'Big Short' investor Michael Burry flags criticism of proposed rule change to fast-track SpaceX joining the Nasdaq

• Michael Burry flagged a possible rule change that would fast-track inclusion in the Nasdaq 100.
• Burry pointed to recent posts criticizing a rule that would allow SpaceX to join the index soon after going public.
• The posts argue that changing the rules to accommodate SpaceX could be bad for investors.

Michael Burry, who has gone from reclusive short-seller to prolific market commentator, spoke out over a proposal to allow big companies to quickly join the Nasdaq 100 shortly after going public.

Reuters reported in February that Nasdaq is considering a rule change that would allow companies to be fast-tracked into the Nasdaq 100 index shortly after their initial public offering. A follow-up report last week said that Elon Musk's SpaceX is leaning toward a Nasdaq listing, requesting quicker entry into the tech-heavy index.

Burry pointed to recent X posts slamming the proposal, including one from Wall Street veteran George Noble, which he described as a "must read." Noble characterized the idea as a "shameless" manipulation of the index.

"Currently, new public companies typically wait up to a year before they're eligible for major index inclusion," he wrote. "That waiting period exists for a reason. It lets the market establish real price discovery. It protects passive investors from being forced into untested, illiquid stocks."

Noble argued that the move to accelerate SpaceX's entry into the Nasdaq would be detrimental to investors.

"The S&P 500 requires companies to have at least 50% of shares available for public trading," he added. "It requires 6 to 12 months of seasoning. It uses free-float adjusted weighting so passive investors aren't buying phantom liquidity. Nasdaq is doing the exact opposite."

Burry shared another post from anonymous Substack author, Keubiko, who argued that Nasdaq's proposal would benefit insiders at the expense of investors.

"The index is applying a phantom, mega-dollar weighting to a restricted, tightly-held float. You are effectively forcing a firehose of mega-cap index capital through a garden hose of actual liquidity. It is a recipe for a massive, artificial supply-and-demand squeeze," the passage flagged by Burry reads.

Nasdaq's proposed rule would allow a company that has recently listed with the exchange to join the index if its market cap ranks among the top 40 current stocks currently listed. SpaceX could IPO this year with a valuation of more than $1.5 trillion.

"The rules are being rewritten to benefit IPO issuers and early-stage insiders, and your capital is the tool being USED to enrich them, Noble said. "45 years in this business and I've watched Wall Street find creative new ways to separate retail investors from their money in every cycle. But usually they at least try to be subtle about it."

A Nasdaq representative declined to comment. SpaceX did not reply to a request for comment.