Blockbuster IPOs to take Wall Street by storm
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Good morning from the Financial Times. Today is Friday, May 22nd, and this is your FT News Briefing. Wall Street is getting pumped about three blockbuster IPOs, and Turkey's president just got a big boost from a court in Ankara. Plus, we'll take a look at the U.S. 's pressure campaign on Cuba. I'm Mark Filippino, and here's the news you need to start your day.
Elon Musk's SpaceX is going public, and it's about to trigger a trading frenzy on Wall Street. SpaceX filed for an initial public offering on Wednesday. Tech giants OpenAI and Anthropic are expected to file their IPOs shortly.
What blockbuster IPOs are set to ignite Wall Street?
And the arrival of three new major companies on Wall Street has analysts talking about an unprecedented wave of stock market buying and selling. George Stier is a markets correspondent for the FT, and he's here to tell us more. Hi, George. Hey. So George, tell me why the SpaceX IPO is such a big deal.
So the IPO is expected to be the largest of all time. It's going to hopefully, for Elon Musk, raise around $75 billion. And SpaceX is targeting a valuation of around 1.75 trillion, which would immediately rank it within the top 10 biggest companies in the world.
The way I understand it is that SpaceX isn't actually planning to release a lot of shares at the beginning, right?
No, the proportion of its total shares that will actually be traded on IPO day next month is relatively small. So less than 5% of its total share count, which is unusually small. But companies over the last few years have been slowly reducing the proportion of the shares that they list because the fewer shares, the greater demand, the bigger the potential price jump on the first day of trading, which is something that the bankers and the company itself wants to see.
So we've got the SpaceX IPO. Then there was news this week that OpenAI is preparing to file. Anthropic is expected to follow suit. What is this frenzy going to look like on Wall Street, this buying and trading frenzy?
Well, these are three of the most hyped private companies in the world right now for various reasons. One, space is interesting. SpaceX has almost a monopoly on commercial space travel. and is working with NASA on that. OpenAI and Anthropic, along with a few of their slightly smaller rivals, have a stranglehold on the LLM, large language model AI market right now. And that is where all of the growth and all of the interest in investor appetite has been over the last few years, basically since ChatGPT was released. a few years ago. So the three companies, when they do eventually all trade on US public markets, probably by the end of the year, it's expected that there will be huge investor demand for those shares, the prices of which could go crazy based on how the stock market itself has performed over the last two or three years.
But in order for investors to make room to buy these stocks, I'm assuming that they're going to have to dump other stocks along the way. Who might be left holding the bag?
Investors have told me and my colleagues that, you know, there's plenty of capital out there. There's plenty of demand and that the market won't struggle to absorb these three new huge companies once they list. There may be some selling opportunities. at the margins of some of the magnificent seven tech stocks that have done so well recently, some of the semiconductor stocks that have done especially well this year. But I think the market is relatively well prepared. These IPOs have been long in the works.
What does this say about the IPO market generally, that these three stocks are going public around the same time and there's so much hype around them?
My interpretation is that... executives at all three companies realized that there is huge investor demand right now for AI and anything connected to space travel. The US stock market, at least, has been almost entirely driven by the AI hype story over the last few years and in the last month, basically since the end of March, especially. You know, a cynic could say that these three companies are capitalizing on peak excitement, peak demand for the industries in which they operate.
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