back roaring.

None of these companies have any MOAT.

LLMs are getting better at a rapid pace and in a year or two, Chinese LLMs should easily catch up with the best of the models. Models have kind of reached a saturation point and that’s why OpenAI and Anthropic are doing an IPO now. Because a year down the line when their lead diminishes even more, they would be worth lesser money.

SpaceX has clients to put payloads into space, but those clients have always looked for good low cost alternatives. It is going to have competition in the future and will lose customers.

Back in 2008, we'd perfected the art of combining high-grade and dogshit Mortgages into one Security which could be sold on to, of course, Pension Funds.

Took almost 20 years for someone to find a way to scale up the basic Scam Mechanics and try again.

If you like SpaceX's launch business (the Grade A mortgage that you personally hold and pay), know that you can't get it without xAI (The dogshit that's already delinquent)

Index funds had a remarkable run. They avoided Goodhart's law for decades

Of course the market can and this is a silly question. These issues are tiny amount of money for the global capital markets to swallow. Masa Son has endangered ostrich eggs for breakfast worth more on the daily. I kid, but seriously this is a very small amount of money to the global markets. It is more of a worry on the psychology than the size.

Remember they arent selling the entire floats of these companies. I cant read the article because Im not willing to pay for the Economist, but 400-500b in equity issuance is not a big deal to the global financial markets even though it sounds big.

Do we prefer the market will spit or swallow in this case?

Is there an index fund that intentionally only focuses on actually profitable companies? It would actually be nice to hedge some funds into non speculative assets.

No doubt these companies are woefully overvalued. But this won’t stop me from putting in orders for several thousand dollars of shares with at market open. There will undoubtedly be plenty of buyers and I expect them to gain rapid entry into the indexes which will unlock a flood of additional capital from 401ks and pensions

Is SpaceX going to eat Tesla? As in, are a bunch of Tesla investors going to be migrating across to SpaceX since that seems to be getting more of Elon's attention these days, especially with xAI barnacled onto the side of it?

The money to participate in the IPO has to come from somewhere...

86 X

I don't think the market will swallow the stock offerings until we see early signs of GDP growth attributable to these entities. But until then, I think the cost is higher than the benefit, which "The dead economy theory" essay covered it well [0]

[0]: https://www.owenmcgrann.com/p/the-dead-economy-theory

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I did have few days ago conversation with AI to research how the economical environment was just before Great Depression and this doesn't look good if true. Definitely feels like someone try to dump their bags to retails investors and main street.

- Trailing P/E: 1929 peak was 32.6 vs. 32.67 today.

- Shiller PE (CAPE): 1929 peak was ~30 vs. 42.66 today (2nd highest in history).

- Buffett Indicator: Market cap was 124% of GNP in 1929 vs. 259.6% of GDP today.

- Margin Debt to GDP: 3.0% in 1929 vs. 4.1% ($1.304T) today.

- Systemic Risk: 1929 margin debt was 10-12% of total market cap vs. 1-2% today. Modern leverage has structurally shifted from retail to sovereign debt and shadow banking.

Can the stock market remain legitimate after such a brazen example of dumping? Regular everyday people can’t access private shares and participate in upside even if they want to. They don’t have the connections like VCs, and aren’t accredited investors. And companies ban secondary transactions, which should be forced by law to be always allowed.

And then after all that, the public have to deal with their index funds, ETFs, mutual funds, pensions, 401ks, etc buying up these overpriced stocks. You have a space company that also acquired a failing social media platform and failing AI company with little revenue justification for the valuation, and a lot of other obligations that make it financially a disaster (like payments owed for spectrum). And two frontier labs with no real moats, each looking for regulatory capture based on safety or ethics or whatever.

To the everyday person, the stock market after the fast listing rule, these three IPOs, and AI job loss, will feel no more legitimate than prediction markets or crypto.

They're doing an IPO now because the war in Europe with Ukraine is almost over it seems, and after that a big percentage of capital will relocate from the USA to Europe again. They are just cashing out right before the tide turns.

There goes my 401k

There is a reason they IPO now I feel like. Markets at ATH, greed is bigger than fear. Now is the perfect time to IPO. Could very well be a bubble burst after that...

pop the bubble already

That's how the new 1927 starts.

It will be in the history books.

At realistic valuations? Sure. At the current overvaluations? Yes. Are these valuations sustainable? No.

I don’t understand why there is so much pushback and skepticisim about SpaceX. They actually have a functioning product, a market where they sell the product and virtually no competition at their pricepoint.

Feels more like: can the bond market handle any potential outflows as money is rotated into these IPOs?

The index fund thing seems to me to be an overhyped nothingburger. The seasoning period would just delay the inevitable when a company is launching with a trillion dollar valuation.

The big story is that that is happening at all. It wasn’t that long ago when Facebook had to get special permission from the government to stay private until they got to $100 billion.

