TheChek News Flow

Companies seek growth abroad through deals for Everlane and Puma amid domestic competition and deflationary pressures

Chinese companies are buying up a growing number of overseas consumer brands as intense domestic competition spills over into international sectors relatively removed from geopolitical tensions.

Just months after Chinese apparel conglomerate Anta acquired a 29 per cent stake in Puma for €1.5bn, ultra fast-fashion retailer Shein this week struck a deal to acquire “sustainable” US clothing brand Everlane for a reported $100mn.

Everlane is being sold by L Catterton, an LVMH-backed private equity firm that has held a majority stake in the San Francisco-based basics retailer since 2020.

Nestlé last month confirmed that it had sold its majority stake in US chain Blue Bottle Coffee to Centurium Capital, controlling shareholder of cut-price Luckin Coffee, which has tens of thousands of stores in China.

Chinese companies’ appetite for outbound M&A has increased after years of unrelenting competition and deflationary pressures at home.

There were $2.4bn of outbound consumer goods deals in the first quarter of this year, almost all in Europe and North America. Last year’s $6.8bn total was the highest since 2018, according to data from consultancy Rhodium Group.

“Consumer goods is one of the few sectors that remains relatively open to Chinese investment in advanced economies,” said Armand Meyer, an analyst at Rhodium.

“Chinese firms with maturing domestic brands are looking to expand their international footprint at a time when the domestic economy is slowing,” he added. “Acquiring established foreign brands is a faster and more effective path than building from scratch.”

Anta’s stake in Puma is the latest in a longer-term strategy of overseas purchases, including a 2019 buyout of Amer Sports, the owner of Hoka, Salomon and Arc’teryx before Amer was relisted in New York in 2024. Anta has also bought German clothing business Jack Wolfskin, and owns the rights to Fila in mainland China.

“Anta is a poster boy for this kind of strategy,” said Josh Perlman, head of Greater China at Authentic Brands Group. Authentic Brands is in the process of relaunching Reebok in China, as well as US luxury brand Guess, which this year closed all its stores in China.

China’s overall outbound investment was $27bn last year, the highest since 2020, driven in part by mining assets in emerging economies. Its vast EV industry is also expanding globally.

However, that figure is dwarfed by the $200bn-plus of outbound M&A in 2016, shortly before trade tensions erupted in President Donald Trump’s first term and continued to escalate over the ensuing decade. 

Last week, Trump called on Xi Jinping to “open up” China on the first presidential visit to Beijing in a decade, flanked by a host of business leaders including Tesla chief Elon Musk and Citigroup’s Jane Fraser.

Chinese brands from Zara competitor Urban Revivo to Mixue, a bubble tea chain with more stores than McDonald’s, almost all of them in China, have sought to expand in the US.

While consumer goods are typically less sensitive than many other sectors, there has been intense scrutiny in Europe, where the EU and France have launched investigations into Shein’s sales of childlike sex dolls, weapons such as knuckle dusters and other illegal objects through its third-party marketplace. JD.com’s bid for Ceconomy, a German electronics retailer, has been delayed by regulatory review.

Everlane is known for its sustainable products and says it prioritises “fewer inputs and cleaner outputs in our processes”.

Everlane chief executive Alfred Chang said the brand would remain independent after its acquisition by Shein and stay “true to our longstanding brand values, sustainability commitments and exceptional quality”. The Shein deal could accelerate Everlane’s progress and give it “greater reach”, he added.

Authentic Brands’ Perlman said that the conditions in China, from industrial supply chains to the country’s knowledge base, were creating “monsters”. 

“It’s not just apparel brands, it could be a car brand, it could be a milk tea brand . . . there’s going to be a lot of concepts coming out of China that could be global,” he said.

How AI has changed M&A

The size of deals is hitting new peaks, unloved companies are becoming sexy and PE has found a new gold mine

Up until this week, NextEra Energy, the Florida-based power company that has just unveiled swashbuckling plans for one of the largest mergers in history, was best known as America’s clean-energy champion, more focused on renewables than transformative takeovers.

Now its planned $420bn combination with its rival Dominion Energy has set out in stark relief how much the AI revolution has affected not just once sleepy utilities but the whole phenomenon of mergers and acquisitions in the US.

The boom — and what it means for sectors such as power and memory chips, as well as its broader economic impact — has transformed the scale, structure and logic of dealmaking.

It has redefined which companies matter, how transactions are structured and who finances them, as private capital investors and banks hurry to reposition themselves. 

“AI has become a tailwind for dealmaking, and equity markets more broadly,” says Matt McClure, global co-head of investment banking at Goldman Sachs.

