As SpaceX prepares for its record-breaking initial public offering (IPO), concerns are growing about potential volatility in global stock markets.
Fortune reported on June 7 that while there is increasing enthusiasm on Wall Street for buying shares ahead of the SpaceX IPO, significant buying demand could lead to the sale of other assets, thereby increasing overall market volatility.
SpaceX plans to sell over 555 million shares at $135 each, aiming to raise at least $75 billion. This would push the company's valuation beyond $1.75 trillion.
If underwriters exercise additional allocation options due to high demand, the total amount raised could increase to $85.7 billion. The final offering price is expected to be set on June 12, with trading on Nasdaq anticipated to begin on June 13 under the ticker symbol 'SPCX.'
Greg Boutle, head of U.S. equity derivatives strategy at BNP Paribas, noted in a report that while the market can likely absorb much of the capital flow related to SpaceX, the issue lies in the potential for these flows to accumulate in the same direction.
He estimated that the available shares during the SpaceX IPO could reach around $75 billion, and if $30 billion in passive buying, retail investor chasing, leveraged ETFs, and options flows converge simultaneously, it could strain the liquidity of the stock. This could lead to a heightened risk of price distortion if everyone attempts to buy or sell at once.
Market observers are noting that the SpaceX IPO could disrupt existing capital flows in the stock market. Although S&P Dow Jones has decided not to change its rules for early inclusion of SpaceX in the S&P 500, Nasdaq 100 regulations have been adjusted. This is expected to generate buying demand from passive funds linked to tech-focused indices.
Such buying demand is likely to be offset by sales of other stocks. Boutle estimated that retail and passive investors might sell around $50 billion worth of other stocks to fund their SpaceX purchases. If SpaceX shares perform strongly after the IPO, this figure could increase.
There are predictions that recently surging artificial intelligence (AI) and semiconductor stocks could be among those sold. A significant portion of retail investors' assets is tied up in popular tech stocks, and given the substantial rise in AI-related companies' stock prices in recent years, these could be targeted for liquidation.
Boutle suggested that the sharp decline in the New York stock market on June 6, led by semiconductor stocks, could be an early signal of such price distortions. He projected that the volume of sales from retail investors liquidating recently high-flying stocks and leveraged products to invest in SpaceX could be substantial.
The SpaceX IPO may also signal the beginning of a wave of IPOs from major tech companies, adding to market pressures. Fortune noted that OpenAI and Anthropic are also planning to go public this year, and demand for investments in these key AI firms is expected to be high. Additionally, secondary offerings from other big tech companies, including Alphabet, the parent company of Google, are raising concerns about whether the market can absorb all the newly available shares.
* This article has been translated by AI.
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