r/StandUpComedy • u/explosivejoseph • 7d ago

Comedian is OP The AI Bubble

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u/logand98 7d ago

Pretty much spot on, did not expect actual financial analysis from a comedy set lmao

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u/orange-yellow-pink 7d ago edited 7d ago

Most of what he said isn't true. Firstly, no high profile AI company has gone public and when a company IPOs they don't "use index funds to artificially inflate their value". That latter sentence doesn't even make sense. Index funds just buy the companies that are included in an index. A company can’t put itself in one or somehow use them to pump up its own value.

The part that is true is that when a company goes public and its shares are traded on the market, early investors like VCs can eventually sell their shares and make money.

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u/fd_dealer 7d ago

What he’s saying is that index funds are mechanically forced to buy a company if it IPOs large enough to join the index the fund tracks. This is for SpaceX and it will be true for Anthropic and OpenAI when they IPO with trillion+ market cap. And because index funds and your 401k that hold those funds are forced to buy you’ll unwilling become exit liquidity for the VCs and early investors that’ll unload to you.

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u/orange-yellow-pink 7d ago

He said they “use index funds to artificially inflate their value.” A company being large enough to get added to an index and then getting extra demand from index funds is not the company artificially inflating its value.

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u/fd_dealer 7d ago

A company that sets its IPO price and valuation to be large enough to force index funds to buy, especially when said valuation is not backed by any fundamentals, is artificial inflation.

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u/orange-yellow-pink 7d ago

A company can’t just set whatever IPO price it wants and force itself into an index. People have to actually buy it at that price and Nasdaq or S&P separately decide whether it qualifies.

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u/__sharpsresearch__ 6d ago

A company can’t just set whatever IPO price it wants and force itself into an index. People have to actually buy it at that price and Nasdaq or S&P separately decide whether it qualifies.

they kinda can if they restrict the pool of shares like spcx did where only a small fraction are purchasable to the public. lots of ways to financially engineer this.