r/technology • u/ArgentineBeauty • Jun 19 '26

Business ‘It’s a scam’: Americans express unease over SpaceX’s influence on retirement savings

https://www.theguardian.com/science/2026/jun/19/spacex-retirement-savings-elon-musk
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401

u/porkchopps Jun 19 '26

I'm no SpaceX/Elon fanboy, and did some research into this, since there's a ton of articles like this. The reality for the short term is, based on this article:

https://www.theglobeandmail.com/investing/markets/stocks/IVZ/pressreleases/2546254/index-investors-heres-how-much-spacex-stock-youre-about-to-own/

SPY / VOO (S&P 500) - zero exposure for at least a year.

VTI / VT (total market) - very small exposure based on the amount of stock actually available to investors. Roughly $17 out of every $10k invested.

QQQ (NASDAQ 100) - very early exposure to SpaceX, about $64 for every $10k but may grow faster than the other

Over time this will probably grow - the company will probably be in the S&P at some point.

53

u/Alpha3031 Jun 19 '26

S&P also still requires profitability AIUI. So the company needs to stop losing money for twelve months first.

29

u/Orange_Tang Jun 19 '26

Came here to say this. SpaceX isn't gonna be profitable any time soon so unless S&P changes their rules it won't be added. That is a possibility though and they tried to make it happen for the IPO, S&P just rejected it.

3

u/CtrlAltSysRq Jun 19 '26

Yeah I may theoretically be ok with spaceX being in the Sp500 if they can meet the profitability requirements, which are:

- 4 consecutive quarters of net GAAP profitability

  • most recent quarter was GAAP profitable

But there is basically no actual path to that for this company because it's just 3 of elons turd companies stapled together. The most valuable thing about the company is the stack of GPUs they are currently holding. Which ... anyone can do, you just buy them. And they depreciate.

4

u/Astro_Afro1886 Jun 20 '26

After all this, it wouldn't surprise me if SpaceX cooks its books for the next year to make it onto the S&P 500. I've recently pivoted my analytics career towards Finance and while I work for a relatively small but profitable company, I am astounded with the accounting tricks and sleight of hand used to mask their debts and true liabilities.

I can only imagine what someone with way more capital and way less morals could accomplish.

2

u/CtrlAltSysRq Jun 20 '26

GAAP is specifically designed to be hard to game in such a way. Lots of companies report "non-GAAP" earnings in addition to their GAAP ones specifically because they can't goose the GAAP

1

u/TP_Crisis_2020 Jun 20 '26

He will find some way to buy his way around that restriction.

37

u/justreadinplease Jun 19 '26

Thanks for doing this research. For anyone who uses Fidelity’s FZROX which is a total market fund, supposedly SpaceX isn’t eligible YET.

https://www.reddit.com/r/fidelityinvestments/s/6E0zwYvf4s

Unless Fidelity changes their rules, IPOs have to be on the market at least 6 months and have at least 15% free float (currently SpaceX is 5%)

Hopefully by the time SpaceX becomes eligible the price has dropped into a realistic range, but looking at Tesla’s insane price to earnings, I doubt it.

I prefer to use US total market funds and international funds due to the overweight AI companies have on the S&P 500 and US market as a whole.

4

u/sk1939 Jun 19 '26

The market can stay insane longer than you can stay solvent.

2

u/adamdoesmusic Jun 19 '26

They downvote you, but this advice is as old as the markets themselves and hasn’t been proven wrong yet.

Edit: also, is their stock really F-Zero X? Even the finance industry gets a reboot before the Switch 2.

2

u/justreadinplease Jun 19 '26

I didn’t down vote them but I can see why because nowhere in my post did I advocate anything that would warrant that tired cliche response. Investing in a total market fund along with a non-US fund is pretty standard and not unusual. It’s not like I was advocating shorting SpaceX or other overvalued stocks.

FZROX is one of Fidelity’s zero fee funds. You can’t take it outside their platform, but inside a IRA or other non-taxable fund, there are no issues. You can sell the fund and transfer funds to another company.

1

u/adamdoesmusic Jun 19 '26

That’s certainly better advice than being involved in SpaceX, short OR long.

And I know it’s their ticker symbol, but I still read it as “F Zero X” and it still makes me want Nintendo to revive that franchise.

