Opinion Today
Retail investors changed the game.
View in browser
Bloomberg

This is Bloomberg Opinion Today, a watershed moment for Bloomberg Opinion’s opinions. Sign up here.

Today’s Agenda

Leapfroggers Pop Off

The S&P 500, Jonathan Levin notes in his column today, is kinda like “the Skull and Bones of corporate memberships.” But does the exclusive club still give newly joined companies a boost?

For a while there, the answer was no. Save for Big Tech outliers such as Facebook (now Meta) and Twitter (now X), companies that entered the index in the mid-to-late 2010s were greeted with crickets. But that’s all changing now:

After reviewing 172 instances of companies being added to the S&P 500 (excluding mergers and spinoffs), Jonathan says the “pop” is back with a vengeance, thanks to an IPO renaissance and, well, all the day traders who frequent r/wallstreetbets:

“A new class of retail investors is changing the way the market works, and we’re all along for the ride,” Jonathan writes. But not all the fresh meat on the index is treated equally. “The lion’s share of companies that join the S&P 500 fall into one of two buckets,” he explains. In one bucket are the “graduates” — companies that slowly rose from the S&P Midcap 400 and eventually entered the large-cap index. In the other bucket are the “leapfroggers” — companies that have flashy IPOs when they get to ring the NYSE opening bell.

For obvious reasons, the “leapfroggers” are more exciting than the “graduates.” Everyone loves a rags-to-riches newbie, and buzzy companies such as Palantir and Coinbase and Robinhood excel at feeding the zeitgeist.

But these popular stocks learned from the best: Tesla. Jonathan calls the automaker’s 2020 entrance into the S&P 500 “a watershed moment” for retail traders. “The stock had an excess return of 8.7% the day after the announcement and continued to rally broadly unabated for weeks. By the time Tesla joined the index a month later, its stock had climbed an extraordinary 70.3%, an excess return of 67.9%,” he writes. While Tesla’s story is unique in many ways — Elon Musk makes sure of that — the post-S&P 500 entry announcement pops have pretty much continued since then.

As Jonathan notes in this video, none of this is investing advice. So make of the “pop” what you will!

Sexy Is Back

Last night, Victoria’s Secret did a fashion show that felt distinctly old, and not in a mature, professional way. As Amy Odell put it in her Substack, “the brand seems unable to evolve aesthetically beyond breasts, bronzer, and bedazzling.” Although CEO Hillary Super was hoping this show would herald a “new era of sexy” for the struggling lingerie brand, there wasn’t much new about the display of near-naked angels wearing 50-pound wings.

Beth Kowitt says the lack of change reflects the national mood: “In the recent past, Victoria’s Secret has tried to cloak the brand in female empowerment — a tactic used to rehabilitate its image after finding itself on the wrong side of the reckoning ushered in by the #MeToo movement,” she writes. “However, there’s no need for the mea culpa this year … what was taboo a few short years ago is admissible again.”

Evidence of the shift is everywhere:  Livvy Dunne explaining sports betting while naked in a bath tub. Taylor Swift’s Sabrina Carpenter-esque song about Travis Kelce’s manhood. A scantily-clad Alix Earle promoting Carl’s Jr. burgers in a Super Bowl ad. Even Sydney Sweeney’s “great jeans” ad didn’t backfire financially for American Eagle as some predicted.

“It feels like we are living through a cultural reboot that’s trying to evoke nostalgia for a simpler time. But a good reboot feels modern and fresh; it builds on the original and is willing to grapple with its place in the past. In this case, though, I find myself forced to rewatch the same old show — one I never liked all that much in the first place and have no desire to see again,” Beth writes.

Which brings me to another company that seems hellbent on bringing sexy back: OpenAI. In two months, Parmy Olson says, ChatGPT will be able to engage in “erotica” with verified adult users. Although Sam Altman has “made a career of justifying opportunistic business moves — like inflating the AI bubble with circular dealmaking or releasing a TikTok clone — with the promise that his tech will eventually, one day, solve intractable human problems,” writes Parmy, it’s hard to see how a sexting chatbot is going to save the world.

Parmy says the pivot to porn boils down to money: “Chatbot companies that don’t allow pornographic content often find it harder to stay in business,” she writes. “When Replika banned sexual roleplay in February 2023, its user numbers dropped from the single-digit millions to the hundreds of thousands. Character.ai also saw a usage drop when it did the same earlier this year.” I guess that meme about having sex with robots really did come true. If only it didn’t feel so regressive.

Telltale Charts

Over the summer, Charli XCX debuted her “PARTYGIRL Chucks” collab with Converse. Online, they looked scuffed in that effortless cool-girl way. But when buyers unboxed their $100 shoes, they realized the distressed marks were screen printed. “Oh so its not actually ripped