Benjamin Felix

What proportion of the shares are available to trade on the public market, freely available to trade?

Crisp waits by the free float.

SpaceX, apparently, there was an article in the FT saying that SpaceX was aiming for a $1.75 trillion valuation, although I saw today a headline that they're aiming for a $2 trillion valuation now, which is wild, but they're only going to float 5%.

So at 1.75 trillion, that's an $88 billion free float.

So Crisp weights them as an $88 billion market capitalization company.

But in the case of Crisp, they would exclude them entirely because Crisp has a 10% float cutoff.

So it's like, we're talking about this and say, yeah, these are big companies, but if you actually go, how does Crisp actually include stocks?

I don't think it's relevant at all, unless we assume that they're going to go public with a higher float.

Yeah, I agree 100%.

My title may have been too dramatic.

I hope I didn't scare anybody off of index funds.

Maybe worth mentioning quickly that in this IPO paper, I didn't have this in my notes, but Marco talks about the solution maybe being that companies give index funds a predetermined significant IPO allocation, and that helps to let the company that's raising capital keep more of the price increase.

They might be able to raise more at a higher price by sort of pre-agreeing with index funds how much they're going to buy, because right now it's the intermediaries that are taking a big chunk of that price increase in the secondary market.

Anyway, it's just an interesting tangent about what a potential solution to address that inefficiency could be.

That's IPOs and index funds buying IPOs, potentially pushing up their price, leading to lower expected returns, all that stuff.

Another important index definition, I just mentioned it, but it's proving to be relevant to these mega IPOs is the concept of free float.

Free float is the proportion of a company shares that are available for purchase in the public equity market.

freely available for purchase.

So like a company director that's required to hold shares, for example, would not be included in the free throw.

And then there are a whole bunch of other criteria like that.