SpaceX and AI IPOs to ignite trading frenzy
The gargantuan IPOs for SpaceX, Anthropic and OpenAI could prompt an unprecedented wave of buying and selling as US exchanges’ new “fast entry” rules quickly inject the stocks into Wall Street indices.
The rules, implemented this month by Nasdaq, mean billions of dollars of passive money will automatically flow to the three companies shortly after they go public. This would not only drive up their share prices but force investors to sell other stocks.
Elon Musk’s SpaceX filed for an initial public offering on Wednesday that is expected to be the largest on record, hours before OpenAI’s plans to list were revealed and rival Anthropic said it was on track to turn a profit, laying the groundwork for its own flotation, write George Steer, Harriet Clarfelt and Emily Herbert.
SpaceX will make relatively few shares available to public investors at its IPO next month, a small “free float” which under old rules would exclude the rocket company from indices tracked by trillions of dollars of passive investments.
However, Nasdaq has loosened its rules as it battled to win the SpaceX listing over its rival NYSE, allowing the stock to join the Nasdaq 100 after just 15 days. SpaceX and other new entrants will also be given an index weighting equivalent to three times the value of the shares floated. S&P Dow Jones Indices is also consulting on changes that could fast-track the stock’s entry into the S&P 500.
The initial impact on the rest of the index will be limited by the relatively small number of shares on offer, but is likely to increase after a lock-up period expires, which will be staggered over the first 180 days of trading, according to the SpaceX prospectus.
JPMorgan estimates that if 50 per cent of the company’s shares are eventually floated with a valuation reaching $2tn, passive investors would have to sell $95bn of Wall Street’s eight biggest existing tech stocks. The FT has previously reported that SpaceX is aiming for a $1.75tn valuation.