He adds that demand for the technology is creating “a cascading impact across more traditional industries”, with power companies and data centre equipment suppliers “among the biggest beneficiaries of the AI build-out”.

NextEra is a prime example. Until a few years ago, its bid for Dominion — intended to create a 240-gigawatt giant catering to data centres and other big clients — would have seemed almost unthinkable.

Utilities were viewed as too regulated, politically sensitive and vulnerable to a backlash over energy prices for large-scale consolidation.

AI, together with the Trump administration’s deregulatory drive and America First approach to antitrust, has changed that.

The AI boom is also reshaping Wall Street, the US corporate order and the real economy, as established businesses desperately seek scale to compete with trillion-dollar technology companies.

CEOs and boards have caught deal fever Fomo — fear of missing out — while their rivals transform themselves for the AI age.

Groups previously unloved by Wall Street have become the target for multibillion-dollar transactions, such as Globalstar, a satellite operator, bought by Amazon for $11.6bn last month. Others have seen their shares soar. The market capitalisation of Sandisk, the computer storage group, has increased by 4,000 per cent since going public in February last year due to insatiable demand for its chips. 

Even the nature of deals is changing, with so-called hyperscalers such as Nvidia, Meta and Google spending billions to hire elite AI engineers to avoid buying whole companies and sidestep antitrust regulators. The boom is also redrawing private capital, with groups such as BlackRock, Blackstone and Apollo rushing to make AI-related investments.

To some, the momentum seems unstoppable. But two tests are looming. In the coming months, capital markets will have to absorb IPOs of a size never experienced before, with SpaceX, OpenAI and Anthropic all set to be valued at around $1tn or more apiece.

The shift to AI at the heart of the M&A upheaval is also facing backlash from Americans who blame data centres for increasing electricity bills, threatening jobs and disrupting their communities.

Scale, scale, scale

A quarter of a century ago, the internet revolution was defined by companies that could conquer the world with relatively little capital. Software groups scaled at extraordinary speed without needing factories, power plants or vast physical infrastructure beyond logistics hubs and cellphone towers.

The AI revolution is overturning that model.

Winning now requires immense scale: chips, energy, fibre networks, data centres and financing measured not in billions, but trillions of dollars.

Jensen Huang, chief executive of Nvidia, recently argued that “trillions of dollars of infrastructure still need to be built” to support the AI boom.

“The amount of computation demand for software in the past is a tiny fraction of what is necessary in the future,” Huang said on a call with investors. “And AI is here, AI is not going to go back.”

That race for scale is driving the new era of megadeals.

Utilities are pursuing transformational mergers to secure power generation, infrastructure investors are hurrying to finance data centres and technology groups are striking increasingly unconventional transactions to lock up talent and supply chains before rivals do.

The shift is being accelerated by geopolitics and Donald Trump’s return to the White House. His administration has treated AI as a strategic arms race against China, creating an environment in which corporate consolidation is viewed through the lens of national competitiveness rather than consumer protection. 

On Thursday, Trump postponed signing an executive order on AI under which the sector’s leading companies would voluntarily submit their models to government checks for national security and cyber risks.

Peter Orszag, chief executive of Lazard, describes the trend as part of a broader move towards “discretionary state capitalism”, in which governments play a more active role in directing capital and industrial policy. He argues the US economy is increasingly being powered by investment tied to AI, from hyperscaler capital expenditure to construction and energy infrastructure.

The political climate has also transformed antitrust from the Biden administration’s approach. Dealmakers increasingly believe consolidation will be tolerated — or even encouraged — if it supports the administration’s broader Maga agenda of AI dominance, domestic manufacturing and economic nationalism.

The result is a corporate environment in which size itself has become a strategy.

Second life

For much of the past decade, hardware groups such as Sandisk were dismissed as low-growth relics in a market obsessed with high-margin software.

The AI boom has transformed their fortunes.

As demand for data storage and computing capacity has surged, investors have rushed into Sandisk as well as groups such as Western Digital and SK Hynix, in recognition that the large language models that dominate AI depend on vast memory and chip infrastructure.

The shift has also transformed the energy sector.

Constellation Energy, operator of the country’s largest nuclear fleet, has become a market darling as hyperscalers race to secure the power needed for data centres.

Constellation’s nearly $27bn takeover of rival Calpine is part of a wave of utility consolidation tied to AI demand, alongside BlackRock-backed deals worth a combined $39bn for power groups AES and Allete.

Industrial groups providing the physical “plumbing” of the AI era have also become strategic assets. Eaton’s $9.5bn acquisition of Boyd’s thermal division this year highlights the contests to control liquid cooling technology vital to next-generation computing facilities.