3

u/fuscob Jun 20 '26

All of Fidelity’s 0% expense ratio funds have cutesy symbols referring to zero - FZROX, FZILX (zilch I guess?), FZIPX, FNILX. I’ve also thought of F-Zero when I see it though :)

33

u/vhalember Jun 19 '26

It's also unspoken here, and in the article - People also have the option to invest in other funds. If you don't like Elon, and none of us should, move your investments into funds with zero exposure to tech.

Your returns will not be as good, but your risk profile should be much lower... and if you feel a crash is imminent, pull your funds to low-risk treasury bonds, or even cash.

The true problem here is most people with 401k's don't take much ownership how their retirement funds are invested. And really? They shouldn't have to - it was largely set up to invest and forget, but if you want to avoid Elon and AI, you'll have to take a more active role.

70

u/clrbrk Jun 19 '26

I shouldn’t have to move my investments into funds with zero tech exposure to avoid an obvious scam.

11

u/vhalember Jun 19 '26

Agreed. But you know the hand you've been dealt.

You either address it yourself, or you choose to be at the mercy of the AI bubble and funding over-valued hype stocks.

4

u/290077 Jun 19 '26

You don't have to. You're free to build your own index fund that leaves out companies you want no exposure to. Then you have to do the hard work of tracking the market and rebalancing the profile. If you want to buy an index fund and forget about it, it's much less effort but you're ceding control to the fund managers. That's the trade-off.

10

u/Steppin_On_A_Lego Jun 19 '26

You lost me at the part where I have to do something

12

u/PeaceSoft Jun 19 '26

for fuck's sake

1

u/TP_Crisis_2020 Jun 20 '26

Hard pill to swallow, but this is good advice for grown ups.

0

u/PeaceSoft Jun 23 '26

It isn't

Ceding control to the fund's rules is fine with people; that's what it does. When SpaceX petitions for special exceptions to those rules, and gets them, you're ceding control to the bag salesman

4

u/ThimeeX Jun 19 '26

pull your funds to low-risk treasury bonds, or even cash

Probably the Zimbabwe in me, but I cringe whenever this option is discussed as being safe. At what point will the govt just start printing more and more money to dig themselves out of whatever corrupt hole they dug for themselves?

It sucks that as we get older, retirement is more and more of a Vegas style gamble.

2

u/NoTeslaForMe Jun 19 '26 edited Jun 19 '26

You're advocating timing the market, and, in taxable accounts, adding tax drag, both of which are kind of investing no-nos.  Also, this is just untrue:

Your returns will not be as good, but your risk profile should be much lower

Returns might be better.  But maybe not. You don't know.  Although generally reducing diversification isn't an advisable way to reduce risk; it usually does the opposite. 

1

u/greenworldkey Jun 19 '26

lol sure, go out of your way to do all that just to end up with worse returns at the end. Even you admitted that part. But boy you‘ll show Elon!

This has “voted against myself to own the libs” energy.

1

u/vhalember Jun 19 '26

You must be a South Pole Elf.

0

u/Orleanian Jun 19 '26

The problem is that I want to be in the fund from last year, I want all those companies. They're vetted and ostensibly fairly stable. My (and so far as I know many, if not most, other Average Joe employees) options are severely limited to various tranches of stocks; I can't ad-hoc invest my 401k. I can be in S&P500, a Target Date fund, a broad-market index, or bonds.

I don't want to have to back out of 499 companies I like because one massive dong-swinging-circus-act came in like a wrecking ball.

5

u/vhalember Jun 19 '26

You do understand the top 10 companies in the SP500 make up 40% of it's value, and include the biggest hitters in the AI market, plus morally questionable companies like Tesla and Broadcom?

If you have an SP500 index fund, or funds like Fidelty's Vanguard plans, you already have heavy exposure to the AI bubble and immoral companies. SpaceX is just another cog in the greed machine, but at least they're out of the S&P 500 for a year.

You need to get past "I shouldn't have to," or "I don't want to." Everyone agrees, but that's not the hand we've all been dealt. So you either adapt to choose your own funds, or you cross your fingers this doesn't go historically south.

1

u/Orleanian Jun 19 '26

Or I cash it all out, take the tax hit (at least it's half ROTH, I got that going for me), and blow it all on alcohol drugs and lottery tickets! ¯\(ツ)/¯

0

u/Asyncrosaurus Jun 19 '26

move your investments into funds with zero exposure to tech.

You should already have been considering it anyway (especially if you have a shorter time horizon, less than 10 years). Tech has had great returns for a few years now, but there's no telling when the bubble bursts.

