The buzz around SpaceX and upcoming mega-IPOs from OpenAI and Anthropic has generated breathless commentary, but most of it misses the point entirely.
SpaceX stock is simply not a good buy, and when OpenAI and Anthropic eventually come to market, those shares likely won’t be either.
That distinction matters enormously, because confusing a bad IPO investment with a broader market warning is a costly analytical mistake.
Historically, two things end bull markets: a major unexpected event like the COVID-19 pandemic or 9/11, or the Federal Reserve aggressively raising interest rates into elevated valuations.
Valuations alone do not kill bull markets, and expensive markets can stay expensive for a long time if earnings keep growing and liquidity remains supportive.
The Nasdaq’s forward price-to-earnings ratio is currently sitting right around its 10-year average of 23.5 times earnings, which is hardly alarming territory.
At the peak of the dot-com bubble, that same ratio was close to four times higher, and profit margins for major technology companies today are at or near record highs.
Recent data compiled by Truist showed the average one-year drawdown for large IPOs was 55%, which underscores just how dangerous chasing hot new listings can be.
Hot IPOs are often priced for perfection, launched into maximum excitement, and supported by a limited float that can temporarily distort the share price in misleading ways.
Once IPO hype cools and lockup periods expire, reality tends to show up in a hurry, leaving retail investors holding shares purchased near peak enthusiasm.
After a brief euphoric post-IPO surge, SpaceX dropped below its $150-a-share initial trading price, closing recently at just over $154 after reaching as high as $225.
During the dot-com bubble, high-profile IPOs including Netscape, Amazon.com, and eBay did not mark the top of the bull run on their own.
What actually pricked that bubble was a combination of speculative mania, excessive valuations across the board, and the Federal Reserve aggressively tightening monetary policy simultaneously.
None of those conditions currently define today’s market, and that context is critical for investors trying to read the macro environment accurately.
The heavy demand for SpaceX shares actually proves there is enough liquidity and risk appetite in the market to absorb a massive offering without cracking.
Robert Ross, founder of TikStocks and author of “A Beginner’s Guide to High-Risk, High-Reward Investing,” put it plainly: investors should avoid these mega-IPOs but not confuse overpriced new listings with a market on the verge of collapse.
Ross, a former chief equity analyst at Mauldin Economics, has publicly stated he would not be buying the SpaceX IPO, citing the fundamental disconnect between hype and valuation discipline.
There is still little evidence of true irrational exuberance in the broader market, given current valuations and strong earnings growth from the world’s most consequential companies.
Investors who skip the SpaceX, OpenAI, and Anthropic IPOs are making a sound decision, but they should not mistake that caution for a signal that the entire bull run is finished.