“The infrastructure required to run and operate an AI data centre just requires more power at the chip,” says Heath Monesmith, president and chief operating officer of Eaton’s electrical sector. “The whole industry needs to move at the speed of chip design.”

KKR made more than a 15-fold return on March’s $4.75bn sale of CoolIT Systems, which had jumped from a $270mn valuation just three years before. The company’s transition from a peripheral player in gaming to critical AI infrastructure illustrates how the boom is minting winners from once-niche specialists. 

The ripples are felt well beyond hardware and energy. General Catalyst’s $6.3bn acquisition of travel group American Express Global Business Travel and its partnership with Nelson Peltz on an $8bn takeover of London-based asset manager Janus Henderson reflect growing bets that AI can transform service businesses through automation and productivity gains.

Hire or buy?

Big Tech has found a takeover workaround in the AI race: licensing a start-up’s intellectual property and hiring its top talent without acquiring the corporate entity.

Such “acquihires” came to prominence as a defensive manoeuvre against the antitrust policy of the Joe Biden era. They have persisted under a more deal-friendly Trump administration, helping companies sidestep the lengthy reviews that accompany traditional M&A, although state-level scrutiny has begun to intensify.

Almost every hyperscaler has adopted the playbook. Google recently deployed $2.4bn to secure Windsurf’s coding architecture and leadership, following similar raids by Microsoft on Inflection AI and Amazon on the engineering core of Adept AI.

Meta’s $14.3bn investment in Scale AI, which installed Alexandr Wang at the helm of the tech giant’s new superintelligence division, remains the benchmark for this talent-first consolidation.

Nvidia, the latest heavyweight to embrace the strategy, has carried out several such deals, including with networking start-up Enfabrica and a $20bn arrangement with its upstart chip rival Groq.

Groq sent the cash to its shareholders and shared top talent and intellectual property with Nvidia, but will continue operating its own small cloud business.  

“Nvidia wanted to be really quiet about it but it was hard to keep such a large deal under wraps,” says a person with knowledge of the deal, which was announced on Christmas Eve.

Jim Ryan, a partner at Morrison Foerster, says Big Tech’s growing adoption of acquihire structures “can offer valuable opportunities for founders and employees”. But, given the complexity of such arrangements, “they can also raise questions for investors”.

AI and private capital

Just four years ago, the private capital industry appeared to be entering a bleak era as the age of easy money came to an end. Interest rate rises threatened the sector’s highly leveraged portfolios. Now, however, such asset managers appear to have embarked on a new golden age, as the chief underwriters of tens of trillions of dollars for AI.

Investors poured a record $250bn into private infrastructure funds last year as capital flooded towards data centres, power generation and digital networks, according to S&P Global.

Apollo estimates nearly $3tn will be required for AI infrastructure up to 2028, with private credit and specialist funds expected to provide much of the financing.

“The demand for capital from this global industrial renaissance that we’re going through is just off the charts,” Marc Rowan, Apollo’s chief executive, told investors late last year.

For Apollo, the immense expenditure on energy and AI infrastructure offers the opportunity to use its vast pool of life insurance assets to become a long-term lender to promising companies. 

For smaller players in the private capital industry, particularly midsized buyout firms, the AI boom has been far more punishing. Valuations and margins have been compressed across large swaths of the software sector, intensifying a market shift in which scale is essential to survive.

All the while the giants are pursuing aggressive plays. Blackstone recently unveiled a $5bn plan to construct a “neocloud” from the ground up in partnership with Google.

The venture aims to deliver high-octane computing power for AI models, using Google’s proprietary microprocessors — a bet that could eventually reach a valuation in the tens of billions.

Blackstone argues that greenfield projects in emerging sectors at times can be more profitable than the traditional strategy of acquiring existing businesses at a steep premium.

“Winners haven’t been set yet. We are building at cost,” says Jas Khaira, the veteran Blackstone executive spearheading the Google partnership. “This is the biggest cycle in capital in my entire career.”

Will it end in tears?

The AI boom is good news for M&A, previously unfavoured companies, engineers hired at vast expense and the titans of private capital.

The rest of America is not so convinced. This month former Google chief executive Eric Schmidt was booed at the University of Arizona when he compared AI to the transformational impact of the computer in a commencement address.

“I know what many of you are feeling,” he added. “There is a fear in your generation that the future has already been written, that the machines are coming, that the jobs are evaporating.”

Across the American heartland, communities are mobilising against the rapid proliferation of sprawling data centres, citing the strain on local power grids as electricity bills soar. According to one recent NBC poll, AI is even less popular than the US’s disliked Immigration and Customs Enforcement agency.

Such strength of feeling may yet decide how far the AI revolution sweeps all before it — and how long the valuations premised on its success endure.

