A 60 percent overnight jump in the aerospace manufacturer's share price has temporarily made it more valuable than the world's largest e-commerce platform, driven entirely by index funds legally obligated to buy an equity that functionally does not exist.
SpaceX officially bypassed Amazon on Tuesday morning to become the fifth-largest company in the United States, propelled by a microscopic free float and relentless retail speculation. Because chief executive Elon Musk tightly controls the vast majority of the company's stock, the massive public valuation was achieved through the frenzied trading of a fraction of a percent of the actual enterprise. Automated tracking funds, required by their own prospectuses to hold shares of top-tier American companies regardless of availability, were forced into bidding wars over the handful of shares actually circulating on the open market.
When a passive vehicle is mandated to maintain a proportionate weight of the country's largest companies, and there are only about fourteen actual shares available to purchase, those shares are going to get very expensive very quickly.
Amazon executives reportedly spent the morning analyzing the price action, with internal communications suggesting the retailer might quietly buy back nine billion of its own shares to see if an artificially constrained float could help Jeff Bezos reclaim his former ranking. Wall Street analysts noted that while Amazon generates hundreds of billions in actual consumer revenue, SpaceX currently benefits from the much stronger financial fundamental of simply refusing to let anyone buy its stock.
By late afternoon, the aerospace firm's valuation had stabilized at the new premium. Retail traders spent the remainder of the session pooling their capital to aggressively bid up fractional ownership of a single remaining share, hoping to push the company's market cap past Alphabet before the closing bell.