Anthropic · OpenAI · SpaceX · Wall Street · Donald Trump · Iran · Fortune Technology
The hottest debate on Wall Street right now: Does the flood of mega-IPOs and new shares signal a downturn ahead? That depends
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Investors swarmed all over SpaceX’s historic IPO and are hyped about public debuts for OpenAI and Anthropic later this year, but they’re also wondering if the good times will keep rolling.
Key facts
- He pointed out that gross equity issuance in the U.S. surged in 1999, 2007, and 2021—years that were all followed by bear markets—with recessions also coming after the tech bubble and housing bubble
- And with IPOs for Anthropic and OpenAI on deck, he said it’s reasonable to assume issuance for this year will resemble what came in 1999, 2007 and 2021
- In addition to the $75 billion SpaceX raised, its AI rivals are expected to tap investors for tens of billions more
- They singled out upcycles in new share supply and looked at the median volume of issuance compared to the S&P 500’s performance
Summary
While the stock market has demonstrated stunning durability amid shocks like President Donald Trump’s trade war and Iran war, the flood of new shares has Wall Street debating if a downturn is due soon. In addition to the $75 billion SpaceX raised, its AI rivals are expected to tap investors for tens of billions more. “While the mood music is relatively positive at the time of writing, history suggests caution is in order: major IPOs and periods of high issuance of equity have often preceded peaks in the US equity market,” Jonas Goltermann, chief markets economist at Capital Economics, said in a note on Friday.