The SpaceX, OpenAI and Anthropic IPOs — all of which are due in the coming year — are designed to finance the relentless capital expenditure on the models behind the AI boom, one of the biggest peacetime investments in history. With such enormous sums at stake, some investors question the maths and the projected profits of the companies involved, evoking the memory of the dotcom bubble.

In the interim, global M&A is now dominated by the AI-inspired race to control the world’s energy, fibre networks and computing capacity.

For McClure at Goldman Sachs, the transformative power of the AI revolution is highlighted by the sheer ambition of utilities and other groups that have suddenly made their way into the limelight.

“A decade ago, these enterprises were categorised as stable, GDP-correlated performers,” he says. “The insatiable demand for data centres has pivoted them towards a trajectory of exponential expansion.”

The question is how long that exponential expansion can continue for the beneficiaries of the AI boom — and the dealmaking it has set off.

Swatch and Audemars Piguet’s collab provides a much-needed pop

The launch may not have gone quite according to plan, but such tie-ups are a good way to inject some buzz into the market

This month’s launch of the “Royal Pop” collaboration between Swatch and Audemars Piguet — two Swiss watch brands at opposite ends of the luxury spectrum — attracted the kind of publicity the companies might have preferred to do without. But in reality, it is good news for them, and a sign of the times for the luxury sector more broadly.

The launch of the pocket watch, in Swatch’s trademark plastic but reminiscent of Audemars Piguet’s Royal Oak flagship, did not run smoothly. There were scuffles and worse in queues outside Swatch stores in London, New York, Paris and beyond, with police in some places using tear gas and pepper spray to subdue the crowds. Videos on social media showed people in hoodies fighting over the chance to buy a Royal Pop pocket watch retailing at up to £350, potentially hoping to flip it on secondary markets for a good 10 times that amount.

Still, for Swatch Group, the new product will turn a neat profit. The cost of producing each pocket watch, according to Bernstein analysts, is no more than 20 per cent of its retail price, with royalties to Audemars Piguet likely to be about the same. This still leaves a 60 per cent gross margin that, taking the lower end of estimated sales of between 500,000 and 1mn units, will deliver at least SFr100mn ($125mn) to Swatch Group’s bottom line. That’s about 40 per cent of this year’s forecast net income.

Swatch — which makes all its watches in Switzerland — can claim to have saved the national industry at least twice: from the quartz movement revolution and from the smartphone, which made wristwatches redundant for many people. Maybe this fresh iteration will help defend it a little longer.

For Audemars Piguet, the upside is less clear. It is true that high-end watchmakers do not have the option of offering cheaper “entry-level” products in the way that apparel or cosmetics makers can. So it is vaguely possible that the Royal Pop will serve that function: perhaps some young buyers will one day buy the Royal Oak for 100 times the price. But equally, some of today’s Royal Oak devotees may not love the idea of entry-level fashionistas getting a piece of their exclusive brand.

The tie-up, in any case, showcases a wider trend in the luxury sector. Fashion and luxury collaborations, already a widespread phenomenon, are a good way to inject some buzz into a market that’s been short of both ideas and consumer appetite. And perhaps the weirder, wilder and more debated, the better for everyone involved.

The longevity industry is booming with high-tech tests, drugs, and medical devices. What to know for your health—and personal finances.

Value investors think the good times are far from over for the Japanese stock market. Here are stocks and funds to invest in now.

Japan has had more than its share of challenges lately, chief among them energy shortages, higher costs from the closure of the Strait of Hormuz, and questions about Prime Minister Sanae Takaichi’s ambitious fiscal spending plans.

That hasn’t stopped investors from snapping up shares of Japanese stocks. The Nikkei 225 is up 18% this year—and 47% over the past five years. Working in Japan’s favor are shareholder-friendly governance reforms in the private sector and increased demand for Japanese services and goods as nations race to revitalize manufacturing and reduce reliance on China.

Investors looking for value say there’s more to come.

Even after the latest gains, the MSCI Japan index trades at under 18 times forward earnings—a discount to the almost 21 times for the S&P 500. Analysts have boosted their earnings expectations for Japanese companies since the start of the year. After about a third of companies reported their results for the fourth quarter of fiscal 2025, which ended in March, Société Générale analysts noted that earnings growth averaged about 18%, suggesting full-year earnings per share growth of 7.5%.

U.S. Treasury Secretary Scott Bessent’s recent visit to meet with top Japanese officials, including Takaichi, highlights the opportunity ahead, especially for Japanese industrial companies that help the U.S. and other countries shore up critical supply chains. As part of its trade pact with the U.S., Japan committed to a $550 billion investment program to help fortify Western economies from reliance on—and competition from—China. The first projects have been directed at power generation, oil and gas, and critical minerals.