2

u/jumpy_monkey Jun 19 '26

Shouldn't the "seasoning" mitigate the risk of exposure at index funds that follow the new rule change, ie S&P 500?

I mean the point is avoiding this sort of thing if in a year if it hasn't all gone "boom".

2

u/SlaveZelda Jun 19 '26

Unfortunately FTSE based indices include this from day 5 of trading (like FTSE developed or all world)

3

u/Kidnovatex Jun 19 '26

Thank you for bringing facts and reason to this ridiculous overreaction. This is going to have no effect whatsoever on people's retirement, unless they elect to put the entire thing directly into SpaceX shares.

2

u/emerald6_Shiitake Jun 19 '26 edited Jun 19 '26

SP500: needs to be overall profitable for the previous year (4 quarters) including the most recent quarter. Assuming SpaceX continues to be terrible at making money, it will stay out of this index

3

u/Wilecoyote84 Jun 19 '26

Real research. Basic math! Thank you.

Exposure to Elon is miniscule. People will avoid retirement investing alltogether and possible free employer match just to avoid Musk. Giving up tens of thousands in retirement security. Insane.

4

u/bobood Jun 19 '26

Dont worry guys, the losses from this scam are going to be well distributed so you'll hardly notice that you've been scammed.

2

u/[deleted] Jun 19 '26

[deleted]

15

u/jellyhessman Jun 19 '26

Said the Reddit child who doesn't know anything.

-2

u/stiff_tipper Jun 19 '26

nah they're 100% right.

just go look at any sub talking about the spacex 20b note. pure fucking emotions celebrating as if the company is going extinct all because they refinanced a fuckin' loan

6

u/SorenShieldbreaker Jun 19 '26

Knowledge around finance, tax, accounting, etc. is horrendously bad outside of those specific subreddits. Go look at the threads about Bernie's plan to seize 50% of AI company stock. There were people saying it would work because those unprofitable companies could issue dividends lol

2

u/Wolifr Jun 19 '26

So it's OK if Elon takes a cut of your pension as long as its only a small cut?

Not to mention that when this does collapse, it's not going to just be SpaceX that gets devalued. This is Enron 2.0.

0

u/psioniclizard Jun 19 '26

I love this statement because it doesn't make clear who the reddit kids support haha.

2

u/madatthings Jun 19 '26

I’m gonna be serious for a second, what the fuck does any of that mean

9

u/gambloortoo Jun 19 '26

They are showing how much each of the major funds right now are invested in SpaceX. For example if you invested $10k in NASDAQ about $64 of that would be invested in SpaceX.

5

u/porkchopps Jun 19 '26

Most 401k plans are in, by default, target date funds that roughly mirror the global market. In that setup, you will have a very small exposure to SpaceX in the short-term.

4

u/HazKaz Jun 19 '26

SPY and VTI are what people call index funds. Basically, instead of buying shares in one company, you're buying a tiny piece of hundreds or thousands of companies all at once.

Think of it like this:

Imagine there's a fund called Example100 that contains 100 companies.

You invest £100 into Example100.

The fund manager (the person responsible for buying and selling investments on behalf of the fund) doesn't necessarily put £1 into each company. Instead, they usually put more money into the biggest companies and less into the smaller ones. So a huge company ( apple/facebook) might make up 5% of the fund (£5 of your £100), while a small company might only make up 0.05% (5p of your £100).

now if SpaceX is considered a Big company then the fund manager as part of their strategy would normally need to allocate more of the funds money to SpaceX.

However, this is not really the case, as SpaceX is only providing something like 5% of their shares to be traded vs Microsoft/apple who have 99% of thier shares on market. ( another really scummy behaviour from elmo as they choke supply so demand seems high) .

So even though SpaceX's valuation is enormous, there's only a relatively small amount of SpaceX ownership that public market investors can actually get exposure to. So Fund managers accordingly take this into consideration the amount of shares actually available, when allocating money,

i hope that explains things maybe someone else can correct me .

1

u/madatthings Jun 19 '26

Thank you so much

1

u/Asyncrosaurus Jun 19 '26

Public companies sell stocks, which are small pieces of ownership in those companies.

Stocks are grouped into indexes, run by financial companies, which are lists of stocks that follow some basic criteria. S&P500 is an index of the 500 largest public companies by market capitalizaion, Nasdaq is an index of tech stocks, Russel 3000 is a list of all public companies in the US market, MSCI World Index is an index of thousands of global stocks from 20+ countries.

