Many IPOs slide below their initial offering.

Very few IPOs changed the rules to allow themselves to be incuded in significant indexes far faster than the rules previously allowed, and then slipped below their initial offering.

This is something you could empirically study. Looks like this NASDAQ study from a few years back has some numbers. At 3 months, that’s what’s in their chart, it’s still about 50/50. At 3 years it’s 29% with returns greater than 10% and 69% with returns greater than -10%.

https://www.nasdaq.com/articles/what-happens-to-ipos-over-th...

> This is shaped like more-or-less every IPO I've seen.

Not even remotely. Many startups IPO with no profit (though not all), but there is nearly always a credible business plan and a semi-rational valuation.

None of this is the case for spcx. They claim their TAM is about the size of the entire GPD of the USA and that they'll soon have 1T/yr in profits. All based on... nothing. The numbers are wildly unrealistic by a multiple never before seen. Oh and full self driving will be here before end of this year, trust them.

This is incorrect, the difference is that most IPOs do not have ETFs buying their stocks, meaning you have a institutional investor forced to buy your stock and keep the musical chairs game going even if your stock has an inflated price., hes robbing ETF owners of their hard earned money

Oh yes, I tell you're a real market analyst. SpaceX is exactly like every IPO ever. Except actually it's unlike just about every IPO there has ever been for so many reasons: The tiny float, special treatment, the intense lockups, valuation at 100x its revenue. No IPO has ever been like this.

the scam here is knowing that the price will be lower, but forcing index funds to buy high

SpaceX has a float of 5%. So only 5% of SpaceX shares have been released to the public. Slowly, starting in August, employees and investors will be able to sell their shares, about 45% more until December 2026 and another 45% until July 2027.

What do you think will happen to SpaceX share prices when roughly 18x the number of shares at IPO are released?

From a company that only made $18bn in sales last year and lost $5bn. For reference, Aramark, a company basically nobody has heard of made as much money and even turned a $0.5bn profit.

SpaceX shouldn't be worth more than $30 in 1 year's time.

Of course, irrationality can be an extremely strong force, so let's see.

This is the main point. I bought Backblaze too early in its post IPO phase. It's a good company and I am a customer, but I am down $15k on the buy.

Really? Which other IPO involves a company acquiring a completely unrelated company just before IPO in order to bail the founder out of a bad investment?

Can you name even one example in the last 50 years?

It got particularly bad with SPACs in the last few years.

Yes, it's almost like that's why there _was_ a rule in place to prevent IPOs like this from being shoved down everyone's throats so quickly without further testing.

This is not shaped like any other IPO. Objectively, it’s the biggest IPO in history and was included in the Nasdaq unusually fast. More subjectively, a significant part of its value is tied to the vision and credibility of a single person. Which BTW happens to be the first trillionaire in the world if things go well.

The valuation based on fundamentals is a scam, you can just look at the numbers. This is unlike any other IPO.

Most IPOs don’t put up 5% of the float for sale. Usually it’s closer to 30-60%.

> (or widen your claim to 'almost all IPOs are scams')

In a world where retail basically has no access to true IPO pricing, I don't think this is untrue for the majority of investors.

Jamming SpaceX directly into a bunch of indexes just because Musk wanted it (and everyone is a coward or complicit) stunk of "scam" in a very different way, though.

It's a scam because of the hype mind control and propaganda around it. Because Musk tried to force it into the NASDAQ and S&P 500 before the normal windows, attempting to bypass sensible regulations that protect investors.

There's a lot to unpack here, but a few thoughts. SpaceX wasn't added to the Nasdaq until two days ago, which is right around the time the stock was reaching it's current lows. Doesn't make sense to say that they prices exploded because of that.

Second, I don't know the details but it's extremely unlikely that most SpaceX folks have been able to sell any shares. Typically there's a 90–180 restricted window where pre-IPO holders are not allowed to sell.

