Up until this point, the potential for an AI bust blast radius was limited to corporate investors, but this is going to cause regular retail/401k investors to get exposure, which could have far bigger impacts on a downturn.
Not to mention the insane wake-up call it is going to be for these AI stocks when 3 months after they launch they have to start making earnings calls and showing their financials. That quarter-by-quarter pressure and scrutiny is no joke, and probably the biggest downside of going public.
I'm bullish on AI, but kind of bearish on any specific AI company. None of the initial big dotcom companies like AOL or Yahoo survived at the scale they briefly had.
If we're doing historical comparisons, there was so much hype for AOL and Yahoo that drove valuations far beyond the economics. In time, the hypesters were proved wrong.
In contrast, there was overwhelming doom and gloom for Google's IPO, in spite of their incredible growth and margin economics. In time, the doomers were proved wrong.
There's so much doom and gloom about Anthropic that directly contradicts their astounding growth and margins. For a long-term investor, Anthropic is looking a lot more like Google not AOL.
I can only hope the doomer narrative dominates until I can get a few shares at a reasonable valuation.
Vibes are almost always wrong. Ignore the vibes and focus on revenue growth rates and inference margins.
Google is an excellent example of the companies that followed after the initial batch of big dotcom companies. They ate Yahoo's lunch. The dotcom bust was in 2000, and Google went public in 2004.
I'm betting more on the successors to this initial group of AI companies. The ones that have to build actual profitable businesses.
Google was easily 10x better than any of their competition. It was effectively alone in the market.
Most of us were using 56k modems to access the internet back then, Google's search returned results within a couple of seconds. Yahoo, Lycos, Excite, Alta-Vista were still loading. Then the search results themselves were so good you could often just pick the first result. They eventually added a button which just took you directly to the first result. Which I used.
I was a relatively early investor (2008), but I was very hesitant early on because Microsoft was building an integrated search function, which became Windows Live Search, which became Bing. I definitely remember it took me to the beginning of the financial crisis to finally decide that it was going nowhere. I suspect it was the development of Google Maps that changed my mind.
I couldn't even tell you when I used the Google search page. It's been years at least. I wouldn't be surprised if many other people also don't go there to search. I assume most search straight in the url bar.
Your memory is faulty. AltaVista was always super fast--it never had the advertising bloat that the other ones had until the very end.
The problem AltaVista had was that it didn't scale when the Internet went exponential--so AltaVista would give you good search results until you asked current, topical questions. AltaVista relied on running a single, super-expensive stonking huge Alpha machine while Google ran on lots of commodity servers that spidered constantly.
This is inaccurate. When I was running AV operations around 2000, we were running on a couple dozen huge Alpha machines for the index layer and queries. We had a bunch of smaller machines for Web serving, and a high memory set of Alphas as a caching layer.
We also spidered constantly. A couple of those huge backend Alphas were dedicated to holding the constant spider index. AV had a well earned reputation for quick discovery, although I think Google wound up faster. We suffered a bit from maintaining separate indexes for the main corpus and recent pages, and I imagine Google handled that better.
But the period of time when our main index went to hell was the period of time when we failed to do a new main index crawl for several months. I won’t get into why that happened politically because my memory isn’t perfect and I don’t want to criticize anyone who won’t see this to stand up for themselves, but it’s absolutely the case that we let the index get stale.
And I will say that I think the execs were distracted by the idea of challenging Yahoo by buying a shopping site and a local news site of sorts and, unlike the Google of the time, they lacked the wisdom to focus on our primary product.
And now I fade back into the hedges, until the next time AV comes up… I suspect a high percentage of my HN comments are on this exact topic. It makes me sad.
And I still miss the AltaVista illustrated diagram (Java Applet) that would allow you to drill down and specialize the search results. No modern search has ever matched that, again.
I don't think it's really doom and gloom, that's mostly on here.
The normies are all still excited/scared and the valuation based on secondary trading is going up and up.
Maybe not quite as crazy as the dot com boom but I'd say the current environment for AI and related equities is a lot closer to the mid/late 90s than 2004
I think both have a similar amount of people who know about it. But it might just be my circle which is mostly in finance and some in engineering/medicine. These are also the type of people who actually invest. There's little doom vibes among those who're older if anything they're the one who think we'll get to some agi type situation.
> focus on revenue growth rates and inference margins
And ignore debt you can't pay back? Fine during ZIRP era because there was always another $50M around the corner. There is no extra $50B around the corner.
They've all over-invested in AI, same as the railroads, and it will collapse the same way.
They've changed the rules that will force these companies into every ETF commonly held by people's 401ks. The doomer narrative doesnt matter, they're forcing the common man to be the exit liquidty for the elite before the bubble pops.
>I can only hope the doomer narrative dominates until I can get a few shares at a reasonable valuation.
I conjecture that some amount of the "doomer posting" is a consequence of other people realizing what you realized here and attempting to sway public sentiment for personal gain.
I am really surprised that people are comparing dot com with AI. Atleast dot-com era was deterministic, comparatively AI is just a probabalistic unreliable slop
Anthropic is selling a commodity item that was just invented. It’s like investing in someone who is blowing lightbulb glass by hand.
We’ve already seen a startup make a chip which generates a hundred pages of text in milliseconds. When companies start bringing out hardware like that for cutting edge models, the entire business is dead. AWS will just eat the market.
History does not repeat itself, but it rhymes. Drawing these comparisons to the Dotcom bubble is only of limited utility. I think there's good reason to believe that recursive self-improvement is a bust, and LLM models will become a commodity. The real value lies in multi-modal integration and good harnesses. The current frontier labs are theoretically in a good position to capitalize on this, but it is far from obvious that they will succeed. I think Google and some of the chinese giants are in a far better position to actually go the last mile.
Reminds me of this...
During Apple's 1980 Initial Public Offering (IPO), Massachusetts regulators banned residents from purchasing the stock. The state's securities regulators deemed the offering "too risky" and "over-valued," enforcing a state rule that prohibited IPOs with a price exceeding 25 times earnings.
> The investors who wanted to take more risk could do that.
What? How? By moving out of Massachusetts? I could understand banning such a speculative stock for e.g. pension funds or whatever, but blocking private individuals from buying with their own money seems insane.
Well we are far more corrupt and in the last stages of late stage capitalism. 15 day waiting period for Nasdaq 100. Your 401k is now the exit liquidty for the country's 5k richest people.
I really dont see how America doesnt collapse on the weight of its own corruption. But maybe the was the plan all along....
Oh yeah, we should just get rid of all securities regulation too. Everyone should be competent on their own to avoid being duped by guys with billions of dollars. Its the elementary school teachers fault if they get scammed by a billionaire.
The stock market (and in particular the US stock market) has been an incredibly positive influence on the average American's 401k... Great driver of allowing Americans and beyond to share in the upside of successful companies... big reason why Americans can retire.
I think you have too much trust in a class of Elites that see us as pigs to be taken to the slaughter. The lindy effect isnt real, just because it has been positive doesn't mean it will continue to be that way
The levels of greed in our society our unmatched. Planes, mansions and yachts for a few thousand people while 10s of millions struggle to buy basic medicine for their children.
Death to the fascist insect that preys upon the blood of the people.
Empires usually go through a long period of decline before they collapse. I'm not sure why you'd think this Empire is immune to collapse or decline.
You're going to lose everything and your children will have no future. When they're old they'll be speaking from a similar perspective to the people who lived through the decline and fall of the USSR. Keep coping though.
Let's get it in perspective though. The S&P500 market cap is currently $70T.
Assume that Anthropic, OpenAI and SpaceX all IPO and get included in SPY with the new fast listing rules. They are likely to be worth $3-4T combined, which means 'retail' investors are going to have perhaps 5% of their portfolio in it.
_Arugably_ that's a pretty fair allocation for retail investors to have to these "moonshot" style companies.
Also - if any one of these IPOs don't go well; I suspect the other(s) will have to postpone, further reducing exposure.
Everyone I know who invests in an index fund is doing so to mitigate the risks of things like "moonshots" which are typically much riskier investments.
> Everyone I know who invests in an index fund is doing so to mitigate the risks of things like "moonshots" which are typically much riskier investments.
The whole point of an index fund is to capture the growth of the whole market. If you wanted low risk you'd be buying bonds.
Is it? I thought the idea was diversity of risk, not "mitigating risk". You clearly don't want 100% of your 401k in OpenAI or Anthropic. But you probably do want 1 or 2% of it in, to give you the long term growth potential?
Regardless SPY is actually a pretty "risky" index fund on some measures - it pays a (very) low dividend compared to many other intl/ETF funds and is weighted very heavily towards tech stocks (atm).
If you genuinely wanted to mitigate risk you would probably not choose SPY.
But the US has never had $1T+ IPOs before. And also a huge amount of enormous private companies that don't want to go public for various reasons.
Also, the rules have changed before. It's not the first time these rules have changed.
I see both sides of the argument (it's definitely _not_ good for 401k investors if Anthropic/OpenAI/SpaceX make huge leaps in technology that allow for far higher earnings that they aren't able to access, for example).
But my main point is that these investors regardless would "only" have 5% exposure to these. That surely cannot be considered a systemic risk that the OP is inferring.
It's the indices we need to be concerned about and it's especially the bloated carcass of xAI hanging onto SpaceX.
SpaceX was a profitable company, it was heavily invested into R&D and had managed to build a tidily profitable connectivity business in Starlink. Now the company is being burdened with all the worthless debt of X and xAI with a likely merger with Tesla following launch just to hand Musk a big check when he hits the valuation targets.
IPO inclusion on indices should be illegal, the price discovery simply hasn't happened yet and it's a direct grab at the most vulnerable retail investors - the passive index huggers that were told that if they just buy an index it'll never be spectacular and it might dip but it'll steadily go up.
I would not be surprised if the US Government ends up bailing out retirees over this and cements the country's descent into debt. Pretty much everyone can see it coming, but we have to act as if Elon is valuing his companies in good faith and not just trying to rob a payday.
I don’t think your first sentence is true. The hyperscalers have spent north of 1 trillion in the capex boom as a direct response to AI demand, If you’re a retail investor, you’re already quite exposed.
Most (all?) 401k plans limit you to a pre-picked list of ETFs and mutual funds you can invest in. Not to mention the standard advice for decades has been 'broad market index fund'.
Afaik this is the first time that an IPO is big that it immediately gets a significant share of a broad market index fund. The rules among the providers are actually quite diverse, so it's complicated. The Rational Reminder podcast discussed it in April: https://rationalreminder.ca/podcast/406
Their conclusion: It might be bad, but so be it. No need to change strategy.
Good thing is that index funds don't hold stocks at market capitalization but only at free float value. So a company whose shares are mostly held by founders, employees, and strategic investors gets a weight well below its headline valuation.
If your plan uses Fidelity you can move your 401k into Brokeragelink and that lets you pick individual stocks. Schwab, TIAA, Alight and some others also have something similar.
imho Anthropic publicly posting accurate information about their revenue and operations would be a step in a healthy direction for the economy/markets if there's an "AI bust blast" coming. This filing is movement towards that
Agreed. Ben Felix has a video about this, I think he focused on SpaceX in it. The problem with the standard total market funds is they gobble it up right away. There are funds that do wait some period of time to purchase new ipos to let them smooth out, but I'm not sure those are typically available in 401k plans.
Hedge funds already know broad based mutuals will have to purchase these so can sneak in before them and then sell to them for a marginal gain. Mayhaps the newest strategy for exiting is generating so much hype that you're guaranteed an exit by retail retirement funds?
And who would have thought it was the online bookstore that would be the big survivor of the dotcom era? They were a comparatively small player relative to AOL/Yahoo/etc at the time of the dotcom bust. Which company is the 1994 Amazon of AI now?
The narrative is that inference on existing models is profitable. All of the profits and many billions of additional capital invested go into training the next model, which is some multiple more expensive to train than the last. Each new model generation also leads to more revenue growth. Newer models are more compute-efficient when distilled (so could possibly be higher margin) but also they work on longer time-horizon tasks and can make greater use of test-time compute which increases token counts. So the inference ROI on each model can pay back the cost of training it, but future growth demands put all that money and more into training the next model. The numbers we’d need to prove whether this is true are not public, but it makes sense and fits what info we do have.
