Tyler Crowe

It has to be a C-corporate, it has to be sufficiently large, it has to have enough liquidity, which means there's enough shares for people to buy, and it has to show positive net income using generally accepted accounting principles, what we call GAAP, in the most recent quarter and cumulatively over the past four.

Now, we don't know SpaceX's financials right now because it hasn't filed the IPO prospectus, but with XAI and the X that used to be Twitter, I think everyone's assuming that it's not necessarily GAAP profitable today.

With that in the background and all that, Lou, why are so many people throwing a stink about this exception for the S&P 500?

Yeah, the $90 billion, I think a lot of people think about that and they hear, that's a ton of money to raise.

But when you're looking at a $2 trillion valuation, that's less than 10% of the entire available shares available in this company.

And so, by that definition of sufficient liquidity, enough float, you start to squint at that and be like, yeah, it's $90 billion, but it's not a lot of the float of the company.

And to this point, I think this is why so many people think this is important.

30% of all assets under management in the top 100 ETFs in the market today are just allocated to the S&P 500.

By far and away, the most money in ETFs is in S&P 500.

If there was a race between the Nasdaq, the Dow, and the S&P 500, S&P 500 ran laps around everybody else.

It's about $2.8 trillion in passive S&P 500 index ETFs alone.

We're talking about a lot of portfolio shuffling if this happens right away.

If my memory serves me correctly, Tesla, back when it was way, way bigger than a lot of the companies in the S&P 500, it took them quite a few years to get into the S&P 500 for that very reason that it wasn't profitable.

We got those two.

We got Databricks.

We got some space companies that are coming public, and I can almost guarantee they're going to be large enough to have S&P 500 considerations.

And speaking of space, we're going to do another mailbag question coming up after the break.

So as we mentioned, we're going to get into the mailbag one more time.

And hey, if you have questions, again, I want to remind everyone, if you want to ask, send your emails to podcasts at fool.com.

And we'll try to get them answered on air.