Can the stockmarket swallow Anthropic, SpaceX and OpenAI?
The Economist asks if the stock market can absorb the colossal IPOs of Anthropic, SpaceX, and OpenAI, sparking a contentious debate on Hacker News. Commenters dissect soaring valuations, alleged rule changes forcing index fund inclusion, and the broader societal implications of unprecedented capital flow into these tech giants. The discussion questions market legitimacy, future profitability, and whether innovation truly translates to widespread public benefit.
The Lowdown
An article from The Economist poses a provocative question: can the stock market truly accommodate the massive initial public offerings anticipated from tech behemoths like Anthropic, SpaceX, and OpenAI? The underlying concern is whether the market has the appetite and capacity to absorb companies valued in the hundreds of billions, or even trillions, without creating instability or further distorting valuations.
Hacker News discussion, often extrapolating from the article's premise (due to a paywall), delved into several key areas:
- Exorbitant Valuations: Many commenters expressed astonishment at the projected valuations, particularly for AI companies like Anthropic, comparing them to historical tech giants like Google at their IPOs. The debate centered on whether current revenue and growth rates justify such figures, with some noting Anthropic's rapid revenue increase but others questioning its long-term defensibility and GAAP profitability.
- Index Fund Influence: A significant portion of the discussion revolved around alleged rule changes by index providers (like Nasdaq and FTSE Russell, with potential changes from S&P 500) to fast-track these companies into major indices. This move, critics argued, would force passive 401k and retirement funds to buy these stocks at IPO valuations, effectively creating a captive buyer base and transferring wealth from ordinary investors to early shareholders.
- Sustainability of AI and SpaceX: Skepticism was voiced regarding the long-term profitability of AI companies, citing the rapid depreciation of GPU assets and the emergence of open-weight models as potential threats to their moats. SpaceX's valuation was scrutinized, with questions about its profitability beyond Starlink and the integration of xAI, which some deemed a drain on resources. Others countered by highlighting SpaceX's revolutionary cost-cutting in space access and AI's demonstrated benefits.
The overall sentiment on Hacker News highlighted a deep concern over market integrity and fairness, with many viewing the situation as a potential "pump and dump" scheme, while others emphasized the transformative potential of these technologies.
The Gossip
Forced Funds and Fast-Tracked Firms
A dominant theme revolved around allegations that index providers are altering rules to ensure Anthropic, SpaceX, and OpenAI are quickly included in major indices like the Nasdaq 100, and potentially the S&P 500. This practice would compel trillions in passive 401k and retirement funds to purchase these companies' stocks at IPO valuations. Many commenters decried this as "disgusting corruption" and a direct wealth transfer, questioning the legitimacy of a market where safeguards meant to protect passive investors are waived. While some pointed out that the actual forced allocation might be a small percentage of overall index funds, the principle of rule manipulation for private gain was a major point of contention.
Valuation Volatility and Bubble Beliefs
Commenters fiercely debated whether the projected multi-trillion dollar valuations for these companies are justified or indicative of an impending market bubble. Some argued that Anthropic's massive revenue growth and high revenue multiples, while seemingly insane, are not unprecedented for rapidly scaling tech. Others countered that these valuations are speculative, drawing parallels to past bubbles (dot-com, housing) and highlighting concerns about AI profitability, the depreciating value of GPU assets, and the competitive landscape with open-source models. The consensus was mixed, with many acknowledging the market's irrationality but differing on whether a sharp 'pop' or a gradual stagnation is more likely.
Societal Value vs. Stock Market Swell
A recurring philosophical question emerged: do these massive company valuations and technological advancements genuinely improve the quality of life for the average person? Critics questioned the tangible benefits, arguing that wealth concentration and "more crap" are the primary outcomes, leading to increased inequality. Conversely, proponents highlighted real-world impacts like Starlink's cheaper and more accessible connectivity, AI's role in scientific discovery and medical diagnostics, and enhanced personal productivity through LLMs. This debate underscored a tension between financial metrics and perceived societal utility, with some lamenting that the stock market is disconnected from the needs of the general populace.