Theoretically, if training more expensive models stops resulting in better capabilities or isn’t economically viable, the labs can shift gears into making profit on old models. A lot of future growth is priced in so this would lead to a collapse in share price if it happens anytime soon.
There’s a story out that Anthropic might be profitable this quarter. This is in one sense bad news - it means that the company wasn’t aggressive enough about acquiring capacity last year, because they didn’t foresee how fast their inference business would grow. Anthropic is now forced to make suboptimal choices about serving existing users vs. training the next model (need to scrounge for capacity by paying other players like SpaceX). And as a Claude Code user I feel like I’ve been affected by that, what with the random outages and performance degradations.
I don’t believe similar scores on small bounded tasks mean models are interchangeable. I’ve found that heavy token-burning workflows are good for my productivity (letting multiple sessions run async working of different stuff). Claude ultracode is an easy example to point to, but there are tons of harnesses out there doing similar things. I find using a higher quality model matters because it affects how far it can get unattended before heading the wrong direction. I’ve tried using the cheaper/faster models and it’s a real downgrade (or completely useless). A model that’s even smarter with longer time horizon would be even better for my productivity. I don’t think we are at the ceiling for model quality or price. My employer pays a lot for my tokens but it’s still a lot less than they pay me.
I agree Anthropic faces some risk they could get commoditized, but on the other hand if things go well they could end up leading adoption into more industries. There are upside and downside scenarios. Recursive self-improvement is obviously an important unknown and could lead to winner-take-all.
There's the "how much of my company exists in a black box controlled by some asshole" angle as well, but in my mind the biggest issue is that current models are already capable of saturating a dev in like four hours.
Yes - IIRC, Amazon was profitable on books by 1996, with other sectors following as they expanded and it was clear that they could post profits any time they wanted by slowing expansion. It was surreal through the bubble years to see “analysts” equating them with companies which were losing money on every sale with no clear way to change that.
Exactly right. Even though ride sharing industry lost money in subsidy arms race and side bets it was likewise fundamentally sound in major metros since early on. Popular "analyses" kept equating Uber/Lyft with firms losing money on every sale with no path to fix it but the demand was always there as riders had already left taxis and transit on reliability and convenience grounds.
There is a big difference between "Every customer is a loss" and "We are profitable and re-investing all of our money". Amazon continued to grow, and reinvested its revenue with solid business fundamentals.
I started as being very skeptical circa 2024, became more open minded towards the end of 2025, and am becoming skeptical again now. Reason being, I interact with entrepreneurs now and I see what they hope for in AI. The universal desire seems to be "people will just talk to AI instead of me while paying me the same as before or more". This is typically covered with coping mechanisms (e.g. "I am not building a chat bot, I am building..." after which they describe a chat bot).
I think the crash is getting more likely because the disconnect between what the technology can be used for does not match what people want it to do.
It's more insidious than that. These IPOs aren't being rushed, they were waiting for all the pieces to be in place to force 401ks and other retirement plans to buy these IPOs.
The most recent change was the NASDAQ adopting the "fast change rule" which allows newly IPO'd companies to be listed in the index after only 15 days of trading. This rule was decided March 30, 2026 and only came into effect May 1, 2026.
The plan is to rapidly drive these prices up in the first 15 days, get the companies listed in the NASDAQ so funds are forced to purchase them at higher prices, then leave retirement accounts holding the bag.
> The most recent change was the NASDAQ adopting the "fast change rule" which allows newly IPO'd companies to be listed in the index after only 15 days of trading.
Official justification, and other changes besides timeframe, e.g.:
> First, eligibility and company size. As multi‑class share structures have become more common, we now consider both listed and unlisted shares when determining eligibility and ranking. This allows the index to reflect a company's full economic size, while index weighting remains based solely on listed shares. This change affects who qualifies for inclusion, not how constituents are weighted.
> A new method to calculate the market capitalization of companies to determine their eligibility for inclusion in the index. It involves adding listed stock and unlisted shares that are part of different share classes. Scrapping a rule that requires companies to float a minimum 10% of their shares. Companies with a low float will receive a lower weighting on the index. […]
As unlikely it is to happen at scale, as a thought process - what would happen if people start selling those index funds in a mad rush? Just drives the transaction volume because those with that new money will just buy something else in the market?
I know SpaceX, Anthropic, and OpenAI will probably be a drop in the bucket in terms of scale of these funds, (free float % etc). But, is it realistic to take the money out of index funds for a bit until the price of these new stocks come crashing eventually?
If people actually dumped index funds for cash en masse it would be catastrophic. To attach some numbers, MSFT averages about 35M shares in daily volume, and that includes all the market makers, HFTs, etc. BlackRock (iShares) owns 593M shares of MSFT and Vanguard owns another 482M. Together, the amount of shares that index funds own is about a month and a half of total trading volumes. I'd bet that such a crash would unfold over about 2-3 days, which brings up the specter of stocks literally going "no bid", where there are not enough buyers for every seller to sell, at any price.
Likely the government would step in and inject cash directly into the markets to support them in such a scenario, because a broad-index stock market crash is the modern-day bank run. Retirees carry the bulk of their savings in the form of stocks; if it disappears, we'd likely face revolt.
If you hit sell on a vanguard ETF and it sells on the market, then Vanguard isn’t the buyer is it? So in that situation with everyone dumping ETFs there would be a lag on the time taken for the ETF to sell and Vanguard to then dump the stocks back out in the market. It’s never occurred to me the situation where huge numbers of people dump index funds and how Vanguard/Blackrock account for that without becoming bag holders of the underlying stocks themselves.
In any case, I’m not sure that large enough numbers of ETF holders are sitting close enough “to the button” to hit sell in the event of a sharp downturn occurring over the space of even a week or two. And a lot of them would see it as an opportunity to DCA into the dip anyway.
If it's an ETF it's a little complicated. The usual mechanism for selling an ETF is that there's a buyer on the other end who's buying shares in the ETF itself, not the constituent stocks. Arbitrage keeps the price in line with the index constituents; if the ETF diverges from its constituent assets, some HFT can buy the ETF and sell the constituents and that will force them to converge.
However, most ETFs are also setup such that they can create or destroy shares in response to large shifts in demand. In this case, if enough people hit sell, the ETF itself will buy back shares and use the proceeds to sell the underlying assets, in a transaction that mechanically should be market-neutral and just propagate the supply/demand of the fund down to the individual stocks.
With Vanguard specifically, it's even more complicated, because VTI is not a separate ETF. It's a share class of the Vanguard Total Stock Market Index Fund. But the mechanism is largely the same - it has the same Authorized Participant system to mint new shares in case of high demand and redeem shares if everybody sells, and then passes these requests on to the underlying mutual fund, which can then piggyback on some of the tax efficiency benefits of the ETF.
Same old story of too big to fail. The government will "inject cash", that is borrowed, so that retirees 401k accounts don't go down. But who pays back the borrowed funds? The non-retirees. Everything is optimized for the boomer generation to be fine, who cares about anyone else?
These stocks crashing (not saying it will or won’t happen), means AI is crashing, and that will be a much broader selloff than these 3. Add Microsoft, Micron, Amazon, Oracle, Nvidia, Supermicro, Dell, etc, any company that has direct or indirect exposure to the massive AI boom (and possibly their lenders).
While unlikely to happen at scale, by way of anecdata I'll say that I and my extended family have almost all shifted money away from funds that are heavily coupled to the fate of GenAI.
The bottom is going to fall out of the market and it's going to take years to recover, I don't see any reason to suffer through that (and neither do my retirement-age relatives).
I'm after steady gains in an approximately efficient market, not a wildly unsustainable speculative boondoggle, thanks.
So you’re still hedging or you 100% fled AI? I presume you have gone to a broader portfolio. But if tech crashes doesn’t everything? And isn’t tech holding up the entire market so they won’t let it happen? And how can you even avoid GenAI if people are cramming it into everything and it’s constantly shocking sectors of the market?
Not OP but I’m in a broad-based Euro index so I gain on the stocks and on the fact that the dollar is going to shit. I haven’t seen the enormous AI-juiced gains that have become commonplace but I’m also insulated from commodity hardware companies trading like rocket ship startups and whatever ends up coming out of that insanity.
Somebody is going to have to explain the business case for Micron trading like it’s Google. We all know that fabs are a low-margin capital intensive business, right?
> CRSP indexes were also recently changed to better accommodate fast entry. New IPOs are eligible for CRSP's suite of indexes after five trading days, provided they pass the index's eligibility and investability screens. Previously, these screens included having at least 10% of shares qualifying as freely tradeable (known as float shares outstanding, or FSO). However, in April the methodology changed to allow stocks with either 10% FSO or approximately $3.3 billion in float-adjusted market capitalization to be eligible for index inclusion. The weighting of stocks in CRSP indexes is also based on free float, which should help address the investability challenges associated with thinly traded stocks.
Total market indexes and target date funds will include this and SpaceX on float adjusted basis I believe. The blast radius is much larger than funds that track the NASDAQ directly.
But isn't that what "total market" means? I don't see how if you invest in a total market fund you could declare "except for SpaceX, Anthropic and OpenAI". Why is it so bad for these accounts to be invested in these companies anyway? Seems pretty typical, i bet all kinds of companies are added to total market indexes each year.
Until recently companies that IPOed weren’t immediately added to the major indexes so there was a longer period for price discovery. This year that changed; so you have retirement funds that typically are more conservative acting as exit liquidity for these massive IPOs.
I would have less of an issue if the inclusion in major indexes was delayed 6-12months but we are looking at inclusion within like 5 days for some of these indexes.
The float will get bigger as you wait tho, since it's common for early investors to be locked for e.g. 6 months. You can argue it's better to smooth the entry as float gets unlocked rather than being front run by all the hedge funds in a single day on a massive capitalization.
almost all 401k plans offer funds based on s&p 500, not nasdaq/russell others. s&p has also halved their trading days requirement from 1 yr to 6 months, but that's still sufficient to be past the post-ipo lock-up period.
> Stocks would become eligible for the index after six months rather than 12 months. The requirement to have a minimum Investable Weight Factor of 0.10 (roughly at least 10% of shares publicly floated) would be dropped. Companies would not be required to demonstrate profitability.
> Still, S&P Dow Jones reminds market participants that the proposed changes would apply only to index eligibility. The actual inclusion of new constituents remains entirely at the discretion of the index committee.
Hedge funds won't try to short the stock; the holders are almost all institutional investors and insiders who are long on the stock and have no reason to lend them to HFs betting on a price decline.
What they might do is trade bespoke instruments like a credit default swap on datacenter construction deals. Stays underneath the radar of politicians and tech insiders who are invested in a particular outcome.
Until the inevitable crash in price when the lockup of employee shares end and they dump their shares onto the market. These fresh companies shouldn’t be included into passive investing securities until 180 days at least. It’s just making the public bag holders.
>The plan is to rapidly drive these prices up in the first 15 days, get the companies listed in the NASDAQ so funds are forced to purchase them at higher prices, then leave retirement accounts holding the bag.
Dumb question: why couldn't retirement accounts simply not purchase these?
These funds don’t invest actively (picking individual stocks). Instead they invest in indexes that track larger portions of the market. So they’ll automatically buy once the company is listed on the NASDAQ.
Why do I imagine that no one whose retirement account is about to get smoked is in place to make decisions about whether or not this is a good investment
I get the sentiment that this is unscrupulous, however, isn't 15 days enough time to find the right price? Or will that not really happen until first quarterly earnings report, which will not occur within that 15 day window?
4-8 quarters for most tech IPOs to settle. IPOs are manufactured for the good times around young co's, so not surprising, and economic stability isn't a question of days/weeks/months.
And yes often a falling knife
This is pretty predictably wall street & federal regulators scamming normal people, retirement funds, etc, taking their fees and exit window at everyone else's expense
Mostly by having a pulse for the last 10-20 years as someone in the bay area seeing it repeatedly play out as tech IPOs get dumped onto retail investors repeatedly, including the 'good' ones. Being lucky enough to participate in IPOs makes you check these wrt when to balance IPO pop exit (weeks/months) vs long-term tax benefits of holding (2yr+).