As the U.S. shifted into services over the past couple of decades, Japan preserved its manufacturing infrastructure, sometimes sticking with unprofitable operations. That manufacturing prowess is now increasingly valuable. Christian Heck, a fund manager and deputy head of value at First Eagle Investments, says the Japanese economy’s aging and shrinking population means it has been early in areas like factory automation, and can now take the skills it has honed abroad. “Any sort of reshoring or onshoring means you need highly automated factories. There isn’t enough labor, and labor is too expensive,” Heck says.

One of Heck’s cheaper holdings is SMC Corp., a world leader in pneumatics equipment manufacturing. The company’s 40% global market share is still growing—its business requires millions of parts, making it harder for rivals to break in. That has allowed SMC to generate ample free cash flow, high returns on invested capital and strong margins. The company has invested heavily recently to increase its capacity, which Heck thinks can deliver mid- to high-single-digit revenue growth over time and a stock return in the teens.

Japan also benefits from the push to find other sources of critical minerals and lessen reliance on China. About a decade ago, Japan discovered a large, deep-sea rare earth deposit that is considered the world’s third-largest high-quality, mineral-rich rare earth reserve. The deposit includes yttrium and dysprosium used in permanent magnets, clean-energy technologies, and advanced chemicals.

Japan has the infrastructure to develop these reserves and has recently outlined a plan to commercialize it, says Masakazu Takeda, co-manager of the Hennessy Japan fund. One potential beneficiary in Takeda’s portfolio: Shin-Etsu Chemical, a silicon wafer and PVC manufacturer, that also has a rare-earth business that could help commercialize the reserves. Though Takeda says the company’s role in building infrastructure was the draw, the rare-earth component is an added benefit.

Japanese companies are also taking a bigger role in the U.S. housing market. Sumitomo Forestry’s recent acquisition of Tri Pointe Homes makes it one of the top builders in the U.S. Sumitomo is looking to consolidate the fragmented U.S. housing market. Though Sumitomo’s shares have lagged behind the broader market as home buyers struggle with affordability in the U.S., Takeda says it’s a matter of when, not if, the market turns.

The dynamics at home also bode well for some companies. Japan is facing inflation for the first time in decades, with core inflation rising 2% to 3%, unfathomable a decade ago in the depths of Japan’s deflationary rout. Among the beneficiaries are banks and cash-rich companies that avoid higher borrowing costs and earn meaningful interest on their cash.

Inflation has another advantage. “Our companies have pricing power but have never used it because it was seen as un-Japanese to raise prices. Now, all of a sudden, it is acceptable,” says Heck. Hoshizaki, which makes ice makers for restaurants and other commercial uses and benefits from relatively stable demand, has increased prices several times since Covid after a 20-year period of no such hikes. “For the businesses we own, that mentality change—that price increases are socially acceptable—has been beneficial,” says Heck. “Pricing is a very important lever because it flows right through to the bottom line.”

At the same time, Japanese government borrowing costs have surged, with the 10-year yield hitting 2.75%, its highest point since 1997. The sharp move in the bond market reflects investor concerns that the Bank of Japan might be moving too slowly to deal with inflation exacerbated by Takaichi’s efforts to blunt the higher energy prices with fiscal stimulus.

Still, the government’s push for companies to start deploying their cash has attracted foreign investors, especially with the Tokyo Stock Market’s “naming and shaming” campaign targeting companies trading below price-to-book value. The exchange is now looking to send a stronger message by revising its corporate governance message to get companies to stop hoarding cash.

Roger de Bree, managing director and fund manager at Tweedy, Browne, invests with an eye for bargains, and sees Japan as a fertile place to invest. Koito Manufacturing, which makes lights for cars and laser safety systems, said in 2025 it would buy back 350 billion yen worth of shares. So far, the company has bought back 50 billion yen. That has boosted the stock, but the company still has room to do more. By his analysis, the company is currently trading at about 10 to 11 times next year’s expected earnings.

“The country is slow to adopt new things, partly because culturally it is slow-moving,” Takeda says. “There is always initial resistance to change. The flip side is that once momentum sets in, it can turn into a significant movement.”

Japanese policymakers have been intervening in the currency market to stem the slide in the Japanese yen. In a note to clients, Société Générale currency strategist Kit Juckes said the yen is likely closer to a recovery. Although the Bank of Japan kept rates at 0.75% at its last meeting, three board members dissented, and SocGen analysts expect the central bank to raise rates soon.

Several major brokerages allow investors to trade on the Japanese stock exchanges. But investors can also gain a foothold more easily in Japan with the iShares MSCI Japan exchange-traded fund or, for those worried the yen won’t shake off its weakness, the WisdomTree Japan Hedged Equity ETF.

