Christopher Bejnar has spent the last couple of months combing through the fine print\u00a0of exchange-traded funds, emailing financial advisers and moving money into European stocks \u2013 all to keep SpaceX out of his $1 million portfolio.<\/p>\n
As Elon Musk\u2019s newest public company heads into Nasdaq\u2019s stock indexes this week, the 46-year-old software engineer in Philadelphia is making sure that none of his money is backing the Tesla and SpaceX founder who recently became the world\u2019s first trillionaire. To stay away, Bejnar said he\u2019s moved $50 000 into European index funds and bought shares of Rocket Lab Corp, a SpaceX rival.<\/p>\n
\u201cI\u2019m on the anti-Elon side,\u201d Bejnar said, pointing to Musk\u2019s inflammatory political activism, and his extensive borrowing to support what Bejnar views as\u00a0unproven technology at SpaceX.\u00a0 \u201cEven if I\u2019m only exposed by a tenth of a percent, I still wouldn\u2019t want that going to him.\u201d<\/p>\n
Across Reddit, TikTok and online forums, investors like Bejnar have been swapping advice on how to avoid SpaceX as it enters\u00a0flagship benchmarks like Russell 1000 Index and CRSP US Total Market Index, even if that means abandoning familiar ETFs or paying more for customized portfolios.<\/p>\n
They are all part of the financial and personal maneuvering provoked by the rise of Musk, one of the\u00a0most polarizing figures on Wall Street, if not the world. The shares of Musk\u2019s first public company, Tesla, have been sent into the stratosphere by Musk\u2019s loyal fan base of retail investors. That same crowd allowed SpaceX to make\u00a0its spectacular debut on the stock market in June as the largest initial public offering in history.<\/p>\n
Read:
Musk in the mirror
Musk\u2019s SpaceX adds billions in debt while cutting interest costs
SpaceX rout set to push market value below $2trn
SpaceX is overvalued<\/p>\n
Australia\u2019s richest person\u00a0Gina Rinehart described Musk as a \u201ctruly exceptional person,\u201d\u00a0and in June said she\u00a0made a \u201csignificant investment\u201d in SpaceX from her company Hancock Prospecting. Betting against the staying power of these believers has been a dangerous endeavor in the past, as many Tesla short sellers have learned. An investor who put $10,000 into Tesla would have roughly\u00a0$3.5 million today, according to Bloomberg calculations.<\/p>\n
That success, though, has led to some vehement critics. Musk\u2019s\u00a0role in President Donald Trump\u2019s second administration\u00a0and his strident participation in the\u00a0culture wars have prompted\u00a0protests,\u00a0boycotts and a cottage industry of anti-Musk bumper stickers, turning opposition to the trillionaire into a movement that is spilling over into investor portfolios.<\/p>\n
The strong personal feelings are compounded by the significant financial and occasional regulatory\u00a0risks attached to Musk\u2019s\u00a0companies. SpaceX and Musk\u2019s other public company, Tesla, both sit at valuations that dwarf peers and worry analysts.\u00a0SpaceX surged right after it went public, but then fell as much as 24%, underscoring concerns that expectations had run ahead of fundamentals.<\/p>\n
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SpaceX and Musk didn\u2019t respond to requests for comment.<\/p>\n
The problem for Musk skeptics is that his stocks are so big they are becoming default holdings in most standard portfolios. Tesla already ranks among the largest companies in the S&P 500 and Nasdaq 100, which dictate the holdings of the broad-market ETFs that\u00a0sit at the core of many retirement accounts. The electric carmaker accounts for 2% of the popular $980-billion Vanguard S&P 500 ETF (VOO) and\u00a0more than 3% of the $490-billion Invesco QQQ Trust Series 1.<\/p>\n
SpaceX\u2019s entry into the public markets raises the stakes further.\u00a0With a roughly $2.1 trillion market capitalization \u2014\u00a01.4 times that of Tesla\u00a0\u2014 the company vaulted into the top tier of US stocks almost overnight.<\/p>\n
After trading closes on Monday, SpaceX will be added to the Nasdaq 100 index following its previous entrance into the FTSE Russell and MSCI\u00a0 indexes. The moves are triggering billions of dollars of mechanical buying and put the stock into millions of passive investment portfolios. At a time when the shares are under pressure, they are likely to be buoyed by at least $5.4 billion of buying from index-tracking funds.<\/p>\n
The unusually rapid addition of SpaceX to the indexes has sparked criticism\u00a0because several providers made exceptions or revised their methodologies to accommodate the company despite\u00a0its relatively small public float.<\/p>\n
That float means that SpaceX\u2019s weighting in major indexes will initially be relatively small,\u00a0making up less than 1% in most indexes \u2014\u00a0well below Tesla. Still, financial advisers\u00a0say they\u2019ve fielded questions from a wide array of clients who want no part of a company controlled by Musk.<\/p>\n