- The initial pop is known to be manufactured by banks, so mostly benefits insiders, so good time to diversify. I'm conservative so sold to cover effective basis or whatever risk strategy :)
- The lockup period (6mo) is a similarly known artificial event, and studies show that
- Tech companies take ~8 quarters of prep for the IPO as they do financial engineering to transition from VC growth-at-all-costs to public $, and I'd expect the same for whatever nonsense they pulled to juice numbers to shake out. And that's not including oddballs like the Musk alternate universe, just normal tech companies covering up EBITDA and low interest rate madness.
- Tech is especially volatile as an industry, so even more skepticism here. Eg, the latest IPO I was involved in was a successful professional social network play, and chatgpt killed it.
? Very much agreed, the IPO pop is a manufactured pricing event focused on investor dynamics rather than direct fair market pricing, making it more of a gamble than normal. Including gambles in index funds defeats the point.
Maybe the confusing point was my involvement is (discounted) pre-IPO shares, which almost by definition, is not an activity accessible to retail investors.
This has been a thing in the CRSP indexes (ie. the benchmark for Vanguard’s VTI) forever. As long as it meets float and cap requirements, it’s inserted into the indexes five days after trading begins.
It makes sense. They intend to track the market as it is.
Though, you can definitely make the case that the popularization of index funds has allowed their holders to essentially become patsies to hype IPOs.
Even with the CRSP indexes this was recently changed to make fast-tracking for these IPOs easier.[0]
> CRSP indexes were also recently changed to better accommodate fast entry . . . Previously, these screens included having at least 10% of shares qualifying as freely tradeable (known as float shares outstanding, or FSO). However, in April the methodology changed to allow stocks with either 10% FSO or approximately $3.3 billion in float-adjusted market capitalization to be eligible for index inclusion.
That change is notable because both Anthropic and SpaceX are planning to IPO at well under that old 10% requirement.[1] Neither would have qualified for fast-track inclusion before, but both are virtually guaranteed to clear the absolute valuation bar.
The person I was responding to was speaking to the fast-track concept, which has been a thing in CRSP indexes for a quite a while.
The float requirement changes are directly due to these huge IPOs only placing small amounts of float on the market. Their goal seems to be tracking the market and making this change prevents them from excluding two notable companies from their indexes.
IIRC CRSP indexes are float-weighted so they aren't going to attempt buying a ton of these IPOs anyway due to that low float.
Again. Would I have made the change? No because placing that little float on the market isn't kosher IMO.
These IPOs will have minuscule impact on the indexes initially. They will have a big impact if they can maintain share price in the first ranking/reconstitution after the lockup period expires.
They will have a big impact if they can maintain share price AND the float increases due to the lockout period expiring (ie. pre-IPO owners selling off shares).
I'd like to know how the CRSP/Morningstar folks feel about the interesting lock-up period rules that Elon has inserted into the SpaceX IPO and how that jives with their analysis.
Won't the lockup expiry increase the float on these already-included companies, forcing mechanical buying by all the very large pool pool of folks holding these index funds? Thus creating forced buyers to maintain said share price?
Every single index fund is different. They all have publicly available methodology guides; you can read them to understand how it works and to model various scenarios.
This particular one, the CRSP total market - which Vanguard uses for VTI - has a “modern” methodology that is thought to be very good. Once every three months they re-rank the entire market and assign weights based on the market as of a particular point in time. Then, a randomly-chosen number of days later, the fund (Vanguard) begins a weeklong reconstitution process in which they buy and sell stocks to reflect the new weights. It is intentionally a weeklong process so that the market is setting prices and not Vanguard with the size of their orders.
The lockup expiry happens, the market reacts, the market is re-weighted, the index reconstitutes. In that order. The price of the stock has to survive the increased float to force the index fund to buy lots more shares.
> This has been a thing in the CRSP indexes (ie. the benchmark for Vanguard’s VTI) forever.
CRSP has recently changed their rules:
> CRSP indexes were also recently changed to better accommodate fast entry. New IPOs are eligible for CRSP's suite of indexes after five trading days, provided they pass the index's eligibility and investability screens. Previously, these screens included having at least 10% of shares qualifying as freely tradeable (known as float shares outstanding, or FSO). However, in April the methodology changed to allow stocks with either 10% FSO or approximately $3.3 billion in float-adjusted market capitalization to be eligible for index inclusion. The weighting of stocks in CRSP indexes is also based on free float, which should help address the investability challenges associated with thinly traded stocks.
Very true. Anthropic just raised money at the end of last week.
There's no way they could have done that without telling those investors the S-1 was prepared and awaiting their signature on the round before they hit Submit, so to speak.
They only go into the index if they are actually worth enough to go into the index. If they drop below a certain value they will naturally be kicked out of the index just like any other company. I.e. if they are not actually in the top 500 US companies then they will not be in the 500 index. The risk of any one company is balanced by all the other companies in the index also.
If they really are a scam, their value will drop and they will be kicked out of the index. I still don’t understand how this means people will be “holding the bag”.
Additionally if you really believe that they are a scam and their price will fall you can just short the stock to completely neutralize their effect on your 401k.
By the time they drop and being kicked out (if they do) the insiders already dumped their shares. Not to mention now all the index fund holders will rush to sell creating even more price pressure.
Shorting (itself being a bad idea for regular investors) also breaks the mantra of passive investing, 401k or otherwise. It’s almost impossible to short right after IPO because of low float and high margin risk.
These mega IPOs are just using passive investors as backstop.
You can protect yourself, but many won't be aware of the situation until it's too late, and institutionally managed funds won't be able to change their rules in time to avoid holding these as part of the index funds they hold.
Many individuals can, but good luck reaching out and convincing the entire country that they should look into making changes to their retirement fund allocations without sounding like a kook.
There's maybe, at best, 1% of the country even aware that this might be a problem.
In your 401k portal/website there's usually a setting like "I plan to retire on year X". When you set that, or something similar, there's typically a managed fund that gradually decreases risk as you approach that year. When you have lots of time before retirement you can ride the ups and downs but as you get closer the less time you have to recover from a downturn so the more conservative you want your investments.
If you're really worried and want to be conservative tell the portal you want to retire in 2030. That will allocate your investments to something conservative and you'll be more protected from a downturn. On the other hand, you'll also be equally protected from an upswing.
I’m not sure I could. Even starting to research how to prevent being affected by these changes shows that there’s layers upon layers of systems that are being manipulated, and there are costs charged for moving the capital in my retirement account to other accounts.
Saying you as in any random person can protect themself from a group of dedicated experts who also have access to levers the common person can’t pull, is kind of not believable on its face.
Is there anything structurally to prevent a super wealthy buyer from guaranteeing this essentially -- moving money and debt around in order to essentially put a floor under the stock and guarantee buy rates until the retirement fund index purchasers have time to absorb all the shares at the artificially high price? Feels to me like this is almost guaranteed to happen -- ...
Anthropic unlike OpenAI has reached an operating profit of 559 million, which is really telling. They've also been migrating enterprise customers to API pricing, which is likely part of why they've become so profitable.
SpaceX is selling their capacity to Anthrophic at a reduced rate in May and June [1]. It's possible that they're only profitable because of this discount.
Exactly. Incredibly hard to understand what hard, non-headline-quoting, steel man arguments there are about how exactly the market will hiccup. And as if all of the AI companies somehow know this and are looking to IPO themselves out when anthropic revenue is growing > 10x per year for multiple years. Feels like a massive disconnect between “this will all implode” people and any real numbers.
All rallies do come to an end. The fact that we all don't know exactly what will cause this one to end is exactly part of the problem and 100% doesn't mean it won't happen. Usually some external shock spooks the market and a massive sell off happens.
So what could happen, any number of things. An obvious near term issue might be inflation increases dramatically in the US (on account of the oil shock), causing interest rates to increase - maybe dramatically - , which causes the stock market to retract. Also, the housing market is pretty much toast at the moment and an increase in interest rates might finish it off too causing a contraction there. So many ways things can break.
But honestly, I'll tell you after it happens and it will happen. Having lived through a few of these now when everyone tells you it's a sure thing and prices go up for ever you get an inkling you are near the pop.
> All rallies do come to an end. The fact that we all don't know exactly what will cause this one to end is exactly part of the problem and 100% doesn't mean it won't happen. Usually some external shock spooks the market and a massive sell off happens.
Yes sure, but that statement contains zero information -- why do you believe it will end in a time short enough for the "market bubble" comments to even make sense?
External shocks -- sure of course. Inflation problems in US -- absolutely, it's a ticking time bomb with a debt crisis looming. Housing market I don't really know anything about but I'll take your word for it.
But all of this has been true for awhile, and could have been stated with equal veracity over the course of the last 5 years at least. Your beliefs shape your actions; so why does this belief shape actions any differently than it has earlier?
> ut honestly, I'll tell you after it happens and it will happen. Having lived through a few of these now when everyone tells you it's a sure thing and prices go up for ever you get an inkling you are near the pop.
Again totally true, I have also lived through them and expect more. But "these companies are IPO'ing because they know the market will pop" is kind of the thing that I was trying to address. For all the signals of market danger, there are plenty of optimistic signals all over the data. Growth is pretty robust across all sectors today.
I think the original comment was before the market sneezes. So we all know it will sneeze and the companies want to get in on this business cycle. The longer they leave it the more likely they will miss it.
They need a price consumers can't stomach or are unwilling to pay, and without that the company is profitable but not able to justify investments. That's the argument.
I'm interested in your argument but who needs a price for what exactly? Like token costs are unsustainable argument? Or are you saying they need a stock price to keep their valuation high?
Token cost might be sustainable but still not profitable enough to make up for the costs of either training or the investments gifted away until it became profitable. They also might have no relevant moat that allows them to enshittify enough. But mainly, they are in "I need to kill whole industries to be worth it" tiers of investment.
> But mainly, they are in "I need to kill whole industries to be worth it" tiers of investment.
Yes agreed. Coding is a pretty big industry though in and of itself. Same with healthcare, legal, etc etc etc. Of course we have zero model today that can seriously kill an industry, but if you look at (1) how good things are today (insanely fast and rapid adoption) and (2) robust performance trends from many complimentary sources, it's kind of inevitable and I haven't really heard a coherent steel man argument for why "killing whole industries" is somehow a far-fetched idea.
> still not profitable enough to make up for the costs of either training or the investments gifted away until it became profitable.
Regardless of the weeds of the economics today, you have a clearly valuable asset that at the very least already a must-have for enterprise and will become even more essential over time. There is token economics that either already do or will make sense. You will have some sort of marginal cost + profit margin that things will stabilize at. You can pay a premium for high quality frontier models. "But it costs more in R&D to fund this!" ok but then token costs will increase. Why is this some sort of death knell?
>it's kind of inevitable and I haven't really heard a coherent steel man argument for why "killing whole industries" is somehow a far-fetched idea.
They don't only require "good enough to kill industries" (which is doubtful but certainly feasible), that's just step one. I think about it in terms of potential failure modes:
- if models don't reach worker-substitution levels, they fail
- if models reach that level, but it's too expensive to run and a worker's still cheaper, they fail
- if models reach that level, but the resulting tech is cheap enough to use, they fail (since open models can compete)
- If the models work but there's social rejection leading to regulation (due to mass unemployment for example), they fail
- if the models work but there are significant deal breakers (like a fundamental inability to keep them safeish to use) they fail.
So it's not really a single AI killer reason, it's more that the success case requires things to land in a very specific future where models work, and they're cheap enough, and expensive enough, and valuable enough, and exclusive enough, and safe enough, and...
Each "and" is a multiplier reducing their chances, and there's a ton or factors. Not imposible, but not where I'd put my money.
If 1B people consume via personally or their employer on average $100/mo of tokens or services that solves the problem right there and that is not inconceivable whatsoever and feels like an underestimate. Repayment doesn’t imply you have to build an end to end replacement of an industry.
This also negates this whole like “you have to completely replace a human” fallacy. Why do you need to replace a human? Why not just increase the value each human brings you?
