Welcome back to The Week Ahead. Shortly after this article is published, shares in the world’s biggest IPO, SpaceX, will begin trading.
The flotation at $135 per share will raise $75bn. This will give the satellite, AI and rocket group a market cap of $1.78tn, reflecting the fact that less than 5% of its equity is being sold.
This IPO has attracted unprecedented interest from private investors who have reportedly been prioritised. They’re expected to receive 20% to 25% of the SpaceX shares being sold, an unusually high proportion for a major flotation.
Ed has covered this story in depth, reviewing SpaceX through the lens of the StockRanks. Perhaps predictably, he warns that based on the numbers “SpaceX looks like a textbook Momentum Trap”.
This doesn’t mean the shares won’t climb higher when trading starts, of course. Sentiment aside, there could be solid buying support from institutions and private investors whose orders didn’t get filled in the IPO.
More broadly, SpaceX is expected to be added to the Nasdaq 100 after just 15 days of trading. This could mean that index tracking funds will have no choice but to buy heavily in the coming weeks.
SpaceX is the (eagle-sized) canary in the coal mine for the next phase of the AI boom. But further mega IPOs for Anthropic and OpenAI are expected to follow. Meanwhile, Google-owner Alphabet (NSQ:GOOGL) is in the process of executing an $85bn equity raise, the largest in history.
It’s not yet clear if the market can absorb this tidal wave of new equity without triggering volatility elsewhere. The week ahead will provide our first taste of what may lie ahead. But I suspect it will be a little longer before investors start to focus on individual companies’ prospects and valuations, rather than the overall direction of travel.
Economic news
Oil prices have fallen below $90 for the first time since the start of the Middle East conflict. Trump is promising that a deal is close, but we’ve heard this before. I would not be surprised if continued uncertainty caused further flip-flopping for oil prices next week.
Fears are growing that crude inventories – particularly in the US – are falling towards critical lows. Oil inventory data due from API…
