A wave of super-sized initial public offerings is sweeping through the U.S. stock market with unprecedented scale.
On June 12, Space Exploration Technologies Corp (SpaceX), led by Elon Musk, is set to debut publicly, aiming to raise $75 billion and shatter the global IPO fundraising record. Rivals in the artificial intelligence sector, OpenAI and Anthropic, are also accelerating their own plans to go public.
The combined fundraising target for these three companies is estimated to be around $200 billion.
Amidst fervent capital enthusiasm, significant market skepticism has emerged. SpaceX commands a staggering $1.77 trillion valuation despite reporting consistent annual losses and a price-to-sales ratio exceeding 90. Prominent Wall Street short-sellers are pointing to a severely inflated valuation.
Some industry insiders have gone so far as to label this wave of mega IPOs as "the largest potential scam in history."
Historical patterns from the past three decades also serve as a warning, suggesting that IPO frenzies often signal a market top.
According to an updated prospectus from June 3, SpaceX plans to issue approximately 5.56 billion shares at $135 per share, seeking to raise $75 billion and achieve an overall valuation of $1.77 trillion.
This fundraising size would easily set a new historical record, surpassing the roughly $29.4 billion raised by Saudi Aramco in 2019 to become the new global "IPO king."
The IPO plans for the two major AI contenders, Anthropic and OpenAI, are also advancing. Anthropic confidentially filed for an IPO on June 1, with market expectations for a listing in September. OpenAI is also anticipated to pursue an IPO by the end of this year. Market forecasts suggest each company could raise around $60 billion.
To facilitate the swift inclusion of these giants into major indices and thereby attract the massive capital of passive funds, Nasdaq has amended its rules, drastically shortening the waiting period for mega IPOs to be added to its index from several months down to just 15 trading days.
FTSE Russell has similarly reduced its waiting period to five days, and S&P Dow Jones Indices is considering comparable adjustments.
These super-sized IPOs are facing intense scrutiny over the justification of their valuations.
Taking SpaceX as an example, its lofty $1.77 trillion valuation contrasts with projected 2025 revenue of about $19 billion and a net loss of nearly $5 billion, resulting in a price-to-sales ratio over 90.
Such aggressive pricing appears irrational to many seasoned investors.
Anthropic and OpenAI face similar doubts. Both companies were reportedly unprofitable last year, though Anthropic projects it may begin generating profits in the second quarter of 2026.
Michael Burry, the investor whose story inspired the film "The Big Short," publicly stated he studied SpaceX's S-1 filing in detail and found "nothing in the document that justifies a $1 trillion or $2 trillion valuation."
David Trainer, CEO of investment research firm Newconstructs, offered even sharper criticism, calling this IPO wave "one of the largest potential scams in history." He pointed out a key difference from the 2000 dot-com bubble: back then, investors could choose whether to buy IPO shares. Now, due to the amended index rules, companies like SpaceX will be rapidly included in major indices like the Nasdaq 100. This means "millions of retirement accounts will be forced to hold and buy these IPOs," regardless of individual investors' views on their value.
Amid the skepticism, SpaceX is actively promoting its future vision. On the 4th, the company's CFO, Bret Johnsen, conducted a 17-minute video pitch aimed at retail investors, with up to 30% of the offering potentially allocated to them.
In the video, Johnsen linked the company's rocket, satellite, and AI businesses, reiterating Musk's vision of "making humanity a multi-planetary species" and stating the company is extending this vision through Starlink and AI solutions. The roadshow video also outlined future targets like increasing gross margin from 49% to 70% and achieving a 45% net profit margin, though no specific timeline was provided.
Statistical analysis reveals that over the past 30 years, major U.S. stock market declines have frequently followed periods of intense IPO activity.
In 1999, 476 IPOs raised a total of $64.67 billion, with both metrics nearly doubling from 1998. The frenzied listing boom was followed by the dot-com bubble burst.
In 2008, the average IPO fundraising amount reached $1.084 billion, five times higher than in previous years. That same year, the subprime mortgage crisis erupted.
In 2021, total U.S. IPO fundraising hit a record high of $119.36 billion. In 2022, the U.S. stock market entered a bear market correction.
Projections for 2026 suggest the average U.S. IPO could raise $2.25 billion, with total fundraising nearly double the 2021 level.
Dario Perkins, an economist at macroeconomic forecasting firm TS Lombard, raised a critical question: If AI is truly going to change the world, why are tech giants in such a hurry to "share the wealth" with the public now? The answer might be that "they know something we don't" – insiders and early investors may believe current market valuations are at a peak and want to "exit while the going is good."
David Trainer also stated that this IPO wave is "a warning sign at the end of the (bull market) cycle."
The post-listing performance of large IPOs themselves has not been encouraging.
Sam Grelck, equity analysis strategist at U.S. investment bank Truist, noted that among 30 large IPOs studied, post-IPO performance was uneven with significant divergence between stocks. Investors participating in new issues should be prepared for high volatility and potential significant drawdowns. Using the first-day closing price as a baseline, returns within three months of an IPO are typically positive, but the median return turns negative over six-month and twelve-month periods. Among the 30 stocks studied, 19 experienced a maximum drawdown of at least 50% within their first year of listing.
Research by University of Florida finance professor Jay R. Ritter on all IPOs from 1980 to 2024 found that, on average, they underperformed the broader market by 20 percentage points over three years following their listing. Companies that went public with a price-to-sales ratio exceeding 40 underperformed the market by 58 percentage points. SpaceX's P/S ratio over 90 undoubtedly casts a shadow over its future stock performance.
The massive combined funding need of approximately $200 billion from these three giants also presents a fresh liquidity test for the U.S. stock market.
Current cash levels in the market are at historical lows. Data from Bank of America shows fund managers' cash holdings have dropped to 3.9%, while half of fund managers are overweight stocks, representing the highest allocation to equities by global investors in four years. This suggests investors are nearly "all-in."
Analysts widely worry that a significant capital migration is inevitable. Investors may be forced to sell existing holdings to raise cash for subscribing to new shares, which could disrupt the current market structure.
Paul Kedrosky, a researcher at MIT's Initiative on the Digital Economy, stated that many stocks currently held by funds will face mechanical selling pressure, and these are mostly large-cap tech stocks.
Wedbush analyst Dan Ives commented, "We believe the market could experience some turbulence as it absorbs these mega IPOs from SpaceX, Anthropic, and OpenAI."
However, some analysts hold a different view.
Matt Kennedy, a senior analyst at Renaissance Capital, which specializes in the IPO market, stated that while market uncertainty exists, "Wall Street has shown time and again it has deep pockets ready for AI," and "if a company like Anthropic can raise $65 billion in the private market, it should be able to raise a similar amount in the public market without disrupting the broader market."
Signs of a "siphoning effect" are already emerging. Over the past month, the Roundhill Magnificent Seven ETF, which tracks the "Magnificent Seven" tech stocks, rose 3%, significantly underperforming the S&P 500's gain of 4.48% and the Nasdaq Composite's rise of 5.94%.
Sectors like aerospace (e.g., Boeing, Lockheed Martin), telecommunications (e.g., AT&T, Verizon), and the Bitcoin market have recently shown signs of capital outflows.
Blake Anderson, portfolio management director at Carson Group, suggested this could be a consequence of investors preparing to participate in the SpaceX IPO.
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