The model of open weights has been around for awhile. You have frontier labs releasing them. They are powerful and capable and track yet lag frontier models. Without massive government subsidies from probably China who did something similar with manufacturing I don’t get the idea of OSS somehow toppling the entire industry of frontier models. How would this happen? Did demand for frontier models drop after GPT-4? GPT-5? Because the cost of GPT-4 perf is maybe 100x cheaper today. You can always pay a premium for a better model (more data spend with proprietary data sources, more compute for training, more thinking budgets), and in the end, things will either go to a monopoly or prices will stabilize around the marginal costs.
Also safeguards are always important. They are thorny fundamental horrific problems and I can tell you there will be a hellscape of pain as people figure out the trivial ways to do bad things with some of the worst security practices we’ve seen. But I don’t get why this is a dealbreaker, we are using these systems everywhere and in loads bearing environments, today, and reliability and hallucination rates continue to increase / decrease.
>If 1B people consume via personally or their employer on average $100/mo of tokens or services that solves the problem right there
0.15B is the full actively employed population of the US. 0.2 extra for the full EU, and we're barely making a third of the needed numbers, and this is assuming that the guy cleaning the street or the plumber will have a 100 bucks subscription just because - not to mention that a hundred bucks is 10-20% of median monthly income in many countries, even some EU ones.
You're asking for 3x Netflix subscribers at 4-10x Netflix price and with the whole world standardized at American prices (without American income).
Then add that this would very likely be a commodity market with competitors, so the billion, if existing, would be a market rather than a specific company's income.
one possibility is that some heavily indebted AI infrastructure company will be unable to meet its dept obligations, which will cause banks that become heavily exposed to AI-infrastructure related dept to tumble
I would guess fallout from the straight of hormuz closure. I don't think we have seen the full effects of that yet. Between climbing inflation, and a possible recession, we could definitely see the bubble finally pop.
That is not why you are seeing a deluge in listings. It takes 1-2 years to make a company IPO ready and is a massive operational headache, and the controls needed take multiple quarters to implement.
The reason you are seeing a boom in IPOs versus 2023-25 is because a large portion of funds that are from the 2016-20 vintage are about to hit the 10 year mark when LPs need to be made whole.
This means you need to exit your investments either with an additional round, an acquisition, or (the most common approach for growth equity which is what series D and later rounds are) IPO.
> Hahah explain why data bricks and stripe are still private
The founders of Databricks and Stripe explicitly structured the terms of their later rounds such that they could remain private indefinetly if needed in return for operational control. Basically the "Rich versus Kings" [0] dichotomy
> Didn’t you say you wanted (sic) tour account deleted? Yet here you are
CCPA requires proof of identity for an account to be deleted, which I do not want to provide due to my professional network's overlap with YC. I'm waiting for HN's mod team to eventually ban my account and subsequently delete my comments like they did for a few others.
> Mate you’re full of it
If you're going to act hostile why don't you use your primary account instead of a throwaway?
OpenAI, SpaceX, and this IPO: I don’t think there’s enough liquidity for all of them. Investors may pull money out of other investments, and hopefully that doesn’t cascade into a full market crash.
The SpaceX IPO confuses me, with the kind of testing they do the stock price is going to be a roller coaster ride. Every splashdown with an explosion, even if planned, is going to impact the stock price. Are they hurting for cash? Why even IPO if you don't need the cash?
Their IPO sees the company as doing a small amount of space and $22T of B2B services. If you believe that then space launches shouldn’t have much impact on their valuation compared to things that affect their hypothetical services revenue. If you think the value comes from the rockets, you would need some very large multiples to justify their desired valuation in which case, sure, the rockets are the cause of volatility…
S-1 isn’t public yet. Source on the lockup period? SpaceX for example filed with accelerated release of insider/investor shares so I don’t think we can know if this is the case until the filing documents become public.
Look at SpaceXs filing. There is one but it is super short. I was just pointing out that 365day lockup is likely incorrect and OP doesn’t really know that until the filing is approved and becomes public.
Going to give the benefit of the doubt here. I know what lockup period means.
365day lockup isn’t a universal standard. For example for SpaceX 20% of insider shares can be sold in the first few days. 100% within the first 3 months.
Without a public S-1 filing we don’t know what the lockup for Anthropic will be
I'm sure they can get private loads or similiar way to "hedge" those? also dark markets and other tricks exist. Fin. eng. level goes way higher for them, just contact inv. banker or their lower class friends. They will find a way.
> Are we in a race to see who can pop the bubble first?
Just because it's a bubble doesn't mean money can't be made.
If you're worried it and the risk involved, perhaps go from 100% equities (100/0) to an allocation that has some bonds (90/10, 80/20, etc). Rebalance as things get out of whack.
There are products that do this rebalancing for you: target-date funds that increase bond allocation as you get closer to retirement, or fixed-allocation all-in-one funds (VASGX, VSMGX; CA: VEQT/XEQT).
Having some bonds and rebalancing would have saved US domestic investors in the so-called Lost Decade of the '00s:
As you likely know, rules have recently been changed that basically force many 401k funds to invest in these IPOs while simultaneously having a relatively small number of the initial IPO to be sold to the public forcing the funds to by at inflated prices.
The bubble won't pop until these retirement accounts of have been raided.
I'm pretty sure that's the change GP is referring to. But pension funds can choose to specifically exclude such companies. The Danish pension fund has already excluded SpaceX, which owns xAI. (This also probably relates to American threats of annexation of Danish territories, not just AI stuff.)
And as suspected, the Anthropic deal is not recurring revenue, its just a think they can cancel anytime with 90 days notice...Release the bad news slowly and when people are looking somewhere else...
SpaceX AI segment lost about $2.5B from operations in Q1 2026 on $818M revenue...they are burning dollars. Musk controls about 85% of voting power through supervoting shares, and cannot be fired...go IPO buyers...nothing like economic exposure without control....
Curious how someone with a 401k, who didn't want their retirement to be used by these companies to buy at an inflated price, would go about opting out of this.
Typically I just have my 401k in an index fund so that things have to become established before they're added. This seems like it's circumventing that, and I would be inclined to vote with my wallet. But everything around 401k index funds that I see are very opaque, so it's not totally clear to me how I would avoid this if I wanted to.
Technically I think this would be fairly straightforward. You could keep the index fund and then short the stock you believe is overvalued, to the degree it's weighted in the index fund. That would give you stock market exposure equivalent to the index without the company you don't believe in.
But I would strongly advise you to NOT DO THIS.
The above position makes it explicit that your thesis involves shorting a stock that could go through the roof in value. That emphasizes what a risk you're taking with your thesis. If your typical investment approach is to just buy index funds, then carry on just buying index funds and let the market do its work.
By the way, if SpaceX, Anthropic, OpenAI etc were to be excluded from the indices, then professional investors would just start a trade the inverse of the one I outlined above - i.e. they'd start shorting your index fund to the extent it was underweight in those companies, in order to profit off the exclusion of those tickers from it.
If you're in this for the long term (which I assume you are given this is your 401k), don't try to second-guess the market short-term.
If your 401k offers it you could look into an "equity income" fund. Not for the dividend income per se, but because these a are big stable companies with a track record of paying dividends.
Also, consumer staples are known for holding their ground during downturns.
But the general advice given is to accept that you probably can't beat the market so don't overthink it and just own the whole thing.
Also keep an eye on expense ratios. A lot of 401k providers gouge you on anything but the basic funds. So you'd have to beat the market by that much more.
You have to lookup what your index fund is. They all have always had different inclusion rules and they may or might not have changed theirs recent to try to include SpaceX.
I think I'm looking at general "retirement funds" which are a little more opaque. e.g. Vanguard/TD retirement funds, when I looked into them, didn't have any information on "what is in them." Just general breakdowns.
Vanguard offers a bunch of ETFs so I can't exactly give you a solid answer.
One of their specific etfs (VTI) tracks the CRSP US Total Market index [1] which has its methodology described here [2] and looking at the "CRSP INVESTABILITY SCREEN SUMMARY" it sounds to me like SpaceX would be added to VTI after 5 days ("Seasoning of New Securities - 5 days or greater if satisfying the fast-track IPO rules".
[1]: "The Fund employs an indexing investment approach designed to track the
performance of the CRSP US Total Market Index (the “Target Index”), which
represents 100% of the investable U.S. stock market," https://personal1.vanguard.com/pub/Pdf/sp970.pdf
If OpenAI and Anthropic eventually become public companies with trillion-dollar valuations, it will be interesting to see if their company ethos remains the same. With that much purchasing power, it's very tempting to gobble up competitors and raise prices.
The real competition is coming out of China right now and I doubt the Chinese government is going to let them buy out their "fast follower" AI companies that are consistently 6-12 months behind in terms of quality. That said, I'm factoring quality as in Opus 4.5/Sonnet 4.5/GPT-5.5 as break points since I haven't really seen an improvement since that point when using AI.
> Compounding the problem, labs in China often release dual-use capable models as open-weight. Once a model is open-weight, safeguards that do exist can be removed, making the model available to any state or non-state actor to use for malicious purposes, including the cyber and CBRN misuse those safeguards were built to prevent.
Probably but the reality is I doubt that actually works outside of US government contracts in practice simply because Europe/et al aren't going to follow their lead.
Europe has been slowly committing economic suicide for the last 30 years by outsourcing everything to the US and China (and Russia), and it looks like maybe Europeans are finally starting to wake up to this.
I wouldn't be one bit surprised if a rash of digital sovereignty movements in the near future hamper Chinese model adoption.
Burning furniture will in fact keep you warm, and if you can do it long enough, your kids will wonder why others toil with trees and axes so much.
The downside of course, is that it is much much harder to go back to chopping wood once that furniture is all gone. Especially if all you ever knew was burning furniture.
You speak so authoritatively about quality and performance of these models, yet there are no quantitative metrics that correlate to real world outcomes that indicate that the quality and performance of these models is anything but subjective noise and classic benchmark nonsense.
A company consumed half a billion dollars worth of tokens in a month and nobody noticed anything until the bill came due.
Tha $500m dollars is roughly equivalent to 2000 people working for a year or 500 people working for four years, they can and would accomplish a lot if they worked in companies that add value to the economy by solving real problems.
Indeed Its irrelevant. Each firm will make its own cost-benefit analysis, especially since the frontier labs are raising prices.
Marketing only takes you so far in creating noise.
Its weird seeing this focus on bench marks again - PC's did this for quite some time. But in the end it came down to - what does all this additional horsepower let you do? Oh create interesting apps, multi-tasking etc. Which was really the value-add.
> You speak so authoritatively about quality and performance of these models, yet there are no quantitative metrics that correlate to real world outcomes that indicate that the quality and performance of these models is anything but subjective noise and classic benchmark nonsense.
I'm responsible for AI roll out at a small business and we've had data science go over these things internally in terms of what results we get for 12+ months now. Its just my experience that is roughly the results we've seen using Deepseek, etc. and comparing cost/results vs. Anthropic/ChatGPT.
> A company consumed half a billion dollars worth of tokens in a month and nobody noticed anything until the bill came due.
It was sourced from one anonymous source. Its highly unlikely to be true in my view, but hey, you do you.
I’m curious which will start producing hardware be it robotics, consumer or commercial devices, chips, energy infrastructure or transforming shipping crates into housing for jobless humans. Maybe even tanks of gel with arrays of humans in suspended animation reading our biometrics, thoughts, pumping in nutrients and training on the data. O_o
Who else right now is making competing models that are roughly as capable? Now factor in hardware availability / future delivery contracts and capital requirements for building datacenters and running new training. If you're trying to compete and lease all that with VC money or loans, good luck actually competing.
Is it actually refreshing? It's actually refreshing to see Stripe staying private for so long. That means, they have a sustainable business model, and can take on projects that might benefit users in the long term despite negative short term consequences instead of focus on growing at all cost for the most part.
Becoming public allows everyday people to access the wealth generation machine your created.
Sometimes I think that the endless cynicism around corporations that exists online is the real ploy by capitalists to keep people poor. It seems to be pretty damn effective at making people allergic to claiming their slice of the pie.
"Going public" means something completely different now, especially for these companies in the news (Anthropic, OpenAI, SpaceX, etc).
Going public used to mean selling a portion of your company for the capital required to grow. Ideally John Q. Public buys stock, the company grows, and they can sell the stock for more money.
These companies already have the capital required to grow from private investment, and already grew; they're behemoths. The act of "going public" are those private investors using the public market to cash out their investment. The exponential growth the public buyers are expecting to see has most likely already happened.
