Here's the real issue with the SpaceX IPO

Elon Musk's trillionaire status is a sideshow. Investing guru Dave Nadig says watch out for the "GameStop problem" and get ready for an even more volatile market.

Elon Musk’s rocket company SpaceX has now gone public, causing a lot of agita over the special treatment Musk seems to get. Some stock indexes bent their rules to include SpaceX early, which means investment funds that track those indexes will have to buy some SpaceX stock. That could artificially inflate the price of a company that already seems overvalued, further enriching Musk, who owns 46% of the shares. Musk-haters think it’s rigged.

SpaceX may set the stage for two more giant IPOs that are coming soon, the artificial-intelligence companies Anthropic and OpenAI. The same indexes that let SpaceX in the side door will probably do the same for Anthropic and OpenAI, generating some forced buying of those shares, too. None of these three companies is profitable, or likely to be any time soon. Yet the insiders will likely amass gargantuan fortunes regardless of how well their companies perform.

In an age of worsening wealth inequality, maybe it’s natural that there’s growing populist hostility toward these AI overlords. But this isn’t the main story. The AI boom, so far, has lifted the entire stock market, boosting portfolio values for just about anybody who owned stocks during the last three years. The giant newcomers won’t move markets very much for months, and maybe years. There are bigger threats to markets, meanwhile, than Musk’s intergalactic wealth, no matter how obscene it might seem.

I spoke recently with Dave Nadig, President of ETF.com, to get some ground truth about the indexes bending their rules to accommodate SpaceX, the risks for ordinary investors, and where we might be in the AI boom (or bubble). The full video is below, followed by a bullet-point summary of the conversation—which came from human intelligence, not its artificial knock-off. 😁