Blockbuster SpaceX’s listing could breathe oxygen into a weak IPO market

The American market, appreciated for its depth, is facing a difficult test, as more than half a dozen analysts and industry experts told Reuters that the SpaceX deal may take a large share of investor demand, exposing some optimists.

Register Here.

“History tells us that a mega IPO like SpaceX can suck oxygen from the market. We saw that with Facebook in 2012,” said Matt Kennedy, senior analyst at Renaissance Capital, a provider of research focused on IPOs and ETFs.

“IPOs are a big marketing event, and companies wouldn’t want the noise from SpaceX offering to shut down news of their deals. So, listing jobs can die down a bit in the weeks surrounding the SpaceX IPO.”

Companies are waiting years apart for good IPO positions after a long dry spell. A listing like SpaceX, with its famous billionaire CEO, hot industry and backers with deep pockets, could have provided the jolt some needed to move forward.

Instead, much of it threatens to overshadow others, as Wall Street banks and investors pour more of their attention, and money, into the Starlink constellation of satellites.

Thirty-five IPOs have gone down so far this year, according to data from Renaissance Capital, down 37.5% from last year. That could worsen in the coming months, dimming hopes that the market will rebound in 2026.

OBSTACLES IN THE IPO MARKET SECTOR

The IPO market has added its biggest pipeline in decades, analysts and bankers said.

Now, along with these hurdles, companies eyeing IPOs must also compete in a market dominated by SpaceX’s headlines.

While bankers may be advising their big clients against competing with SpaceX, smaller listings can benefit, said Michael Ashley Schulman, a partner at wealth management firm Cerity Partners.

“Smaller IPO debuts can benefit from sales enthusiasm that can bring IPOs together with the idea that if one does well, others will too,” he said.

MORE MEGA ACTIVITIES TO COME

Timing an IPO is often as important to the success of the listing as the company’s fundamentals. May through June is usually the best window before a quiet summer that prevents big offerings in the fall.

“The attention these big IPOs are getting in the market could push the IPO window wide open to 2027,” PitchBook analyst Kyle Stanford said in a report.

The report added that if SpaceX raises between $50 billion and $75 billion, while OpenAI and Anthropic raise $50 billion combined, that would be almost equal to the total raised by US VC-backed IPO companies in the past decade.

“Media attention is not the only thing that mega IPOs can get. Writing an IPO would be limited by the amount of money these companies are able to raise,” Stanford wrote.

‘MUSKONOMY’ VS MARKET POINTS

To be honest, it’s uncharted territory – no proposal of this magnitude has ever been attempted before.

Analysts and experts have said that the absence of a clear model or comparable list leaves investors without strong expectations, making it difficult to gauge how the market will respond to SpaceX’s IPO.

“SpaceX is going to be big, there’s no doubt about it,” said James Angel, Georgetown McDonough’s Psaros faculty member for Markets and Financial Policy.

“The combination of popular products like X and Starlink, along with the magic of AI, the dream of space, and the magic of Musk means that investment bankers will have little trouble generating interest in the property.”

Elon Musk has a track record of attracting investors around the world, and his businesses often command attention. His government, called “Muskonomy” by critics, makes a lot of money with relatively few offers.

That issue of investor interest is not just a theory, it has been in the past list.

Musk’s EV maker Tesla raised $226 million in its 2010 IPO with a market value of about $1.6 billion. It is now the world’s most valuable automaker, worth more than $1.3 trillion.

But even that track record and investor appeal may not be enough in today’s IPO market, analysts have warned. “We do not believe that SpaceX can escape the reality of the US IPO market, in the sense that it has become a consumer market,” said Josef Schuster, CEO of IPOX IPO.

“Even strong IPO candidates in hot sectors need to show flexibility in their pricing and may need to lower prices for IPO success.”

Some have warned that a wave of mega-listings could crowd out investor demand, especially if several mega-deals hit the market at the same time.

“There’s an old saying that a bull market ends when the money runs out, and there are a lot of historical examples where a flood of IPOs and new entrants come into the stock market, and then secondary offerings mean that sellers end up being flooded with buyers,” AJ Bell chief financial officer Russ Mold said.

Our standards: The Thomson Reuters Trust Principles.opens a new tab