economy
SpaceX IPO: Major IPOs Don't Typically Signal a Bull Market Peak, History Shows
Historical data suggest that major IPOs don't usually flag a bull market peak in the year that follows.
TL;DR
- SpaceX is set to have the largest IPO ever on Nasdaq this Friday, potentially raising $75 billion.
- Historical data from 2008 onwards indicates that major IPOs typically underperform the Nasdaq and S&P 500 in the year after their launch.
- Most of the largest IPOs reviewed by Canaccord Genuity, including Facebook, Alibaba, Aramco, and Rivian, saw declines in their first year of trading.
- The Nasdaq Composite gained 10.9% on average one year after mega-sized IPOs, while the S&P 500 rose 1.1%, compared to an average IPO decline of 4.2%.
- Factors more indicative of a bull market peak include disappointing growth, elevated equity issuance, and tightening Fed policy, none of which are currently dominant conditions.
- Historically, speculative mania or 'irrational exuberance' has not always immediately preceded a market top, as seen after Alan Greenspan's 1996 speech.