A stronger yen could bolster confidence domestically, encouraging Japanese households to invest more at home. Already, Japan has offered nudges like expanding tax-exempt investment accounts to woo some of the $7 trillion, or half of Japanese households’ wealth, that has been parked in cash into equities.

Japanese retail investors have just 14% allocated to stocks. If they inch nearer to Europe’s 25%, Morgan Stanley estimates that could translate to $1.7 trillion in equity purchases. That’s about 20% of the market cap of Tokyo Stock Market Prime Exchange, which lists the biggest companies.

The largest U.S. IPOs tend to underperform the market, with a not-insignificant share of those stocks delivering negative returns.

In a bygone era, an initial public offering was a way for investors to get in on the ground floor of a promising company. In 2026, it’s more like parachuting onto the roof.

When SpaceX goes public in June, the company is likely to carry a valuation approaching $2 trillion. It will probably raise a record $75 billion in the deal. CEO Elon Musk may become humanity’s first trillionaire. We’re way past start-up.

Thanks to a seemingly bottomless pool of funding, the most exciting companies can stay private for longer and go public at dizzying valuations. Artificial-intelligence rivals Anthropic and OpenAI, data platform Databricks, and payment processor Stripe are all candidates for so-called mega-IPOs at valuations of $100 billion or more if SpaceX’s offering goes well.

Bigger isn’t necessarily better, though. Historical data show the largest U.S. IPOs tend to underperform the market, with a not-insignificant share of those stocks delivering negative returns. And the coming wave of mega-IPOs presents more risks than usual: Private investors are licking their chops at the prospect of cashing in on long-awaited gains.

Even the savviest, most battle-tested investors may fear missing out. But SpaceX and its fellow IPOs won’t behave like normal stocks for months, if not longer, and trading promises to be choppy and unpredictable. Waiting out the chaos may not be exciting. It will be shrewd.

Facebook, now Meta Platforms, still holds the record for being the most highly valued U.S. company at the time of its IPO, with a market cap of $81 billion in May 2012. SpaceX could come public at more than 20 times that size—even larger than Meta is today.

The AI labs, meanwhile, are still conducting 12-figure private funding rounds of their own. OpenAI secured $122 billion at a $852 billion valuation in late March. Anthropic one-upped its rival the next month, fielding proposals from investors that would value it at as much as $900 billion, according to multiple reports.

Saudi Aramco is the lone historical corollary for IPOs of that size. It went public on Saudi Arabia’s stock exchange in 2019 at a valuation of $1.7 trillion.

“The only company that has done something at this scale was a state-funded oil company in one of the less transparent markets in the world,” says Avery Marquez, director of investment strategies at IPO research firm and fund sponsor Renaissance Capital. “There is really no relative scale.”

The record of the very largest IPOs is spotty at best. Excluding Cerebras Systems, the chip maker that completed its IPO a few weeks ago, 36 U.S. companies have gone public on a U.S. exchange with a market cap of $15 billion or more, according to FactSet. Only nine have beaten the S&P 500’s returns from their first-day closing price. Just 17 have generated positive returns at all.

Look down the list of winners and you’ll see tech luminaries like Google, now known as Alphabet (+15,500%), and Palantir Technologies (+1,347%). But for every Google, there’s a Lyft (-83%). And for every Palantir, there’s a UiPath (-85%). Some of the companies, such as telecom equipment maker Lucent Technologies and smartphone precursor Palm, have all but disappeared.

However you slice the data—narrowing in on tech companies, expanding to IPOs of any size, excluding the dot-com bubble—you’ll notice a pattern. On average, stocks spike on their first trading day but struggle to keep up the momentum over time. The 1,724 U.S. IPOs from 2011 through 2024 had an average first-day pop of 23%, according to data from Jay Ritter, a University of Florida professor dubbed Mr. IPO. Over the next three years, the newcomers lagged behind the market by 25 percentage points.

The trends are especially rough for companies that trade at a high premium to their revenue, suggesting big expectations for growth. Since 1980, issuers with trailing annual sales of at least $100 million and a price-to-sales ratio above 40 have seen an average three-year drop of 45% from their first day’s close.

SpaceX will be the next name in that data set. At an estimated market cap of $1.8 trillion, the company would trade at 93 times trailing sales.

“I think there’s a very good chance that these IPOs will jump on the first day of trading,” Ritter says. “And whether they go up or not, one thing that I’m certain about is the stock is going to be very volatile.”

Don’t expect the data to spook investors, many of whom have been waiting for years to invest in SpaceX. In fact, there are plenty of reasons to expect yet another explosive first-day gain in June.

