SpaceX’s imminent initial public offering is set to be the biggest stock debut in history — but the sheer scale of the launch could squeeze investor demand for other new listings, market watchers suggest.
Samuel Kerr, global head of equity capital markets at Mergermarket, said SpaceX’s long-awaited listing, expected June 12, comes as Europe’s IPO market struggles to build momentum, in sharp contrast to the “completely booming” U.S. market.
With a potential $75 billion IPO and a market valuation of $1.75 trillion, SpaceX’s debut offering is “otherworldly,” Kerr said. Such a listing would “dwarf” other recent debuts, including AI chipmaker Cerebras Systems, whose blockbuster IPO last week pushed its market cap to about $95 billion.
“There’s a possibility it could be a negative for the whole global IPO market,” Kerr told CNBC’s “Europe Early Edition” on Tuesday.
He noted typical IPOs aim to be around five-times covered ahead of pricing, meaning demand for the SpaceX offering would likely need to be “well in excess” of $75 billion.
It has the potential to “really suck all the oxygen out the room for anybody else,” Kerr explained. “Everybody’s eyes are going to be on SpaceX.”
Given the scale of capital the deal is expected to absorb from the global equity capital markets investor base — with investors potentially allocating significant orders to the listing — “almost nothing’s going to want to be in the market at the same time,” he added.
Elon Musk’s company is expected to unveil its IPO prospectus in the coming days.
‘Negative cocktail’
The landmark debut — and the potential capacity squeeze caused by other blockbuster listings in the pipeline, such as OpenAI — further complicates the outlook for Europe’s IPO space, which is already grappling with ongoing bond market volatility and the prospect of looming interest rate hikes.
Kerr said macroeconomic pressures, coupled with sustained uncertainty surrounding the Iran war, its impact on supply costs and rising energy prices, as well as structural weaknesses in the European IPO space — where many new listings underperformed last year — amount to a “pretty negative cocktail” for the market overall.
“Global interest rate rises are a big problem for the IPO market… another ingredient to that negative cocktail is higher bond prices,” he added.
“We were not really expecting an incredibly busy first half of the year, but anything that we were expecting to see in the first half of the year has now been pretty much postponed, at least to the second half.”
Cerebras Systems.
Looking ahead, Salman Ahmed, global head of macro and strategic asset allocation at Fidelity International, warned that a wave of mega IPOs could temporarily drain liquidity from broader equity markets.
With SpaceX, OpenAI and Anthropic all in the frame, Ahmed said the sheer size of upcoming deals could create a major “supply event” for equities, forcing portfolio managers to rebalance positions and potentially triggering a period of market “indigestion,” particularly in heavily concentrated U.S. stock markets where gains have been dominated by a handful of large-cap winners.
“They’ll have to suck in a lot of capital from the system, and that’s why I think there’s another reason we have to be careful about the winners right now, because that’s where the capital is going to be pulled from to finance these mega IPOs.”
— CNBC’s Lee Ying Shan contributed to this story.
