SpaceX isn’t the only forthcoming mega-IPO (initial public offering). There’s talk of an OpenAI IPO by September, and Anthropic could go public in October.
The combined value of the three companies could hit $4 trillion (€3.43 trillion). That “would exceed the entire dot-com IPO wave of 1995-2000”, notes venture capitalist and market commentator Paul Kedrosky, and would be about half the value of all US IPOs since the second World War.
Dot-com bubble comparisons are thus doing the rounds, but what is notable this time is not simply the excitement, but the scale and stage at which public investors would encounter these businesses.
In the past, young, fast-growing companies needed to go public to raise capital, but firms can now fund years of growth without ever accessing public markets. At the end of March, for example, OpenAI closed a $122 billion funding round at an $852 billion valuation, highlighting how large and liquid private capital pools have become.
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That companies are going public later in their life cycle has obvious implications for investors. A recent Barron’s headline captured the point: “SpaceX Went Up 1,000-Fold – and You Couldn’t Buy It”, highlighting how so much compounding now takes place before public markets are ever involved.
IPOs have long been associated with underperformance, hence the joke that IPO stands for It’s Probably Overpriced. If listings are now occurring so much later in the cycle, that tendency may be even harder for public investors to escape.