Microsoft and Apple had decades of profitable years before hitting a trillion. AI companies are seeking trillion dollar IPOs without profits, selling a service well below its actual cost.
Stripe seems to be doing fairly well as a private company. They continually offer liquidity events for employees to cash out, while also retaining less pressure for hypergrowth from outside activists and investors.
It's the contents of the submission that are confidential, not the fact that they are submitting.
The contents themselves contain a lot of detailed information about the internals of the company including financials, revenue, ownership details etc... those details are what's confidential until the SEC gives its approval, at which point the public can then review the document.
It’s hard to imagine there’s much upside left for retail to capture at this point.
How much bigger can they get when they’re already 1/5 the size of the world’s largest company?
It seems like the chance of retail making a killing on these IPOs like they did with Amazon (+2200x since IPO) or Nvidia are slim. The entire S&P is $60T.
Railroads seem like a good parallel: right of way, coal, and iron all were huge factors for success. That was greater CAPEX but the parallel does break down somewhat since railroads had huge, immediate demand and everything but fuel had much longer service lives.
I think this IPO will be the real test of whether the concept of a Public Benefit Corporation actually holds up in practice. Don't mess this up, Anthropic.
why did they raise 3 days ago? What's the benefit of doing this instead of going public right away? If it's just cash to pay for GPUs, can't they issue bonds or something?
You pretty much always do a late-stage private round shortly before an IPO, that is the standard. The goal of the late-stage funding round is to give a better idea of how much capital can be raised by the IPO. It helps reduce uncertainty about expectations of what the company is worth before going public.
Conspiratorially, it seems like a shotgun attempt at undermining the supposed OpenAI IPO later this year.
Also filing an S-1 doesn't actually indicate that they intend to go public "immediately," it just gives them the option to go public (probably in the near future).
IPO isn't really about "raising money for the company" any longer, unless one means raising the money in their wallets so they can take the money and run.
> We study long-run shareholder outcomes for over 64,000 global common stocks during the January 1990 to December 2020 period. We document that the majority, 55.2% of U.S. stocks and 57.4% of non-U.S. stocks, underperform one-month U.S. Treasury bills in terms of compound returns over the full sample. Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation.
> Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills. These results highlight the important role of positive skewness in the distribution of individual stock returns, attributable both to skewness in monthly returns and to the effects of compounding. The results help to explain why poorly-diversified active strategies most often underperform market averages.
Further, over ten years, most individual stocks under perform a market index (even more so if stock was initially a top performer):
> […] Since 1926, the median ten-year return on individual U.S. stocks relative to the broad equity market is –7.9%, underperforming by 0.82% per year. For stocks that have been among the top 20% performers over the previous five years, the median ten-year market-adjusted return falls to –17.8%, underperforming by 1.94% per year. Since the end of World War II, the median ten-year market-adjusted return of recent winners has been negative for 93% of the time. The case for diversifying concentrated positions in individual stocks, particularly in recent market winners, is even stronger than most investors realize.
“Passive investing” is not the same as “buying anything at any price”. Index funds follow transparent rules and weights. If the company is overvalued, that overvaluation is set by the wider market, not just passive investors.
I've heard of the changes to the NASDAQ rules and I somewhat get how they make it so these stocks are included in index funds earlier than before. As far as I know, NYSE and others haven't done the same change so index funds there are "safe", i.e. will include the stocks only after a longer period, implying that it will have settled in value by then. Is that true at all? I'm sure the situation is much more complicated, but I do wonder how to figure out how much I'm affected.
There is a huge amount of misinformation on this topic, including in this thread, at the minute.
Some index funds have a very long horizon before they include them (e.g. a year). Others are "fast-tracked" (e.g. notably VTI). Most of those, however, are float-adjusted, so only the stock available for trade is considered part of the marketcap. So e.g. VTI / VTSAX will buy spacex relatively quickly after the IPO but at the float-adjusted weight of ~$75B because that's the % of stock available.
If you care alot about this, now is the time to understand how your index fund treats IPOs wrt to delays + float adjustment.
Specifically, I do a typical 3FP and own VTSAX, but I don't read bogleheads or anything. True set-it-and-forget-it, but I do want to read more if things are shifting.
You should not trust me, but here's my understanding. I wish there was a really good writeup somewhere to explain this authoritatively but I'm not sure there is one. Would also love to see one. Frankly vanguard should do it.
VTSAX (and VTI) follow the CRSP index. This is float-adjusted but they likely will be fast tracked (these are two separate rules in how this index chooses to weight things and participate in new stocks). At ~5% float, these companies will be in the 50-100B range. So under all those assumptions, they'll be bought quickly but represent less than 1% of VTSAX (until they float more shares on the public market).
With SpaceX, OpenAI, and Anthropic, we're likely to see 3 of the largest IPOs ever (by a wide margin) this year. Will existing institutional investors trim other positions to allocate a lot of capital for these mega listings or is this not a concern?
Most likely. Funds generally don't have much unallocated cash, they operate fully invested, so three huge IPOs will force an asset rebalancing which can cause some liquidity drain from the rest of the market.
Plus as insider lockup periods expire, that's a ton of dollars pulled out of the market and into safer assets. It's going to be a huge net exit of capital.
I'd expect a lot of volatility and pretty heavy downward pressure across the rest of tech.
They are scared of underperfoming the market and failing to exist as an index. Losing money with everyone else is a more sustainable risk than losing money while other indexes go up.
Maybe. If you read the fine print they are not. They have the goal of matching the index returns, but they never say anywhere they have exactly the stocks in the index.
Index funds all make active choices and often hold companies not in the original index. They are more passive than a traditional funds that buys and sells all the time, but they still make active choices. When an index changes stocks they can look up the price - but the funds mirroring the index need to make real trades that if not carefully done will change the value of the stocks (and cause the fund to under perform the index), so index funds have plans to prevent this. Compared to a traditional fund an index fund looks passive and there is much much less for the manager to do - but that doesn't mean the managers do nothing.
Not true for Vanguard's total US stock market fund (VTSAX/VTI), the largest total US stock market fund in the world. Their CRSP index only requires 20 trading days post IPO, or 5 for large caps (this has been true for many years, this is not a recent change)
But only the amount the company floats for many index funds. So in the case of SpaceX, they are only floating 5% of the company. So the number of shares something like VTI has to buy is much smaller than the total market cap (5% of it).
As a layman external observer, this seems a bit rushed to me? I know there's a race amongst the frontier AI labs, but I don't quite understand the rush (apparently there is still a lot of money to go around), so as some comments imply, it does look like "our financials look good right now let's strike while the iron is hot!"
I do think Anthropic's business has very good long-term prospects, but the current run rates are not sustainable and they know it which is why they, more than OpenAI, are under higher pressure to IPO. Some things to consider:
1. This was surprising to me, but enterprises Claude Code (and Codex) plans are billed on token usage at API rates. I was expecting lower rates for volume subscriptions. This explains their huge spike in ARR, but I expect competitive pressures will soon come into play, especially as companies start to get more budget-conscious. Specifically...
2. Tokenmaxxing is finally encountering the inevitable pushback. My theory is it was an effort to incentivize devs to experiment and figure out ways to get productive with AI by throwing money at the problem, which was always going to be a short-term dynamic. Companies are going to be much more intentional about token budgets (especially as Anthropic is apparently now asking for volume commitments for enterprise plans.) Smaller, open-weight models may start looking much more attractive.
3. I've said before but I think Anthropic severely underestimated their own popularity and corresponding demand for compute and has to enter costly deals to acquire capacity to keep Claude's 9's above GitHub's, even as they alienated customers with short term tweaks to optimize usage. These deals will eat into their margins and Claude's problems likely pushed customers to competitors, the effects of which could take time to be more evident.
So maybe whatever looks good on their financials right now is time-limited, and the current boost may start petering out at some point, which may influence when OpenAI files their own IPO.
It means that Anthropic has submitted a document that it intends to share with the public in order to solicit public investment. This document includes details about its business, financials/revenue, ownership structure, risks, etc...
The document itself is what's confidential until the SEC approves it, at which point Anthropic will release that document to the public and IPO.
Of course that fundraise was the last one: [0], everyone getting ready to dump their pre-IPO shares on to you as China catches up with their open models.
Better to do it now than to wait a day longer and the tokens are not getting any cheaper here.
Obviously OpenAI will file for IPO certainly this month, or even this week in response both SpaceX, and Anthropic.
Really seems that this entire industry has been told it will get a MASSIVE bailout. And with Fink basically confirming so means, Hillary was right? Trump is a tyrannus dictator?
Reading these messages is getting me discussed. Is there any fund/index fund that is not breaking the rules to allow easier pump and dump from big players?
of course. do it now while they have the users. in a year when everyone has laptops with 128gb+ running models locally, anthropic stands zero chance. same with openai. i dont even use openai anymore. this will be one of the biggest crashes in history.
post your position for all to see if you're so confident. Time in market is way better than timing the market. I'd rather ride through a downturn, buying at the same pace i always do, and come out the other side than try to time it. Been there done that and i got burned every time.
This is actually the pin everyone was looking for that will pop this AI bubble, including the token cost falling in China and the release of open models that are good and run locally.
It could be, but the market could bounce right back. And if it does, it's hard to know who will emerge stronger. Anthropic could end up like Amazon, or it could end up like Yahoo.
Every post anthropic generates feels like misdirection and bad summarization using AI. There is no sense of who the audience for this post is for and includes a lot of redundant information.
Can't see the relevance of this comment to the post. You can do a Google search for "confidentially submits draft S-1 to the SEC" to see other examples of companies announcing these submissions and they're all written in the same way.
It's just a standard/template that most companies reuse.
Is there any real reason to have generated announcements anyway? You could get more polished text with some copy editors and I can't imagine cost is really a big concern for it.
The motivation for such a terse thing is pretty obvious given the way they’ve generally announced things. It’s drumming up interest with as much vagueness as possible.
It’s a classic tactic. If you are unable to show real data (why?), then just give as little information as possible so that people can just fill in the gaps based on their own biases.
I mean, look at the way Mythos was announced…too dangerous to release outside of select customers, but they’ve announced they’re adding Mythos capabilities now, so I guess the danger has passed? What changed? What risk mitigations have taken place?
Not to mention the insane wake-up call it is going to be for these AI stocks when 3 months after they launch they have to start making earnings calls and showing their financials. That quarter-by-quarter pressure and scrutiny is no joke, and probably the biggest downside of going public.
I'm bullish on AI, but kind of bearish on any specific AI company. None of the initial big dotcom companies like AOL or Yahoo survived at the scale they briefly had.
In contrast, there was overwhelming doom and gloom for Google's IPO, in spite of their incredible growth and margin economics. In time, the doomers were proved wrong.
There's so much doom and gloom about Anthropic that directly contradicts their astounding growth and margins. For a long-term investor, Anthropic is looking a lot more like Google not AOL.
I can only hope the doomer narrative dominates until I can get a few shares at a reasonable valuation.
Vibes are almost always wrong. Ignore the vibes and focus on revenue growth rates and inference margins.
I'm betting more on the successors to this initial group of AI companies. The ones that have to build actual profitable businesses.
Most of us were using 56k modems to access the internet back then, Google's search returned results within a couple of seconds. Yahoo, Lycos, Excite, Alta-Vista were still loading. Then the search results themselves were so good you could often just pick the first result. They eventually added a button which just took you directly to the first result. Which I used.
I was a relatively early investor (2008), but I was very hesitant early on because Microsoft was building an integrated search function, which became Windows Live Search, which became Bing. I definitely remember it took me to the beginning of the financial crisis to finally decide that it was going nowhere. I suspect it was the development of Google Maps that changed my mind.
Your memory is faulty. AltaVista was always super fast--it never had the advertising bloat that the other ones had until the very end.
The problem AltaVista had was that it didn't scale when the Internet went exponential--so AltaVista would give you good search results until you asked current, topical questions. AltaVista relied on running a single, super-expensive stonking huge Alpha machine while Google ran on lots of commodity servers that spidered constantly.
See https://www.usenix.org/legacy/publications/library/proceedin... for the 1997 server count, which was before we got to the three tier architecture.