The limited float could theoretically drive up, but as I noted, it wasn't added to the Nasdaq 100 until two days ago, so it's not something we can really attribute to that.

Btw, I loathe Elon Musk as a human, but am just clarifying some facts.

Priced in before the event then?

I'm unclear why you don't think it's a scam, because "he is a great financial engineer" seems awfully close to admitting that and then the "platform vehicle for everything else coming through the pipeline" seems to be the clincher that it is indeed a scam.

For example, he's talking about data centers in space as the "everything else coming through the pipeline" and space data centers are an obvious engineering boondoggle, but sound cool to people that don't know anything about data center design or the challenges of space engineering (ie heat rejection)

Can you spell out a bit more how these three thoughts live together consistently for you:

1) The price is insane

2) The price is a work of great financial engineering

3) The price isn’t a scam

I guess the difference between "scam" and "financial engineer" is whether it works.

If everyone loses their money it will be a scam. If people get rich he will be a financial engineer.

These aren't two different things. The winning side will make up reasons why they are right, and the losing side will make up excuses why they were wrong.

I guess it depends on the framing: a scam perpetrated on whom? It's not a scam on active investors if you lock in a bump from guaranteed passive investors. The active investors will see gains from that bump. But on the passive investors? On wider society?

If you spot the regulator looking the other way and try to sneak one past, is that legitimate, or sketchy? What if you recently had the influence to make them look the other way or be under-resourced?

You could argue 'treason' is a better word than 'scam'.

I must say, "great financial engineering" serves as an amazing spin on "scam."

There's no room in the global economy to justify the kinds of numbers.

Like spacex isn't going to be the world's first 100 trillion dollar company because there isn't that much money. That's nearly as high as the global GDP.

Crazy growth rates are not possible.

> I have to admit he is a great financial engineer.

so was Madoff

Almost all of their promises since start have just been corporate puffery and pure vaporware. Going to Mars, point-to-point Earth travel, Starship, reusable rockets...

Same with all his other companies.

> I don’t think scam is the right word. The valuation and bank price targets are absolutely insane.

I was hoping you were headed to "...beyond scam" into serious fraud or something. Regardless how this is categorized, everyone (banks, stock market, the executive branch) is complicit, and I think SpaceX stock should have stayed off the public market.

I was told I was giving poor advice explaining how to avoid exposure to the latest Musk grift. Unfortunate.

“It's easier to fool people than to convince them that they have been fooled.” —- Mark Twain

https://news.ycombinator.com/item?id=48374430

(SpaceX shorts have made ~$4B in profits on paper so far, as of this comment)

[dead]

A lot of VCs had money locked up in SpaceX, like, portfolios going back a decade or more had some sort of investment in SpaceX. The IPO gave them an exit.

Why would anyone want to risk any money going any way with these stocks?

Tesla isn’t behaving rationally, there is no way to tell whether SpaceX will behave rationally or not.

It seems like it’s becoming somewhat more rational, but all these stocks just seem to be incomprehensible to me.

The market can stay irrational longer than you can stay solvent

I can hold a strong opinion on this matter without risking any of my own money.

I own no Musk stock and never short anything.

I don’t think that affects the opinion I stated in any way.

Well I sure did. Not sure why you are writing this as a "gotcha". Buying puts is not some insane play. I gained about 85%.

“The world can remain irrational longer than you can remain liquid.”

What you describe is exactly a scam: he somehow convinced you that he's not motivated by wealth! That alone is clearly a scam, the idea that Musk is not motivated by huge amounts of wealth and high valuations is just implausible considering g his behavior at every single turn.

SpaceX makes its revenue from renting out GPUs

> "Not a scam IMO"

> "I think SpaceX is a solid well run company"

This should be all the proof you need that it's a scam. Here's why:

The company isn't "SpaceX" it's "SpaceXAI", and nearly all of the valuation comes from the "AI" component, not the "SpaceX" component.