SpaceX IPO Could Create ‘The Biggest Short Squeeze’ of All Time on Index Funds. Here’s How That Happens.

The operation sounds astir impossible: a abbreviated compression involving scale funds. After all, scale funds are designed to beryllium passive, rules-based buyers, not progressive traders caught connected the incorrect broadside of a position. Yet that is precisely the script Animal Spirits hosts Michael Batnick and Ben Carlson laid retired connected Episode 467, "The Biggest Short Squeeze of All-Time," citing Bloomberg columnist Matt Levine. With SpaceX targeting a June 12, 2026, NASDAQ debut nether ticker SPCX astatine a $1.75 to $1.8 trillion valuation, the mechanics are astir to beryllium tested successful public.

How SpaceX Could Force Index Funds to Buy astatine Any Price

Levine's "maximally cynical approach" works similar this. A institution could "do an IPO, merchantability similar 1 stock of banal to the astir ardent imaginable Elon Musk instrumentality plus manager astatine a $2 trillion valuation," fastener up everything else, and hold for scale inclusion to bash the rest. Once the banal qualifies for a large benchmark, each money tracking that benchmark has to ain it.

Forced buyers gathering a deliberately scarce interval nutrient 1 outcome: "You person efficaciously created a abbreviated compression for the scale funds. They person to bargain banal astatine immoderate price, and determination isn't capable banal for them to buy."

SpaceX's S-1 makes the interval mathematics credible. SpaceX's filing confirms a 366-day lock-up covering 100% of the Founder's shares and those of important investors, underwritten by Goldman Sachs. That is the mechanical ground for a banal that trades bladed and affluent for implicit a year.

Why the Short-Squeeze Theory May Be Overstated

Bloomberg Intelligence puts the existent passive request astatine astir $20 billion, astir a 4th of the $75 billion raise. Under float-adjusted scale rules, SpaceX would slot successful astir the 195th position successful the S&P 500, adjacent Amgen and Gilead, alternatively than adjacent the top.

That examination offers utile context. Amgen (NASDAQ:AMGN) carries a marketplace headdress of astir $182.5 billion with a trailing P/E of 23. Gilead Sciences (NASDAQ:GILD) has a marketplace headdress of astir $160 billion and a trailing P/E of 17. Neither moves the scale overmuch connected its own, and a float-adjusted SpaceX entering adjacent that fertile would not stroke up SPY's apical ten. Carlson's view, that excluding the top-15 names from cap-weighted indexes "would beryllium bizarre," reflects however scale providers person agelong handled this.