We also spidered constantly. A couple of those huge backend Alphas were dedicated to holding the constant spider index. AV had a well earned reputation for quick discovery, although I think Google wound up faster. We suffered a bit from maintaining separate indexes for the main corpus and recent pages, and I imagine Google handled that better.
But the period of time when our main index went to hell was the period of time when we failed to do a new main index crawl for several months. I won’t get into why that happened politically because my memory isn’t perfect and I don’t want to criticize anyone who won’t see this to stand up for themselves, but it’s absolutely the case that we let the index get stale.
And I will say that I think the execs were distracted by the idea of challenging Yahoo by buying a shopping site and a local news site of sorts and, unlike the Google of the time, they lacked the wisdom to focus on our primary product.
And now I fade back into the hedges, until the next time AV comes up… I suspect a high percentage of my HN comments are on this exact topic. It makes me sad.
And I still miss the AltaVista illustrated diagram (Java Applet) that would allow you to drill down and specialize the search results. No modern search has ever matched that, again.
Simple text ads to start. It was built on MySQL, Java and C++ and became how they made most of their money.
I doubt you will. Most likely IPO reference price will be like SpaceX's, 100x ARR or so.
You're better off buying Google who own a huge chunk of Anthropic at a much saner average.
But if it's 40x in October, and inference margin is strong, and revenue is still growing 20% per month, then I'm in.
The normies are all still excited/scared and the valuation based on secondary trading is going up and up.
Maybe not quite as crazy as the dot com boom but I'd say the current environment for AI and related equities is a lot closer to the mid/late 90s than 2004
Normies have never heard of Anthropic, where the economics are incredible and doom vibes are pervasive.
They (together with OpenAI and maybe Google) can have better margins on frontier models, but the demand on those got to be much lower
And ignore debt you can't pay back? Fine during ZIRP era because there was always another $50M around the corner. There is no extra $50B around the corner.
They've all over-invested in AI, same as the railroads, and it will collapse the same way.
Most of the time, they're wrong half the time.
I conjecture that some amount of the "doomer posting" is a consequence of other people realizing what you realized here and attempting to sway public sentiment for personal gain.
Citation needed for that one.
We’ve already seen a startup make a chip which generates a hundred pages of text in milliseconds. When companies start bringing out hardware like that for cutting edge models, the entire business is dead. AWS will just eat the market.
Retroactive reasoning with investments (if I just bought X) is insane.
They IPO'd in 1980, yet their stock price was below the IPO price for the majority of 1980-1987.
It also fell to its IPO price for an extended period of time between 1996-1998.
You hypothetically could have waited 20 years after the IPO before investing without giving up theoretical gains.
What? How? By moving out of Massachusetts? I could understand banning such a speculative stock for e.g. pension funds or whatever, but blocking private individuals from buying with their own money seems insane.
I really dont see how America doesnt collapse on the weight of its own corruption. But maybe the was the plan all along....
Of course, it doesn't always go up...
I think you have an oddly negative bias.
The levels of greed in our society our unmatched. Planes, mansions and yachts for a few thousand people while 10s of millions struggle to buy basic medicine for their children.
Death to the fascist insect that preys upon the blood of the people.
how long does this last? I've been hearing it for a decade.
You're going to lose everything and your children will have no future. When they're old they'll be speaking from a similar perspective to the people who lived through the decline and fall of the USSR. Keep coping though.
Assume that Anthropic, OpenAI and SpaceX all IPO and get included in SPY with the new fast listing rules. They are likely to be worth $3-4T combined, which means 'retail' investors are going to have perhaps 5% of their portfolio in it.
_Arugably_ that's a pretty fair allocation for retail investors to have to these "moonshot" style companies.
Also - if any one of these IPOs don't go well; I suspect the other(s) will have to postpone, further reducing exposure.
Everyone I know who invests in an index fund is doing so to mitigate the risks of things like "moonshots" which are typically much riskier investments.
> Everyone I know who invests in an index fund is doing so to mitigate the risks of things like "moonshots" which are typically much riskier investments.
The whole point of an index fund is to capture the growth of the whole market. If you wanted low risk you'd be buying bonds.
Regardless SPY is actually a pretty "risky" index fund on some measures - it pays a (very) low dividend compared to many other intl/ETF funds and is weighted very heavily towards tech stocks (atm).
If you genuinely wanted to mitigate risk you would probably not choose SPY.
Given that they've had to change the rules of index funds to allow for this, yes, this is not what people expect.
Also, the rules have changed before. It's not the first time these rules have changed.
I see both sides of the argument (it's definitely _not_ good for 401k investors if Anthropic/OpenAI/SpaceX make huge leaps in technology that allow for far higher earnings that they aren't able to access, for example).
But my main point is that these investors regardless would "only" have 5% exposure to these. That surely cannot be considered a systemic risk that the OP is inferring.
SpaceX was a profitable company, it was heavily invested into R&D and had managed to build a tidily profitable connectivity business in Starlink. Now the company is being burdened with all the worthless debt of X and xAI with a likely merger with Tesla following launch just to hand Musk a big check when he hits the valuation targets.
IPO inclusion on indices should be illegal, the price discovery simply hasn't happened yet and it's a direct grab at the most vulnerable retail investors - the passive index huggers that were told that if they just buy an index it'll never be spectacular and it might dip but it'll steadily go up.
I would not be surprised if the US Government ends up bailing out retirees over this and cements the country's descent into debt. Pretty much everyone can see it coming, but we have to act as if Elon is valuing his companies in good faith and not just trying to rob a payday.
Their conclusion: It might be bad, but so be it. No need to change strategy.
It being in the public markets is something you can deal with if you want.
It being in private markets means you cannot choose to participate in the upside if you want.
A lot of people have been using it to passively invest in AI (via QQQ).
It’s nonsensical for a variety of reasons but we live an era of the stock market just being another casino…
Hedge funds already know broad based mutuals will have to purchase these so can sneak in before them and then sell to them for a marginal gain. Mayhaps the newest strategy for exiting is generating so much hype that you're guaranteed an exit by retail retirement funds?
[edit:typo]
there are ways for you to manage your risk if it in public markets, theres nothing you can do if its in private.
Are AI companies capable of turning a profit today if they turn some knobs?
Theoretically, if training more expensive models stops resulting in better capabilities or isn’t economically viable, the labs can shift gears into making profit on old models. A lot of future growth is priced in so this would lead to a collapse in share price if it happens anytime soon.
There’s a story out that Anthropic might be profitable this quarter. This is in one sense bad news - it means that the company wasn’t aggressive enough about acquiring capacity last year, because they didn’t foresee how fast their inference business would grow. Anthropic is now forced to make suboptimal choices about serving existing users vs. training the next model (need to scrounge for capacity by paying other players like SpaceX). And as a Claude Code user I feel like I’ve been affected by that, what with the random outages and performance degradations.
You cant possibly believe we'll be just spending more and more in tokens endlessly.
And if the margins are so good for anthropic they will collapse. There's too much competition in the field.
I agree Anthropic faces some risk they could get commoditized, but on the other hand if things go well they could end up leading adoption into more industries. There are upside and downside scenarios. Recursive self-improvement is obviously an important unknown and could lead to winner-take-all.
I started as being very skeptical circa 2024, became more open minded towards the end of 2025, and am becoming skeptical again now. Reason being, I interact with entrepreneurs now and I see what they hope for in AI. The universal desire seems to be "people will just talk to AI instead of me while paying me the same as before or more". This is typically covered with coping mechanisms (e.g. "I am not building a chat bot, I am building..." after which they describe a chat bot).
I think the crash is getting more likely because the disconnect between what the technology can be used for does not match what people want it to do.
What? No. VCs, pensions, etc aren’t corporate investors in any common terminology.
The most recent change was the NASDAQ adopting the "fast change rule" which allows newly IPO'd companies to be listed in the index after only 15 days of trading. This rule was decided March 30, 2026 and only came into effect May 1, 2026.
The plan is to rapidly drive these prices up in the first 15 days, get the companies listed in the NASDAQ so funds are forced to purchase them at higher prices, then leave retirement accounts holding the bag.
Official justification, and other changes besides timeframe, e.g.:
> First, eligibility and company size. As multi‑class share structures have become more common, we now consider both listed and unlisted shares when determining eligibility and ranking. This allows the index to reflect a company's full economic size, while index weighting remains based solely on listed shares. This change affects who qualifies for inclusion, not how constituents are weighted.
* https://www.nasdaq.com/newsroom/nasdaq100-index-methodology-...
> A new method to calculate the market capitalization of companies to determine their eligibility for inclusion in the index. It involves adding listed stock and unlisted shares that are part of different share classes. Scrapping a rule that requires companies to float a minimum 10% of their shares. Companies with a low float will receive a lower weighting on the index. […]
* https://www.reuters.com/business/new-nasdaq-rules-include-fa...
I know SpaceX, Anthropic, and OpenAI will probably be a drop in the bucket in terms of scale of these funds, (free float % etc). But, is it realistic to take the money out of index funds for a bit until the price of these new stocks come crashing eventually?
Likely the government would step in and inject cash directly into the markets to support them in such a scenario, because a broad-index stock market crash is the modern-day bank run. Retirees carry the bulk of their savings in the form of stocks; if it disappears, we'd likely face revolt.
In any case, I’m not sure that large enough numbers of ETF holders are sitting close enough “to the button” to hit sell in the event of a sharp downturn occurring over the space of even a week or two. And a lot of them would see it as an opportunity to DCA into the dip anyway.
However, most ETFs are also setup such that they can create or destroy shares in response to large shifts in demand. In this case, if enough people hit sell, the ETF itself will buy back shares and use the proceeds to sell the underlying assets, in a transaction that mechanically should be market-neutral and just propagate the supply/demand of the fund down to the individual stocks.
With Vanguard specifically, it's even more complicated, because VTI is not a separate ETF. It's a share class of the Vanguard Total Stock Market Index Fund. But the mechanism is largely the same - it has the same Authorized Participant system to mint new shares in case of high demand and redeem shares if everybody sells, and then passes these requests on to the underlying mutual fund, which can then piggyback on some of the tax efficiency benefits of the ETF.
Pretty sure most people just sit in the default requirement 20XX year funds, which heavily weight away from equities once people are retirement age.
The bottom is going to fall out of the market and it's going to take years to recover, I don't see any reason to suffer through that (and neither do my retirement-age relatives).
I'm after steady gains in an approximately efficient market, not a wildly unsustainable speculative boondoggle, thanks.
Somebody is going to have to explain the business case for Micron trading like it’s Google. We all know that fabs are a low-margin capital intensive business, right?
https://finance.yahoo.com/markets/stocks/articles/spacex-ipo...
VTI in turn is the primary holding of most of Vanguard's Target Date retirement funds, which are widely held in 401ks.
Other indexes do not have these multipliers, and are much larger. The exposure for e.g. VTI is far, far less.
> CRSP indexes were also recently changed to better accommodate fast entry. New IPOs are eligible for CRSP's suite of indexes after five trading days, provided they pass the index's eligibility and investability screens. Previously, these screens included having at least 10% of shares qualifying as freely tradeable (known as float shares outstanding, or FSO). However, in April the methodology changed to allow stocks with either 10% FSO or approximately $3.3 billion in float-adjusted market capitalization to be eligible for index inclusion. The weighting of stocks in CRSP indexes is also based on free float, which should help address the investability challenges associated with thinly traded stocks.
* https://www.schwab.com/learn/story/some-indexes-accelerate-e...
I would have less of an issue if the inclusion in major indexes was delayed 6-12months but we are looking at inclusion within like 5 days for some of these indexes.
> Stocks would become eligible for the index after six months rather than 12 months. The requirement to have a minimum Investable Weight Factor of 0.10 (roughly at least 10% of shares publicly floated) would be dropped. Companies would not be required to demonstrate profitability.
* https://www.schwab.com/learn/story/some-indexes-accelerate-e...
Though:
> Still, S&P Dow Jones reminds market participants that the proposed changes would apply only to index eligibility. The actual inclusion of new constituents remains entirely at the discretion of the index committee.
What they might do is trade bespoke instruments like a credit default swap on datacenter construction deals. Stays underneath the radar of politicians and tech insiders who are invested in a particular outcome.
