The SpaceX IPO drama explained

Summary

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Episode Overview

Title: The SpaceX IPO Drama Explained
Podcast: The Indicator from Planet Money (NPR)
Date: June 11, 2026

This episode unpacks the highly anticipated SpaceX IPO—expected to be the largest in history—and delves into recent changes in Nasdaq's rules that have significant implications for how SpaceX (and future tech giants) will be valued and added to major stock indexes. Hosts Ricky Mulvey and Darian Woods, joined by Alex Muturi (former CEO of S&P Dow Jones Indices) and Campbell Harvey (Duke finance professor), break down what these changes mean for investors and the broader market.

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Key Discussion Points & Insights

1. SpaceX’s Unique IPO (02:09–03:21)

• Small slice going public: SpaceX is only offering around 4% of its shares. The majority remains with Elon Musk, employees, and private investors.
• Changing motives for IPOs:
  • IPOs used to primarily raise capital for growth. Now, companies like SpaceX use IPOs for early investors and employees to cash out and to determine a market price.
  • Alex Muturi:

    "So for them, coming public isn't necessarily to raise new capital. It's a way to monetize their shares, give their internal shareholders, employees and such early investors a way to start liquidating some of it and putting a true price on the value of their company." (03:03)

2. Nasdaq’s New Rules and the SpaceX Advantage (03:35–04:46)

• Speeding up inclusion:
  • The Nasdaq now allows companies to be added to the NASDAQ 100 in as little as three weeks, rather than waiting for an annual update.
  • Darian Woods:

    "The Nasdaq threw that out. Now a new company can join the NASDAQ 100 in as little as three weeks. No need to wait for the annual meeting." (04:31)

• These rules were adjusted just before the SpaceX IPO, likely increasing demand and visibility for SpaceX shares.

3. Critique from Index Experts (04:46–06:09)

• Need for a cooling-off period:
  • Alex Muturi warns that IPOs are typically volatile (“like a fussy newborn”), and a waiting period helps establish a ‘steady state.’
  • Alex Muturi:

    "If you look at most IPOs, and this one's probably no exception, you know, you get a lot of dislocations early on, right? The price runs up, it collapses. You want to get to a point where there's a lot of more steady state." (05:02)

4. The “Free Float” Rule Change—Math Upside Down (06:09–07:47)

• What is free float?
  The percentage of a company's shares available for public trading (only 4% for SpaceX).

• New logic:
  Now, Nasdaq will treat SpaceX as if three times that amount is available—i.e., weighing it at 12% instead of 4% for index inclusion, which artificially boosts the required demand from index investors.

  • Campbell Harvey:

    "The most important rule change was the so called free float...So you multiply by three and you get 12%. So what this will do is increase the demand by the index investors because they need to match that 12% rather than 4%." (06:09–06:45)

• Impact:
  This creates a scenario where index funds must buy more stock than actually exists on the market, likely pushing prices much higher, especially in the early days.

• Campbell Harvey:

  "What will that do? That will increase the price, and by the time the retail investor gets into the market, the price will be inflated by this demand." (07:47)

5. Potential Risk to Retail Investors (08:07–09:12)

• Structural flaws:
  Campbell Harvey argues Nasdaq’s methodology is fundamentally flawed and that public indices should reflect only shares the public can actually buy.
• Retail investors left behind:
  Most retail investors have been shut out of the explosive value growth of tech giants like SpaceX, as only rich, “accredited” investors have had early access.
  • Campbell Harvey:

    "So if you're rich, you get the opportunity to, number one, diversify your portfolio, which we all want to do. And number two, you're able to get in early." (09:12)

6. Big Picture: Who Benefits from Tech Growth? (09:24–09:42)

• The hosts reflect on the broader challenge: How can regular people participate in the wealth generated by fast-growing private tech firms and new AI leaders?

