SpaceX, OpenAI, Anthropic blocked from joining S&P 500
▼ Summary
– SpaceX demanded expedited entry into major stock indexes as a condition of its IPO, but the S&P 500 refused to bend its rules.
– S&P Dow Jones Indices’ June 4 decision blocks SpaceX from billions in passive investment funds and prevents similar fast-track entry for AI companies like OpenAI.
– The refusal relieves concerns about passive investor money and retirement savings facing risks from SpaceX’s unprofitable AI and orbital data center bets.
– S&P considered waiving rules like the 12-month IPO seasoning period and profitability requirements to accommodate SpaceX’s low public float and $29 billion debt.
– SpaceX planned to offer only 3% of shares publicly and is unprofitable due to heavy AI infrastructure spending, making it ineligible under standard index criteria.
The S&P 500 has drawn a firm line, refusing to bend its rules for even the most valuable companies in the world. SpaceX requested an unusually fast track into several major stock indexes as a condition of its historic market debut, but index managers have declined to make an exception for Elon Musk’s space and AI giant. The decision, made on June 4 by S&P Dow Jones Indices, blocks SpaceX from potentially accessing billions of dollars more through passive investment funds that automatically buy shares of S&P 500 companies.
Had the rules been changed, the door could have also opened for leading AI firms like OpenAI and Anthropic to follow shortly after their own expected initial public offerings. That possibility has now been closed. For many observers, this news comes as a relief. It reduces the risk that passive investor money and people’s retirement savings will be heavily exposed to the market volatility tied to SpaceX’s ambitious bets on AI and speculative orbital data center plans. AI companies are already struggling to fund and build expensive data centers, even as they shift more of the subsidized costs of running AI services onto customers through usage-based pricing.
To consider expedited entry for SpaceX, S&P Dow Jones Indices held a monthlong consultation on waiving several key requirements for so-called MegaCap companies with “unprecedented market capitalizations.” Proposed changes included shortening the seasoning period for new IPOs from 12 months to six, waiving the investable weight factor (IWF) requirement that at least 10 percent of shares be publicly available, and dropping the profitability requirement for the latest quarter and the previous four quarters. Such adjustments would have accommodated SpaceX’s plan to offer only about 3 percent of its IPO shares to the public, along with its current lack of profitability and a growing debt load that has reached $29 billion due to heavy spending on AI infrastructure.
(Source: Ars Technica)