Dumb question: why couldn't retirement accounts simply not purchase these?
Or one that just imposes a reasonable waiting period on adding newly-IPO’d listings.
And there are plenty of ways to manipulate the price, such as issuing a low float to a hyper hyped stock..
And yes often a falling knife
This is pretty predictably wall street & federal regulators scamming normal people, retirement funds, etc, taking their fees and exit window at everyone else's expense
Where are you getting this timeline from?
- The initial pop is known to be manufactured by banks, so mostly benefits insiders, so good time to diversify. I'm conservative so sold to cover effective basis or whatever risk strategy :)
- The lockup period (6mo) is a similarly known artificial event, and studies show that
- Tech companies take ~8 quarters of prep for the IPO as they do financial engineering to transition from VC growth-at-all-costs to public $, and I'd expect the same for whatever nonsense they pulled to juice numbers to shake out. And that's not including oddballs like the Musk alternate universe, just normal tech companies covering up EBITDA and low interest rate madness.
- Tech is especially volatile as an industry, so even more skepticism here. Eg, the latest IPO I was involved in was a successful professional social network play, and chatgpt killed it.
Most/all of these are googleable things
Lock-up expiry is a real effect. Everything else you mention is Reddit stuff—trading the pop is practically a gamble.
Maybe the confusing point was my involvement is (discounted) pre-IPO shares, which almost by definition, is not an activity accessible to retail investors.
Meanwhile some of these companies are also lobbying to be able to only have to submit annual or biannual earnings reports, too.
Everyone is looking for multiple ways to leave the dumb money holding the bag.
It makes sense. They intend to track the market as it is.
Though, you can definitely make the case that the popularization of index funds has allowed their holders to essentially become patsies to hype IPOs.
Even with the CRSP indexes this was recently changed to make fast-tracking for these IPOs easier.[0]
> CRSP indexes were also recently changed to better accommodate fast entry . . . Previously, these screens included having at least 10% of shares qualifying as freely tradeable (known as float shares outstanding, or FSO). However, in April the methodology changed to allow stocks with either 10% FSO or approximately $3.3 billion in float-adjusted market capitalization to be eligible for index inclusion.
That change is notable because both Anthropic and SpaceX are planning to IPO at well under that old 10% requirement.[1] Neither would have qualified for fast-track inclusion before, but both are virtually guaranteed to clear the absolute valuation bar.
[0]https://www.schwab.com/learn/story/some-indexes-accelerate-e...
[1]https://www.economist.com/finance-and-economics/2026/06/01/c...
The float requirement changes are directly due to these huge IPOs only placing small amounts of float on the market. Their goal seems to be tracking the market and making this change prevents them from excluding two notable companies from their indexes.
IIRC CRSP indexes are float-weighted so they aren't going to attempt buying a ton of these IPOs anyway due to that low float.
Again. Would I have made the change? No because placing that little float on the market isn't kosher IMO.
https://indexes.morningstar.com/insights/analysis/bltcd8e699...
These IPOs will have minuscule impact on the indexes initially. They will have a big impact if they can maintain share price in the first ranking/reconstitution after the lockup period expires.
I'd like to know how the CRSP/Morningstar folks feel about the interesting lock-up period rules that Elon has inserted into the SpaceX IPO and how that jives with their analysis.
This particular one, the CRSP total market - which Vanguard uses for VTI - has a “modern” methodology that is thought to be very good. Once every three months they re-rank the entire market and assign weights based on the market as of a particular point in time. Then, a randomly-chosen number of days later, the fund (Vanguard) begins a weeklong reconstitution process in which they buy and sell stocks to reflect the new weights. It is intentionally a weeklong process so that the market is setting prices and not Vanguard with the size of their orders.
The lockup expiry happens, the market reacts, the market is re-weighted, the index reconstitutes. In that order. The price of the stock has to survive the increased float to force the index fund to buy lots more shares.
CRSP has recently changed their rules:
> CRSP indexes were also recently changed to better accommodate fast entry. New IPOs are eligible for CRSP's suite of indexes after five trading days, provided they pass the index's eligibility and investability screens. Previously, these screens included having at least 10% of shares qualifying as freely tradeable (known as float shares outstanding, or FSO). However, in April the methodology changed to allow stocks with either 10% FSO or approximately $3.3 billion in float-adjusted market capitalization to be eligible for index inclusion. The weighting of stocks in CRSP indexes is also based on free float, which should help address the investability challenges associated with thinly traded stocks.
* https://www.schwab.com/learn/story/some-indexes-accelerate-e...
There's no way they could have done that without telling those investors the S-1 was prepared and awaiting their signature on the round before they hit Submit, so to speak.
The extremely small float of these offerings will make index weights a rounding error.
Ask your LLM of choice to compare the likely value of shares to be held by index funds with the market cap of each of these companies.
Diversification doesn’t work if you throw in low quality investments you wouldn’t consider on their own. It just lowers returns.
If they really are a scam, their value will drop and they will be kicked out of the index. I still don’t understand how this means people will be “holding the bag”.
Additionally if you really believe that they are a scam and their price will fall you can just short the stock to completely neutralize their effect on your 401k.
Shorting (itself being a bad idea for regular investors) also breaks the mantra of passive investing, 401k or otherwise. It’s almost impossible to short right after IPO because of low float and high margin risk.
These mega IPOs are just using passive investors as backstop.
There's maybe, at best, 1% of the country even aware that this might be a problem.
If you're really worried and want to be conservative tell the portal you want to retire in 2030. That will allocate your investments to something conservative and you'll be more protected from a downturn. On the other hand, you'll also be equally protected from an upswing.
/not a financial advisor
Saying you as in any random person can protect themself from a group of dedicated experts who also have access to levers the common person can’t pull, is kind of not believable on its face.
[1] https://www.wheresyoured.at/anthropics-profitability-swindle...
So what could happen, any number of things. An obvious near term issue might be inflation increases dramatically in the US (on account of the oil shock), causing interest rates to increase - maybe dramatically - , which causes the stock market to retract. Also, the housing market is pretty much toast at the moment and an increase in interest rates might finish it off too causing a contraction there. So many ways things can break.
But honestly, I'll tell you after it happens and it will happen. Having lived through a few of these now when everyone tells you it's a sure thing and prices go up for ever you get an inkling you are near the pop.
Yes sure, but that statement contains zero information -- why do you believe it will end in a time short enough for the "market bubble" comments to even make sense?
External shocks -- sure of course. Inflation problems in US -- absolutely, it's a ticking time bomb with a debt crisis looming. Housing market I don't really know anything about but I'll take your word for it.
But all of this has been true for awhile, and could have been stated with equal veracity over the course of the last 5 years at least. Your beliefs shape your actions; so why does this belief shape actions any differently than it has earlier?
> ut honestly, I'll tell you after it happens and it will happen. Having lived through a few of these now when everyone tells you it's a sure thing and prices go up for ever you get an inkling you are near the pop.
Again totally true, I have also lived through them and expect more. But "these companies are IPO'ing because they know the market will pop" is kind of the thing that I was trying to address. For all the signals of market danger, there are plenty of optimistic signals all over the data. Growth is pretty robust across all sectors today.
Yes agreed. Coding is a pretty big industry though in and of itself. Same with healthcare, legal, etc etc etc. Of course we have zero model today that can seriously kill an industry, but if you look at (1) how good things are today (insanely fast and rapid adoption) and (2) robust performance trends from many complimentary sources, it's kind of inevitable and I haven't really heard a coherent steel man argument for why "killing whole industries" is somehow a far-fetched idea.
> still not profitable enough to make up for the costs of either training or the investments gifted away until it became profitable.
Regardless of the weeds of the economics today, you have a clearly valuable asset that at the very least already a must-have for enterprise and will become even more essential over time. There is token economics that either already do or will make sense. You will have some sort of marginal cost + profit margin that things will stabilize at. You can pay a premium for high quality frontier models. "But it costs more in R&D to fund this!" ok but then token costs will increase. Why is this some sort of death knell?
They don't only require "good enough to kill industries" (which is doubtful but certainly feasible), that's just step one. I think about it in terms of potential failure modes:
- if models don't reach worker-substitution levels, they fail
- if models reach that level, but it's too expensive to run and a worker's still cheaper, they fail
- if models reach that level, but the resulting tech is cheap enough to use, they fail (since open models can compete)
- If the models work but there's social rejection leading to regulation (due to mass unemployment for example), they fail
- if the models work but there are significant deal breakers (like a fundamental inability to keep them safeish to use) they fail.
So it's not really a single AI killer reason, it's more that the success case requires things to land in a very specific future where models work, and they're cheap enough, and expensive enough, and valuable enough, and exclusive enough, and safe enough, and...
Each "and" is a multiplier reducing their chances, and there's a ton or factors. Not imposible, but not where I'd put my money.
This also negates this whole like “you have to completely replace a human” fallacy. Why do you need to replace a human? Why not just increase the value each human brings you?
The model of open weights has been around for awhile. You have frontier labs releasing them. They are powerful and capable and track yet lag frontier models. Without massive government subsidies from probably China who did something similar with manufacturing I don’t get the idea of OSS somehow toppling the entire industry of frontier models. How would this happen? Did demand for frontier models drop after GPT-4? GPT-5? Because the cost of GPT-4 perf is maybe 100x cheaper today. You can always pay a premium for a better model (more data spend with proprietary data sources, more compute for training, more thinking budgets), and in the end, things will either go to a monopoly or prices will stabilize around the marginal costs.
Also safeguards are always important. They are thorny fundamental horrific problems and I can tell you there will be a hellscape of pain as people figure out the trivial ways to do bad things with some of the worst security practices we’ve seen. But I don’t get why this is a dealbreaker, we are using these systems everywhere and in loads bearing environments, today, and reliability and hallucination rates continue to increase / decrease.
0.15B is the full actively employed population of the US. 0.2 extra for the full EU, and we're barely making a third of the needed numbers, and this is assuming that the guy cleaning the street or the plumber will have a 100 bucks subscription just because - not to mention that a hundred bucks is 10-20% of median monthly income in many countries, even some EU ones.
You're asking for 3x Netflix subscribers at 4-10x Netflix price and with the whole world standardized at American prices (without American income).
Then add that this would very likely be a commodity market with competitors, so the billion, if existing, would be a market rather than a specific company's income.
The reason you are seeing a boom in IPOs versus 2023-25 is because a large portion of funds that are from the 2016-20 vintage are about to hit the 10 year mark when LPs need to be made whole.
This means you need to exit your investments either with an additional round, an acquisition, or (the most common approach for growth equity which is what series D and later rounds are) IPO.
The founders of Databricks and Stripe explicitly structured the terms of their later rounds such that they could remain private indefinetly if needed in return for operational control. Basically the "Rich versus Kings" [0] dichotomy
> Didn’t you say you wanted (sic) tour account deleted? Yet here you are
CCPA requires proof of identity for an account to be deleted, which I do not want to provide due to my professional network's overlap with YC. I'm waiting for HN's mod team to eventually ban my account and subsequently delete my comments like they did for a few others.
> Mate you’re full of it
If you're going to act hostile why don't you use your primary account instead of a throwaway?
[0] - https://www.hbs.edu/faculty/Pages/item.aspx?num=38550
[1]: https://www.sec.gov/Archives/edgar/data/1181412/000162828026...
Even SpaceX is not profitable because of Starship.
https://youtu.be/IHD8BDFYyGI
https://www.fool.com/investing/2026/05/29/spacexs-massive-ip...
365day lockup isn’t a universal standard. For example for SpaceX 20% of insider shares can be sold in the first few days. 100% within the first 3 months.
Without a public S-1 filing we don’t know what the lockup for Anthropic will be
Just because it's a bubble doesn't mean money can't be made.
If you're worried it and the risk involved, perhaps go from 100% equities (100/0) to an allocation that has some bonds (90/10, 80/20, etc). Rebalance as things get out of whack.
There are products that do this rebalancing for you: target-date funds that increase bond allocation as you get closer to retirement, or fixed-allocation all-in-one funds (VASGX, VSMGX; CA: VEQT/XEQT).
Having some bonds and rebalancing would have saved US domestic investors in the so-called Lost Decade of the '00s:
* https://www.forbes.com/sites/advisor/2010/09/13/its-not-real...