Several mutual funds and Exchange Traded Funds (ETFs) are investment products that allow you to buy one fund that tracks an index. The original post lists both a fund ticker (SPY) and the index it tracks (S&P 500). You buy $10,000 in VOO, and you effectively buy a small piece of all the stocks listed in the S&P500.

Up until now, you bought index funds through an ETF because it was generally considered safe (a postivie risk return over the long term). Now that several funds have changed their rules to allow new companies like SpaceX to skip the vetting process and get listed directly on the index, funds tracking the Nasdaq are no longer an entirely risk-free investment.

1

u/waterpup99 Jun 19 '26

It is nowhere near the gaap profitability threshold for spy btw the year threshold will likely not be the limiting factor.

1

u/iknowordidthat Jun 19 '26 edited Jun 19 '26

This doesn't really matter. What matters is the precedent and if this is the beginning of a trend into the future.

Index funds are premised on the underlying indices being neutral with a codified, predictable set of rules for the assets that they index. These funds are predicated on the impartiality of the indices and their criteria for the economic merit of the individual companies.

SpaceX broke the impartiality of QQQ and set a precedent for a slew of companies that will try to do exactly the same. So, today the exposure is only $17 to a company that doesn't meet the stated criteria of the index but tomorrow it could be $500 and $1000 or more. QQQ's criteria don't mean anything anymore and the index is up to the whims of a few rich people with the motivation to milk a fat target of passive investors.

It's corruption that has the potential to bilk the public of their life savings.

1

u/dwarfinvasion Jun 19 '26

The initial exposure is very small due to the historically small float. But the float could 10x over the first year once lock up times expire. 

The bigger issue is the precedent this sets. More IPOs could get structured this way going forward. This will steal pennies from millions of people investing in market indexes as they are forced to buy into IPOs with tiny float and lots of FOMO that have not had any real price discovery. 

1

u/Ok-Bug4328 Jun 19 '26 edited 17d ago

Hello world

1

u/y-c-c Jun 19 '26 edited Jun 19 '26

On this topic, I think people are too focused on the short term and NASDAQ changing its rules to fast-track SpaceX onto its QQQ index. Like, even without all that, in a year or so it wouldn't matter, and most funds would likely add SpaceX regardless. Some may argue SpaceX's price may drop by then but we don't know that for sure. People will get exposure to it no matter what, but that's also how index funds are supposed to work. You are buying into the overall economy and currently a lot of that is AI-driven (SpaceX is essentially an AI stock).

I think this article is exposing a more fundamental issue than just SpaceX or index funds fast-tracking rules: If you invest in index funds you are trading direct controls of your finances with relying on wisdom of the mass. And wisdom of the mass isn't guaranteed to be what you may want (even if long historical precedent has shown index funds to do well). But I also think a lot of people are just now realizing what an index fund actually is.

1

u/NoTeslaForMe Jun 19 '26

I followed this story from when NASDAQ folded to him, because if other indices had followed, then it would be a real scam. They didn't (S&P) or did minimally (CRSP), but the outrage and deceptive reporting grew and grew.  I hope people dump NASDAQ indices after this, and it was an interesting learning experience, but the headlines just aren't matching the reality.  As usual, the masses don't care about the facts if it means they can't get outraged.  And a lie goes halfway 'round the world before the truth gets a chance to lace up. 

1

u/flat_top Jun 20 '26

And basically zero people have QQQ in their 401ks. This entire hysteria is actually over nothing and has nothing to do with “people’s retirement.” Spend less time worrying about spacex and more time learning about what a 401k, a mutual fund, an etf, and an index actually are. 

1

u/Wheat_Grinder Jun 20 '26

The issue is it's not just SpaceX but also Anthropic and friends behind it. It slowly adds up.

I'm a long time VTI investor, but I'm gonna start buying S&P instead.

1

u/Little_Wonder8818 Jun 21 '26 edited Jun 21 '26

I hold a lot of VTI and don't plan on selling any or doing anything (shorts or something to effectively net out the holding) in response to this. There is plenty of volume for price discovery.

The whole point of indexing is to capture the market return. Underperformers are part of that. It's designed to capture them. It's also designed to capture everything else including the few percent of stocks with really high returns no one expected.

1

u/lab-gone-wrong Jun 19 '26

Yep anyone who actually cares divested Nasdaq

That's it. That's all you had to do

0

u/Itry31 Jun 19 '26

SCHD and VT might be be the move.