To start, the hard numbers are genuinely impressive. SpaceX accounts for the majority of all orbital launches worldwide, and its use of recycled rockets has driven per-launch costs well below what the sector ever thought was possible. Starlink, its satellite broadband system, served 10.3 million customers by the end of March, generating profit margins on earnings before interest, taxes, depreciation, and amortization, or Ebitda, of 63% on $11.4 billion in revenue in 2025.

And if “innovative telecom business” is the floor for SpaceX stock, putting solar-powered data centers in space represents the stratosphere. Like many of Musk’s ideas, “orbital AI” seems straight out of a sci-fi novel, but the company is already attracting serious partners like Alphabet

GOOGL and Anthropic. At a time when data-center developers are scrambling for power and land, SpaceX is offering to eliminate the need for both.

The AI business, SpaceX says in its IPO prospectus, has a total addressable market of $26.5 trillion, nearly as large as the entire U.S. gross domestic product of $31.9 trillion.

Then there’s the hype: “SpaceX has been the most famous private company in the world, attached to one of the most polarizing public figures alive, and inaccessible to most investors for two decades,” explains Jake Miller, co-founder of Opto, a tech platform for private investing. “That’s a generational IPO story, not a normal one.”

For now, it’s also an unprofitable one. In the first quarter of 2026 alone, the company reported a $1.9 billion operating loss, driven by a $2.5 billion loss in the AI segment.

SpaceX didn’t respond to Barron’s requests for comment.

By all accounts, investors are pining for shares. SpaceX has yet to declare the size of its IPO offering, but it will likely be a single-digit percentage of the company’s total shares outstanding. The company plans to set aside much of that for retail investors, including those with accounts at Charles Schwab, Fidelity, Robinhood, and SoFi.

The retail focus makes sense given Musk’s unique pull among a certain set of self-directed traders, according to Marquez, who expects retail demand to be strong. One bracket higher, some high-net-worth investors are pitching the stock to their advisors, rather than the other way around.

“In all my years in this business, I’ve never had so many inbound inquiries on an IPO like this,” says Drew Freides, a UBS private wealth advisor who is optimistic about SpaceX in the long term but wants to see the valuation before recommending the stock to clients. “We spend a lot of time, you know, reining in clients and just being cautious.”

OpenAI and Anthropic are no less famous or exciting. The pair are locked in a warp-speed race to build the future of human technology, and they’re starting to generate significant cash. Anthropic said in May that it had hit a $30 billion annualized revenue run rate; earlier this year, OpenAI said its run rate had exceeded $20 billion.

Both companies declined to comment for this article. The Wall Street Journal reported last week that OpenAI is preparing to file a confidential IPO prospectus with regulators in the coming days. There are reasons for the pair to go public soon, particularly if SpaceX’s IPO is a success.

Training and running AI models is expensive, and the two companies are in constant need of capital. Public companies can use their stock to open the financing spigot quickly. Competition—for capital, a record valuation, or good old-fashioned bragging rights—is the other factor.

“There are no public AI companies,” Harrison Rolfes, a research analyst at PitchBook, says. “Whoever IPOs first becomes the market leader.”

The real winner of a mega-IPO isn’t necessarily the company or public investors, though. Private investors are the ones coming out on top.

Following the financial crisis, legislators designed the 2012 Jumpstart Our Business Startups Act to stimulate public markets. But the law also eased the path for private offerings, by allowing larger companies to keep their financials private. Under the JOBS Act, the threshold for requiring disclosure went from 500 shareholders to 2,000.

With less of a regulatory nudge, companies can soak up round after round of funding from investors looking for exponential returns. It helps that private markets are no longer the exclusive province of venture-capital firms. Institutions, family offices, and high-net-worth individuals are all getting in on the action. Some investors have access through special-purpose vehicles —a pooled secondary-market investment—that the companies themselves may not recognize as legitimate.

“If you pay close enough attention, you can find someone who can sell you some SpaceX,” says Tom Kerr, co-head of investments at private markets investment firm Hamilton Lane. (Kerr doesn’t advise going that route.)

Early investors often have astronomical gains on paper—SpaceX, for instance, was worth a measly $30.5 billion in 2018—but selling shares on the secondary market can get clunky. An IPO solves that problem, giving founders, employees, and other private shareholders an opportunity to sell shares at will. And make no mistake, investors will take at least some chips off the table.

Companies are already stating as much publicly. The London-listed Edinburgh Worldwide Investment Trust, which has had a stake in SpaceX since 2018, said in April it would propose a tender offer following the SpaceX IPO allowing shareholders in the closed-end fund to “crystallize” their returns. On an earnings call in February, Cannae Holdings CEO Ryan Caswell said the investment firm’s SpaceX stake “seems like it’ll be a source of cash for us over time.”