The bubble won't pop until these retirement accounts of have been raided.
NASDAQ changed its rules. Which I’m now 90% sure was a brilliant marketing move, given nobody followed that index until they did this.
In addition to the IPO, I expect there will be a lot of option and derivative services
SpaceX AI segment lost about $2.5B from operations in Q1 2026 on $818M revenue...they are burning dollars. Musk controls about 85% of voting power through supervoting shares, and cannot be fired...go IPO buyers...nothing like economic exposure without control....
Typically I just have my 401k in an index fund so that things have to become established before they're added. This seems like it's circumventing that, and I would be inclined to vote with my wallet. But everything around 401k index funds that I see are very opaque, so it's not totally clear to me how I would avoid this if I wanted to.
But I would strongly advise you to NOT DO THIS.
The above position makes it explicit that your thesis involves shorting a stock that could go through the roof in value. That emphasizes what a risk you're taking with your thesis. If your typical investment approach is to just buy index funds, then carry on just buying index funds and let the market do its work.
By the way, if SpaceX, Anthropic, OpenAI etc were to be excluded from the indices, then professional investors would just start a trade the inverse of the one I outlined above - i.e. they'd start shorting your index fund to the extent it was underweight in those companies, in order to profit off the exclusion of those tickers from it.
If you're in this for the long term (which I assume you are given this is your 401k), don't try to second-guess the market short-term.
Also, consumer staples are known for holding their ground during downturns.
But the general advice given is to accept that you probably can't beat the market so don't overthink it and just own the whole thing.
Also keep an eye on expense ratios. A lot of 401k providers gouge you on anything but the basic funds. So you'd have to beat the market by that much more.
Vanguard offers a bunch of ETFs so I can't exactly give you a solid answer.
One of their specific etfs (VTI) tracks the CRSP US Total Market index [1] which has its methodology described here [2] and looking at the "CRSP INVESTABILITY SCREEN SUMMARY" it sounds to me like SpaceX would be added to VTI after 5 days ("Seasoning of New Securities - 5 days or greater if satisfying the fast-track IPO rules".
[1]: "The Fund employs an indexing investment approach designed to track the performance of the CRSP US Total Market Index (the “Target Index”), which represents 100% of the investable U.S. stock market," https://personal1.vanguard.com/pub/Pdf/sp970.pdf
[2]: https://www.crsp.org/wp-content/uploads/guides/CRSP_Market_I...
The real competition is coming out of China right now and I doubt the Chinese government is going to let them buy out their "fast follower" AI companies that are consistently 6-12 months behind in terms of quality. That said, I'm factoring quality as in Opus 4.5/Sonnet 4.5/GPT-5.5 as break points since I haven't really seen an improvement since that point when using AI.
https://www.anthropic.com/research/2028-ai-leadership
They are already starting that now.
I wouldn't be one bit surprised if a rash of digital sovereignty movements in the near future hamper Chinese model adoption.
The downside of course, is that it is much much harder to go back to chopping wood once that furniture is all gone. Especially if all you ever knew was burning furniture.
A company consumed half a billion dollars worth of tokens in a month and nobody noticed anything until the bill came due.
Tha $500m dollars is roughly equivalent to 2000 people working for a year or 500 people working for four years, they can and would accomplish a lot if they worked in companies that add value to the economy by solving real problems.
Marketing only takes you so far in creating noise.
Its weird seeing this focus on bench marks again - PC's did this for quite some time. But in the end it came down to - what does all this additional horsepower let you do? Oh create interesting apps, multi-tasking etc. Which was really the value-add.
I'm responsible for AI roll out at a small business and we've had data science go over these things internally in terms of what results we get for 12+ months now. Its just my experience that is roughly the results we've seen using Deepseek, etc. and comparing cost/results vs. Anthropic/ChatGPT.
> A company consumed half a billion dollars worth of tokens in a month and nobody noticed anything until the bill came due.
It was sourced from one anonymous source. Its highly unlikely to be true in my view, but hey, you do you.
What? In what way would the change? They are already raising prices..
We don’t actually know if their business model is sustainable. If they were public we would have a better answer to this.
Sometimes I think that the endless cynicism around corporations that exists online is the real ploy by capitalists to keep people poor. It seems to be pretty damn effective at making people allergic to claiming their slice of the pie.
- ABNB right at around their IPO price. - Uber is 75% up… after 6 years. - SNOW came back to break even only after the recent surge.
Going public used to mean selling a portion of your company for the capital required to grow. Ideally John Q. Public buys stock, the company grows, and they can sell the stock for more money.
These companies already have the capital required to grow from private investment, and already grew; they're behemoths. The act of "going public" are those private investors using the public market to cash out their investment. The exponential growth the public buyers are expecting to see has most likely already happened.
The contents themselves contain a lot of detailed information about the internals of the company including financials, revenue, ownership details etc... those details are what's confidential until the SEC gives its approval, at which point the public can then review the document.
Welcome to 2012 [1].
[1] https://en.wikipedia.org/wiki/Form_S-1#:~:text=Under%20the%2...
† https://www.anthropic.com/news/series-h
How much bigger can they get when they’re already 1/5 the size of the world’s largest company?
It seems like the chance of retail making a killing on these IPOs like they did with Amazon (+2200x since IPO) or Nvidia are slim. The entire S&P is $60T.
Price setting.
Also filing an S-1 doesn't actually indicate that they intend to go public "immediately," it just gives them the option to go public (probably in the near future).
Would it crash other company stocks so that investors start selling and purchasing Anthropic shares, or how does it work?
As opposed to normal people trying to pick winning stocks?
* https://en.wikipedia.org/wiki/A_Random_Walk_Down_Wall_Street
Most stocks suck:
> We study long-run shareholder outcomes for over 64,000 global common stocks during the January 1990 to December 2020 period. We document that the majority, 55.2% of U.S. stocks and 57.4% of non-U.S. stocks, underperform one-month U.S. Treasury bills in terms of compound returns over the full sample. Focusing on aggregate shareholder outcomes, we find that the top-performing 2.4% of firms account for all of the $US 75.7 trillion in net global stock market wealth creation from 1990 to December 2020. Outside the US, 1.41% of firms account for the $US 30.7 trillion in net wealth creation.
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3710251
> Four out of every seven common stocks that have appeared in the CRSP database since 1926 have lifetime buy-and-hold returns less than one-month Treasuries. When stated in terms of lifetime dollar wealth creation, the best-performing four percent of listed companies explain the net gain for the entire U.S. stock market since 1926, as other stocks collectively matched Treasury bills. These results highlight the important role of positive skewness in the distribution of individual stock returns, attributable both to skewness in monthly returns and to the effects of compounding. The results help to explain why poorly-diversified active strategies most often underperform market averages.
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2900447
Further, over ten years, most individual stocks under perform a market index (even more so if stock was initially a top performer):
> […] Since 1926, the median ten-year return on individual U.S. stocks relative to the broad equity market is –7.9%, underperforming by 0.82% per year. For stocks that have been among the top 20% performers over the previous five years, the median ten-year market-adjusted return falls to –17.8%, underperforming by 1.94% per year. Since the end of World War II, the median ten-year market-adjusted return of recent winners has been negative for 93% of the time. The case for diversifying concentrated positions in individual stocks, particularly in recent market winners, is even stronger than most investors realize.
* https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4541122
Even with all these shenanigans, most people are better off sticking with index funds.
Past history cannot tell what happens next.
You probably also believe the markets are fully efficient and there is no insider trading ever.
Historically, it takes 6-12 months for the wider public market to determine the correct valuation.
That's why SpaceX, Anthropic, OpenAI are rushing to 15 days.
They know something bad will happen between 15 days and 6 months after IPO.
Some index funds have a very long horizon before they include them (e.g. a year). Others are "fast-tracked" (e.g. notably VTI). Most of those, however, are float-adjusted, so only the stock available for trade is considered part of the marketcap. So e.g. VTI / VTSAX will buy spacex relatively quickly after the IPO but at the float-adjusted weight of ~$75B because that's the % of stock available.
If you care alot about this, now is the time to understand how your index fund treats IPOs wrt to delays + float adjustment.
Specifically, I do a typical 3FP and own VTSAX, but I don't read bogleheads or anything. True set-it-and-forget-it, but I do want to read more if things are shifting.
VTSAX (and VTI) follow the CRSP index. This is float-adjusted but they likely will be fast tracked (these are two separate rules in how this index chooses to weight things and participate in new stocks). At ~5% float, these companies will be in the 50-100B range. So under all those assumptions, they'll be bought quickly but represent less than 1% of VTSAX (until they float more shares on the public market).
Plus as insider lockup periods expire, that's a ton of dollars pulled out of the market and into safer assets. It's going to be a huge net exit of capital.
I'd expect a lot of volatility and pretty heavy downward pressure across the rest of tech.
Of course IIRC they looking into tweaking the rules to allow some handpicked extremely unprofitable companies in, due to "reasons"....
Index funds all make active choices and often hold companies not in the original index. They are more passive than a traditional funds that buys and sells all the time, but they still make active choices. When an index changes stocks they can look up the price - but the funds mirroring the index need to make real trades that if not carefully done will change the value of the stocks (and cause the fund to under perform the index), so index funds have plans to prevent this. Compared to a traditional fund an index fund looks passive and there is much much less for the manager to do - but that doesn't mean the managers do nothing.
I do think Anthropic's business has very good long-term prospects, but the current run rates are not sustainable and they know it which is why they, more than OpenAI, are under higher pressure to IPO. Some things to consider:
1. This was surprising to me, but enterprises Claude Code (and Codex) plans are billed on token usage at API rates. I was expecting lower rates for volume subscriptions. This explains their huge spike in ARR, but I expect competitive pressures will soon come into play, especially as companies start to get more budget-conscious. Specifically...
2. Tokenmaxxing is finally encountering the inevitable pushback. My theory is it was an effort to incentivize devs to experiment and figure out ways to get productive with AI by throwing money at the problem, which was always going to be a short-term dynamic. Companies are going to be much more intentional about token budgets (especially as Anthropic is apparently now asking for volume commitments for enterprise plans.) Smaller, open-weight models may start looking much more attractive.
3. I've said before but I think Anthropic severely underestimated their own popularity and corresponding demand for compute and has to enter costly deals to acquire capacity to keep Claude's 9's above GitHub's, even as they alienated customers with short term tweaks to optimize usage. These deals will eat into their margins and Claude's problems likely pushed customers to competitors, the effects of which could take time to be more evident.
So maybe whatever looks good on their financials right now is time-limited, and the current boost may start petering out at some point, which may influence when OpenAI files their own IPO.
I just hope pension funds and other long-term investors don’t end up buying into them.
The document itself is what's confidential until the SEC approves it, at which point Anthropic will release that document to the public and IPO.
Better to do it now than to wait a day longer and the tokens are not getting any cheaper here.
Obviously OpenAI will file for IPO certainly this month, or even this week in response both SpaceX, and Anthropic.
Then AGI will then have been achieved externally.
[0] https://news.ycombinator.com/item?id=48313390
actual consultation link
"The stock market just did something eerily similar to the dot-com bubble top in 2000" - https://www.cnbc.com/2026/06/01/the-stock-market-just-did-so...
And you can consistently beat the market as long as passive index investors believe in efficient markets.
post your position for all to see if you're so confident. Time in market is way better than timing the market. I'd rather ride through a downturn, buying at the same pace i always do, and come out the other side than try to time it. Been there done that and i got burned every time.
I've seen this comment on HN at least 5 times already.
It's just a standard/template that most companies reuse.
https://www.figma.com/blog/s1-confidential-submission
https://www.prnewswire.com/news-releases/gemini-announces-co...
https://investors.navan.com/news-releases/news-release-detai...
https://www.round1-group.co.jp/docs/pdf/2026/20260507_news_e...
It's a required public disclosure following a format traditionally used in mandatory public disclosures.
It’s a classic tactic. If you are unable to show real data (why?), then just give as little information as possible so that people can just fill in the gaps based on their own biases.
I mean, look at the way Mythos was announced…too dangerous to release outside of select customers, but they’ve announced they’re adding Mythos capabilities now, so I guess the danger has passed? What changed? What risk mitigations have taken place?