The issue here is that public investors are missing out on so much upside.

I am actually curious in knowing an answer to this: Does anybody think this is a good thing? A benefit to the world?

Not if anyone is cheating or scheming or being a rules lawyer, but is it good?

According to SpaceX's own S100 filed to the SEC their future revenue is projected to be 93% AI and there's also where the overwhelming majority of the CAPEX will go.

You guys remember that bit in Project 2025 where the plan was to crash the economy and buy up everything cheaply?

Do we finally see the mechanism?

What a headline

What is the value proposition for Space-X?

As far as I can tell it is in machines they cannot make work, servicing markets that do not exist for a service that will not matter for 20-years.

That and a third rate AI company that no body wants, except to get rid of.

This will probably go swimmingly at the start - but as time goes by and they raise more capital, Musk snorts more K and the glory fades, what then?

So what people seem to be unaware of or are purposely ignoring is that OpenAI and Anthropic have invested trillions in a rapdily depreciating asset. There was a HN post from a day or two ago where someone bought a V100 for 150 pounds and connected it to their computer. Well that was a $10k GPU in 2017. That's the fate of H100/B100 GPUs in 5-10 years (and I suspect closer to 5). What do you do if you've invested $1 trillion that will be worth $100 billion or less in 5 years? I think it'll be worse than that because modern hardware at that time will still probably be the same Wattage but have much higher performance so you'll be getting much higher performance-per-Watt and that's going to really matter.

The only company I'm confident will survive this hardware crunch and still be relatively successful in this space is Google.

OpenAI in particular is a bet that there will be an AI moat and that OpenAI will "win". I don't think there will be a moat and China is a big reason why (eg DeepSeek).

SpaceX is a little different. Yes, launching rockets is a business but it's not a trillion dollar business. 100 Falcon 9 launches doesn't even break $10 billion in revenue. Plus, Starship faces cost overruns, delays and significant headwinds.

But the real kicker is that SpaceX was used to bail out Elon from the Twitter purchase and the xAI investors from the first Twitter bailout. That's a problem because xAI is burning $1 billion a month in a company where that really matters and I don't think Grok will "win" here. Like, at all. SpaceX would be a significantly more attractive company without xAI.

The big potential growth area is Starlink. For that to justify this valuation I think you need handheld Starlink phones. That requires a lot of satellites at a relatively low orbit, which also means they have a relatively short life (because they burn up in the atmosphere). And for that Starship must succeed.

All the AI data center in space stuff is complete bullshit. It makes no sense. It'll never be viable. It's not going to happen.

EDIT: let me clarify because I was careless in my wording. So, Anthropic individually has not spent "trillions". That was more of a general statement on AI spending. Anthropic has raised ~$100B, the last round of which was $65B (at $965B post-money IIRC). This industry as a whole needs to recoupo trillions.

Anthropic seems to be in a better position (as a business) than OpeNAI is but I do think the it's a race to cash out before depreciating assets, well, drepreciate and there's the real risk as compute becomes cheaper and the AI craze wears off, Claude just may not have the growth trajectory that is built into the price.

How long have the SpaceX, OpenAI and Anthropic investors been waiting for an IPO (excluding tender offers)? 24 years, 10 years, and 5 years.

You really think they are going to hold off against selling for multi-millions for another year, especially SpaceX?

OpenAI (and especially) Anthropic are at risk from being undercut by the Chinese labs and their open-weight models and may cause their valuations to be questioned.

If that doesn't cause a correction, then SpaceX will do it for them. There is no lock up for the 5% of shares being available.

Spacex is worth buying. The best chance to make a lot of money is buying stock before the economics make sense. By the time SpaceX looks like a good company on paper with strong profits… the price will be so high you have little chance of making anything significant. If it’s a long term hold, consider how far away retirement is for you. Also, moon bases are coming.

The AI companies IMO are fucked. In the next few years computer hardware should advance to the point that local LLMs are good enough for everyday workloads. Not everyone needs top of the line flagship models in a cloud to see productivity gains. Companies will actually save money just buying employees top of the line laptops for AI enabled work than blowing that same amount on tokens every month.

Why wouldn't it? There huge demand for these shares. It's not like $3+ trillion is dumped at once. It's a tiny percentage of it, and the high multiple does the rest of the work.

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So, The Economist's paywall is unbypassable?

Flagged from the front page for defeatism. Like in the Soviet Union.

Every time an article is AI critical or attracts too many AI skeptical comments, it is flagged. Is this process automated with openclaw by now?

What a stupid proposition. The capitalisation has already flowed to theses companies through private means.

One other angle to think of is the midterm elections.

There will be chaos and potential stall for another 2 years following the elections and if the democrats win. There will be natural vested interest in showing economic decline or bad things to win next elections.

Both parties do it.

This is the best time to get to a safe place for all these companies.