  • Darian Woods:

    "So one question is how can regular people benefit from the growth of massive private companies, especially in the age of AI?" (09:24)

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Notable Quotes & Memorable Moments

• Ricky Mulvey (on index math):

  "Is this index methodology? Is it gaslighting? Is this podcast really 30 minutes long? Can I run a three minute mile?" (07:19)

• Darian Woods:

  "Do numbers mean anything?" (07:25)

• Campbell Harvey (on getting to talk about something other than the yield curve):

  "The yield curve is only one of my research ideas. It's the most popular in the media, but amongst academics it's number 21." (05:52)

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Important Timestamps

• 02:09 — How much of SpaceX is going public
• 03:03 — Why companies like SpaceX go public now
• 04:19 — Nasdaq’s rule change for speedy index inclusion
• 05:02 — IPO volatility explained
• 06:09 — Campbell Harvey critiques index math and ‘free float’
• 06:45 — How index methodology will impact demand
• 07:47 — Impact on price and risk to late/inexperienced investors
• 09:12 — Private vs. public access to tech growth

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Summary

This episode offers a sharp, concise breakdown of why SpaceX’s IPO is historic—not just for its size, but because of unusual new rules that bend the math behind major stock indexes. These changes are likely to supercharge demand for the small percentage of SpaceX shares available to the public, potentially driving prices up and possibly squeezing out average investors. Experts argue this highlights deeper problems with how tech wealth is being created—and who gets to benefit.

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If you want to learn more about the implications of AI wealth and proposals like an "AI dividend," check out the show’s previous episode, as noted by the hosts (09:42).

Transcript

[Alex Muturi]

Npr.

[Ricky Mulvey]

SpaceX is preparing to go public later this week. The debut will mint SpaceX is one of the largest companies in the world. It will be the biggest initial public offering or IPO ever.

[Darian Woods]

This big splash in the markets leads to some big questions like will this company really extend human consciousness beyond Earth?

[Ricky Mulvey]

And more earthly questions like is SpaceX receiving special treatment from its stock exchange? That's the question we're focusing on. This is the indicator from Planet Money. I'm Ricky Mulvey.

[Darian Woods]

And I'm Darian Woods. Today on the show, we're looking at the SpaceX IPO and a rule change that turns math upside down. One now apparently equals three.

[Ricky Mulvey]

We promise you don't have to do math. We've got all of it after the break.

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[Alex Muturi]

You can.

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[Ricky Mulvey]

spaceX stock is hitting public markets, or really a sliver of the company is hitting public markets. SpaceX is offering about 4% of its shares in its IPO.

[Darian Woods]

The rest of the company is still owned beyond the reach of the public by Elon Musk, SpaceX employees and private private investors.

[Ricky Mulvey]

Alex Muturi is the former CEO of S& P Dow Jones Indices. You may own a piece of that company's hit index, the S&P 500. Alex says the reasons why a company goes public has changed.

[Alex Muturi]

Historically, IPOs were a way of raising capital. So when a company went public, they're much, much smaller.

[Darian Woods]

An IPO has always been a way to cash out earlier investors. But companies used to issue public stock to build factories and expand their businesses.

[Ricky Mulvey]

Now companies like SpaceX can grow into trillion dollar behemoths with private dollars.

[Alex Muturi]

So for them, coming public isn't necessarily to raise new capital. It's a way to monetize their shares, give their internal shareholders, employees and such early investors a way to start liquidating some of it and putting a true price on the value of their company.

[Darian Woods]

SpaceX doesn't need your retirement money to build its next rocket, but this gives early investors the chance to cash out.

[Ricky Mulvey]

And the company is offering up a little bit of ownership to the public to find a price for the whole thing.

[Darian Woods]

Now, the Nasdaq just changed its rules on how it adds companies to its index, the NASDAQ 100. It's mostly a collection of big tech companies that trade on the exchange. SpaceX is expected to join this club.

[Ricky Mulvey]

These rules came into being just a month before the SpaceX IPO. And it's no secret these rule changes will increase the demand for SpaceX stock.

[Darian Woods]

Elon Musk is a very special person who gets special rules.

[Ricky Mulvey]

Absolutely. Darian and other companies like OpenAI and Anthropic will likely benefit from these rule changes if they go public.

[Darian Woods]

The first rule change is that the Nasdaq dramatically reduced the time it takes for a big company to enter the index of its 100 largest companies.

[Ricky Mulvey]

Previously, the Nasdaq added and deleted companies from its top 100 index once per year. If a new company wanted to join the club, it had to trade for at least a few months.

[Darian Woods]

The Nasdaq threw that out. Now a new company can join the NASDAQ 100 in as little as three weeks. No need to wait for the annual meeting.

[Ricky Mulvey]

The S&P 500 has not changed its rules on letting companies into its S&P 500 Club.

[Darian Woods]

Former CEO Alex Maturi says there's a reason for a waiting period. Stocks bounce up and down a lot just after they go public, and the stock is kind of like a fussy newborn. He thinks that the Nasdaq isn't giving SpaceX enough time to settle down.