\u201cI don\u2019t think we\u2019d be having this conversation if it wasn\u2019t him,\u201d said Emily Green, head of wealth management at Ellevest, who likened the current anti-Musk\u00a0sentiment to the public\u00a0fallout Meta Platforms faced after\u00a0a series\u00a0of scandals following the 2016 election.\u00a0\u201cThere\u2019s a number of people that didn\u2019t want to own Tesla over the past couple of years\u201d and they\u2019re asking the same with SpaceX.<\/p>\n
Direct indexing is the solution Ellevest offers\u00a0clients \u2013 buying a basket of individual stocks that mirror an index, making it possible to exclude shares of companies an investor doesn\u2019t want.\u00a0Green said restricting just one or two stocks in a broad portfolio shouldn\u2019t affect the overall performance due to returns from other holdings, and her clients who sought to avoid Tesla were at peace with the stock\u2019s rise.<\/p>\n
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\u201cHow we do it is we buy about 300 individual positions that span US large cap, mid cap, small cap and developed-market international stocks,\u201d Green said. \u201cPeople can customise it in a deep way and it can be a very personal thing.\u201d<\/p>\n
Read:
Elon Musk: World\u2019s first trillionaire
Musk testifies he\u2019s suing OpenAI to stop Altman\u2019s \u2018looting\u2019<\/p>\n
Bejnar said he wasn\u2019t as concerned about having money in Tesla, but SpaceX changed the balance for him because of the way the company\u00a0is borrowing and banking on Musk\u2019s big but untested vision.<\/p>\n
\u201cIt almost to me feels like he\u2019s opening up credit cards to pay off other credit cards,\u201d he said. \u201cWhat I didn\u2019t anticipate\u00a0is that these index funds would change the rules to actually help him out.\u201d<\/p>\n
In recent weeks, Reddit posts about dodging SpaceX exposure\u00a0have sprung up in subreddit groups like r\/investing, r\/ETFs and r\/EnoughMuskSpam, generating reams of heated threads like one\u00a0titled, \u201cHow to avoid investing in Elon Musk Companies.\u201d<\/p>\n
One of the posters was\u00a0David Greer, a 30-year-old data analyst, who said he\u00a0moved his\u00a0$650,000 in retirement savings out of US index funds into international ones in April.<\/p>\n
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<\/p>\nDavid Greer Photographer: Poppy Lynch\/Bloomberg<\/p>\n<\/div>\n
Greer\u00a0has been disillusioned with the second Trump administration and views\u00a0Musk as \u201cTrump of the tech world.\u201d With Trump threatening\u00a0to exit the North Atlantic Treaty Organization and exerting\u00a0his \u201cAmerica First\u201d foreign policy, Greer has lost confidence that the US will continue having the same strength, and stock returns, as before.<\/p>\n
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\u201cI don\u2019t think it\u2019s necessarily SpaceX exclusively that I\u2019m trying to avoid,\u201d said Greer, who lives in Davis, California. \u201cBut when it became clear that SpaceX was going to the market and that I would be invested, it felt like the straw that broke the camel\u2019s back.\u201d<\/p>\n
Omar Qureshi, a financial adviser, has\u00a0stayed away from buying SpaceX shares himself because he feels Musk is \u201can evil human being.\u201d But as managing director at Hightower Signature Wealth, he\u2019s helped clients participate in the IPO. To him, the debate goes beyond Musk and highlights the consequences of the passive investing boom that has transformed Wall Street over the past two decades.<\/p>\n
As more retirement savings automatically flow into passively managed funds, index inclusion has become increasingly valuable, Qureshi said. The biggest companies receive a disproportionate share of new money, helping support their stock prices and making it harder for active managers to outperform.<\/p>\n
\u201cIf you\u2019re one of the big boys, you\u2019re guaranteed to get flow,\u201d said Qureshi. \u201cIt becomes a self-fulfilling prophecy. The inflows drive performance, which drives more money into the indexes.\u201d<\/p>\n
Still, neither Greer nor Bejnar wants to turn to actively managed funds. Greer prefers doing his own research and is still fond of the \u201cset it and forget it\u201d strategy with index funds.\u00a0Bejnar, meantime, discussed\u00a0options with his financial advisor before putting money from\u00a0his managed brokerage account into a subset of ETFs that won\u2019t contain SpaceX. His advisor cautioned that if the stock does well and gets added to every benchmark, it\u2019ll become harder to avoid.<\/p>\n
Bejnar believes it won\u2019t be added to the S&P 500\u00a0any time soon given the index provider\u2019s 12-month seasoning period and requirements for profitability and public float. SpaceX\u2019s $25 billion debt sale in late June reinforced his conviction that it\u2019s helping prop up debt associated with Musk\u2019s broader business empire. He\u2019s been encouraging friends and others on Reddit to join the anti-Musk exodus.<\/p>\n
And what if SpaceX shares climb in the long run?<\/p>\n
\u201cI would not feel bad about never buying SpaceX, no matter how well it does,\u201d he said.<\/p>\n
\u00a9 2026 Bloomberg<\/p>\n<\/p><\/div>\n
#investors #scrambling #SpaceX #Elon #Musk #portfolios<\/p>\n","protected":false},"excerpt":{"rendered":"
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