The impending initial public offering (IPO) of SpaceX, a company valued in the trillions, is not merely another market event; it represents a fundamental challenge to the very structure of capitalism and the integrity of major stock indexes. According to Dave Nadig, President and Director of Research at ETF.com, the modern IPO process, exemplified by companies like SpaceX, Anthropic, and OpenAI, is ‘breaking capitalism and indexing,’ a sentiment he shared on the May 13, 2026, episode of ‘At The Money’ with Barry Ritholtz.
The Evolution of the IPO: From Growth Capital to Liquidity Event
Traditionally, companies went public to raise capital for growth, embarking on road shows and investor meetings to float significant portions of their stock. This model, however, is largely a relic of the past. ‘Once upon a time, companies went public to raise money… That’s not the case anymore,’ observed Barry Ritholtz. Nadig elaborates that the private equity space now captures ‘most of the growth in capitalism.’ Instead of seeking Wall Street for initial funding, entrepreneurs turn to private equity firms, often ceding substantial equity for early investment and subsequent funding rounds through private credit.
This prolonged private phase means companies accumulate numerous private shareholders before ever reaching the public market. The eventual IPO, Nadig explains, becomes less about raising fresh growth capital and more about providing liquidity for these ‘insiders and early investors.’ This shift, he notes, has been a consistent pattern for ‘any IPO in the last 15 or 20 years,’ tracing back to the Great Financial Crisis. While this system ‘works out pretty well for the private equity capital,’ it ‘no longer really rewards the public as a public market the way it used to.’
The Trillion-Dollar Lottery Ticket
The scale of modern IPOs has dramatically increased. Nadig recalls that in the dot-com era, the average IPO company was valued at approximately $120 million post-IPO, with around 30% to 40% of the company floated. This allowed for a ‘lengthy process’ of public assessment before index inclusion. Today, the market is grappling with ‘trillion-dollar IPOs,’ where the public often perceives these offerings as ‘lottery tickets,’ hoping for an immediate ‘pop’ in value.
However, this expectation is frequently unmet. Nadig points out that the ‘purported pop which no longer really happens’ is a common misconception, with many companies initially ‘trade down.’ While some, like Tesla, have famously recovered and thrived after an initial sell-off, the immediate riches once associated with IPOs are increasingly elusive for the average public investor.
SpaceX: A Conglomerate Challenging Norms
SpaceX stands out as a particularly complex case. Nadig stresses that the discussion isn’t about whether SpaceX is ‘good or bad,’ but rather its ‘unique’ structural characteristics. It is already a ‘multi-business conglomerate’ before its IPO, a rarity for a company going public. Within its structure, SpaceX encompasses diverse ventures such as Twitter/X, Grok and xAI (increasingly a data center story), Starlink (boasting 9 million subscribers and generating ‘real money’), and a near-monopoly in United States space launch services.
Beyond its multi-faceted nature, SpaceX’s IPO strategy is unprecedented. The company plans to float only 5% of its stock, leaving a substantial 95% privately held post-IPO. This ‘very, very thin float’ directly challenges established norms for public market participation and index inclusion.
Breaking Index Rules: The Nasdaq 100 Precedent
Despite its minimal public float, SpaceX is slated for ‘accelerated entry’ into the Nasdaq 100 and is under consideration for similar treatment by the S&P 500. This move, according to Nadig, signifies ‘breaking all sorts of rules.’ The Nasdaq, which licenses its index to products like the Invesco QQQ ETF, recently conducted a ‘consultation’ with its licensees. Following this, new rules were adopted to accommodate such large, thinly floated entities.
Specifically, the new Nasdaq rules accelerate a company’s entry into the index from the previous six months to just 15 days for ‘very large’ companies. More controversially, for companies with a mere 5% float, Nasdaq will ‘pretend that your float is 15% or 3x, just because of reasons.’ This artificial inflation of public float for index calculation purposes raises significant questions about the true representation and liquidity within these widely followed benchmarks.
The implications of these shifts are profound. As the private market captures more growth and IPOs become primarily liquidity events for early investors, the public’s access to early-stage investment returns diminishes. Furthermore, the bending of index rules to accommodate thinly floated, massive companies like SpaceX could distort the very benchmarks that millions of investors rely on for portfolio construction and performance tracking. This evolving landscape suggests a redefinition of what it means to be a ‘public company’ and how market capitalization truly reflects public ownership and accessibility.