Lise Buyer, founder of IPO advisory firm Class V Group, says private-market investors are under pressure to provide liquidity to clients. “It’s hard to go out and raise new funds if you haven’t put any money back in the pockets of your previous investors.”

Others are exiting before the IPO even happens. Marc Lipschultz, co-CEO of embattled private-equity firm Blue Owl Capital, told investors in April that the company had realized roughly 10-times returns by selling about half of its SpaceX investment at a $1.25 trillion valuation.

To be sure, investors won’t be able to dump shares right away. Private shareholders typically have a six-month lockup period after an IPO during which they are prohibited from selling.

Issuers and their investment banks are increasingly engineering ways to reduce the cascade of stock at the six-month mark. Cerebras shareholders, for instance, will get a chance to convert and sell 84 million Class B shares in August, then another 87 million shares in September and October—all before six months pass in mid-November. SpaceX is getting similarly creative, with a portion of shares unlocking after the company’s second- and third-quarter earnings report. Another batch unlocks if the stock price reaches certain levels.

“At some point, you’re going to have a massive waterfall of stock that’s going to be coming to market,” says Ken Smythe, CEO of secondary investments firm Next Round Capital. “How the company manages that is going to be critical because there’s never been this amount of unlock at one time.”

Retail-trader personalities online have a warning for investors trying to buy from institutions: “You are the exit liquidity.” With mega-IPOs, that exit liquidity will likely include the index funds held by pension funds and retirement accounts.

Nasdaq rolled out a “fast entry” rule in May that shortened the waiting period for megacap stocks to be included in the Nasdaq 100 index to 15 trading days, down from as long as a year. S&P Dow Jones Indices has also proposed shortening its wait for S&P 500 inclusion to six months from 12 months. It could implement the rule just before SpaceX’s IPO.

Dozens of the world’s most popular funds are linked to these indexes and will likely be forced to buy recent mega-IPOs sooner than they would have before. This forced buying could create the demand early investors need to unload shares, facilitating an enormous wealth transfer from private markets to public markets.

“The insider is going to be able to cash out at this inflated price, but the index funds are going to be buying at this inflated price,” says Ben Schiffrin, director of securities policy at Better Markets, a consumer-focused advocacy group. “That seems, you know, not great for retail investors.”

On one hand, the automatic demand is helpful. If issuers like SpaceX can properly time lock-up expiries, they may be able to prevent huge selloffs when new shares become available. On the other hand, markets are in uncharted territory when it comes to the sheer volume of stock changing hands. Investors trying to ride the coattails of funds by buying SpaceX just before it gets included in the Nasdaq 100 or the S&P 500 may find themselves in a crowded trade.

“Once you get past those index inclusions, then where is the demand?” Jim Lebenthal, chief markets strategist at Cerity Partners, puts it. “I suspect that these companies will have a very long, profitable future as public companies, but there might be a little hiccup in the shares after they’re included in the indexes.”

It will be difficult to ignore the news when SpaceX starts trading in a few weeks. Those who don’t buy the SpaceX IPO could easily get the SpaceX FOMO instead.

Freides, the UBS advisor, says client inquiries are more about a fear of missing out and less about company fundamentals. “They feel like, ‘I should’ve been in this thing years ago. And why aren’t I in this, and how do I get in this? And I don’t care what it costs.”

Resisting the urge to chase the stock is the prudent move. Investors should expect wild, unpredictable swings in the first several months of trading, without the venture capital-like upside they would get from a smaller, younger company. SpaceX’s future may even include a merger with Tesla, further complicating the growth trajectory and stock upside.

To those tempted by the mega-IPOs, Lebenthal advised an admittedly old-fashioned approach: diversification and dollar-cost averaging.

“There are plenty of retail investors out there who are like, ‘I want to move all my chips on to OpenAI.’ Good luck, I wouldn’t do that,” he says. “You get some on the IPO? Great, save some dry powder for whatever may come next.”

IPOs the size of SpaceX, or indeed OpenAI and Anthropic, are essentially a new asset class altogether. Each quarter that passes after SpaceX’s IPO will offer new data on how the asset behaves. Patient investors get the benefit of seeing more quarterly results and gauging SpaceX’s progress toward justifying its valuation. Perhaps more importantly, they will see how both hype-driven investors and billion-dollar institutions react.

Another argument for patience: Investors who bought Meta after its first day of trading are up 1,474% today. Those who bought it six months later have booked gains of 2,454%.

IPOs get treated like the main attraction. Just remember that the real investment story is what happens next.