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LivestreamMenuSpaceX is about to make the biggest public debut ever in history, into an already euphoric stock market. There’s never been an offering quite like this one. When SpaceX starts trading as expected on Friday next week, the rocket and satellite company is set to raise $75 billion in its initial offering. And, its valuation of $1.77 trillion means it debuts as one of the top 10 largest public companies, ahead of Facebook-parent Meta Platforms , Tesla and Micron Technology . Even more incredible is that it’s supposed to make the world’s first trillionaire out of Elon Musk , who heads both SpaceX and Tesla. Musk, who is CEO, chief technical officer and chairman of the board at SpaceX, is supposed to have 85% of voting power in the company. Its impact — alongside upcoming IPOs from Anthropic and OpenAI — is about to have far reaching consequences for the public equity universe as well. The stock market is already at all-time highs on artificial intelligence enthusiasm, and now has to wade through the supply and demand dynamics of multiple trillion dollar offerings. “SpaceX is a seminal event,” Philip Blancato, chief market strategist at Osaic, told CNBC. “This moment of trillion dollar companies coming public are market drivers, whether we want to admit it or not, whether we’re excited about it or not.” “All of this is exciting and dangerous at the same time,” Blancato said. Extreme volatility IPOs are already known to be volatile. A Truist Wealth review this week of 30 major IPOs from the last 15 years showed that shares of the newly public companies tend to fall and suffer severe drawdowns in their first year. On a median basis, they’ve dropped 9% one year after their debut, meaning not even half of the companies closed out the year in positive territory, according to the firm. And, within those first 12 months, the stocks on average suffered major drawdowns of 54%. SpaceX’s IPO has the potential to be even more challenging than usual, thanks to recent rule changes from major indexes like the Nasdaq 100 that change the way the stock is weighted. Instead of using the tradable free float of $75 billion to weight SpaceX, the index is using a 3x multiplier that gives the stock a weighting based on a market cap of $225 billion. What that means for investors is that any moves up or down in the stock following the IPO could be exaggerated as investors are forced to chase the stock, adding to overall index volatility. Growing headwinds Next week will also bring the consumer and producer price indexes for May, and the data is expected to show continuing pricing pressures. The annual reading for headline consumer inflation is expected to go to 4.3%, up from 3.8%, according to consensus estimates on FactSet. The information could give investors some insight into the path forward for interest rates, especially given that the first Federal Reserve meeting helmed by Kevin Warsh will take place the following week. The central bank convenes June 16-17. That meeting will also include the release of the next summary of economic projections. Markets are already pricing in a hike before the year is out. But next week’s inflation data can give investors an idea of just how challenging the economy is getting for consumers, and how tenable the upward momentum is in the stock market. SpaceX’s IPOs will also show just how robust the AI narrative will remain, given much of the recent upswing came from semiconductors. On Friday, all three major averages could log a down week. Both the S & P 500 and Nasdaq are solidly in the red, but the Dow Jones Industrial Average is off slightly week to date in afternoon trading. Week ahead calendar All times ET. Monday, June 8 Earnings: Campbell’s Co. Tuesday, June 9 6:00 a.m. NFIB Small Business Index (May) 8:15 a.m. ADP Weekly Employment change (05/23) 10:00 a.m. Existing Home Sales (May) 10:00 a.m. Wholesale Inventories (April) Earnings: Casey’s General Stores , J. M. Smucker Co. Wednesday, June 10 8:30 a.m. Consumer Price Index (May) 8:30 a.m. Hourly Earnings final (May) 8:30 a.m. Average Workweek final (May) Thursday, June 11 8:30 a.m. Initial Claims (06/06) 8:30 a.m. Producer Price Index (May) Earnings: Lennar , Adobe Friday, June 12 10:00 a.m. Michigan Sentiment preliminary (June)Read More
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