[Alex Muturi]

If you look at most IPOs, and this one's probably no exception, you know, you get a lot of dislocations early on, right? The price runs up, it collapses. You want to get to a point where there's a lot of more steady state.

[Ricky Mulvey]

So the first concern is that SpaceX, then other big IPOs will be rushed into the Nasdaq 100 club before they settle down.

[Campbell Harvey]

But that's not the most important real change.

[Darian Woods]

I would recognise that voice from a mile away. Campbell Harvey, the finance professor at Duke University, the economist who figured out that the treasury yield curve could help predict recessions.

[Ricky Mulvey]

And yes, we've called him a few times to talk about the yield curve. It's one of Campbell's claims to economic fame. How happy are you to get a call to discuss an economic topic other than the yield curve?

[Campbell Harvey]

I'm very happy about that. So the yield curve is only one of my research ideas. It's the most popular in the media, but amongst academics it's number 21.

[Darian Woods]

His beef is with how the NASDAQ now counts the size of the companies in its index.

[Campbell Harvey]

The most important rule change was the so called free float.

[Ricky Mulvey]

Free float just means how much of this company is available for sale to the general public.

[Darian Woods]

The float for SpaceX is 4% of the company. This means that investors can only trade 4% of SpaceX on public markets. But the NASDAQ is saying that percentage doesn't really represent the size of the company for its index.

[Ricky Mulvey]

Instead, when SpaceX is added to the Nasdaq 100, it will weigh the company as if three times the number of shares are available for sale.

[Campbell Harvey]

So you multiply by three and you get 12%. So what this will do is increase the demand by the index investors because they need to match that 12% rather than 4%.

[Darian Woods]

So what does this mean? Think of an index fund like a mutual fund, where you have lots of stocks altogether. So these funds that just track the index will have to buy SpaceX stock as if the company offered triple the number of shares than they actually did.

[Ricky Mulvey]

Is this index methodology? Is it gaslighting? Is this podcast really 30 minutes long? Can I run a three minute mile?

[Darian Woods]

Do numbers mean anything?

[Ricky Mulvey]

This imbalance won't last forever. Some SpaceX employees will be allowed to sell their shares over time, so more will come public.

[Darian Woods]

But still, these rules can create a mechanical imbalance. Campbell estimates that half of the demand for SpaceX shares will come from those investors and funds having to pretend that 4% is really 12%.

[Campbell Harvey]

What will that do? That will increase the price, and by the time the retail investor gets into the market, the price will be inflated by this demand.

[Ricky Mulvey]

In a public statement, the Nasdaq says the new rules are an improvement on the old system, which could have forced index funds to buy even more stock after big IPOs.

[Darian Woods]

But Campbell says the whole NASDAQ index has a fundamental flaw. It should only value companies based on the value of shares available to the public. In this case, four.

[Ricky Mulvey]

So to summarize, the NASDAQ is quickly adding new companies to its index during a volatile time. Simultaneously, it's saying that big companies that offer a small slice of ownership to the public will be represented as if they are offering triple the number of shares. This could create a demand storm.

[Darian Woods]

By the way, we did reach out to NASDAQ multiple times via email and on the phone, but they would not offer a recorded interview. We also asked them if these new rules will help or harm retail investors, and we did not get an answer.

[Ricky Mulvey]

Campbell believes this story highlights a bigger problem. See, retail investors haven't been able to participate in the growth of massive tech companies like SpaceX. The company stayed private while its value skyrocketed. The only people outside these companies who can buy shares, they're called accredited investors. That basically means you make a lot of money or you're a millionaire.

[Campbell Harvey]

So if you're rich, you get the opportunity to, number one, diversify your portfolio, which we all want to do. And number two, you're able to get in early.

[Darian Woods]

So one question is how can regular people benefit from the growth of massive private companies, especially in the age of AI?

[Ricky Mulvey]

You know, maybe Gemini or ChatGPT can figure it out.

[Darian Woods]

Hey, you forgot about Grok Elon Musk's AI man.

[Ricky Mulvey]

That'd be a good one too.

[Darian Woods]

By the way, if you want to learn more about growing AI wealth and proposals to tax AI that aim to benefit regular people, check out yesterday's episode about an AI dividend. This episode was produced by Julia Ritchie with engineering by Maggie Luther. It was fact checked by Emma Ferrara. Cagan Cannon edits the show and the indicator is a production of N

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