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- Wall Street expects that the stock market to digest the new equity supply from SpaceX’s initial public offering.
- SpaceX’s anticipated $75 billion capital raise will absorb just a little over two weeks of shareholder payouts, according to Gavekal Research.
- That isn’t to say that investors aren’t in for a rough period as new major IPOs are often volatile.
SpaceX’s facilities and employees, as speculation mounts on when the company will aim to file its initial public offering (IPO) prospectus with regulators in Starbase, Texas, U.S. March 25, 2026. Gabriel V. Cardenas | Reuters
SpaceX’s initial public offering this week is set to be the biggest ever in history, flooding the stock market with new shares that begs the question: where is the money going to come from?
As far as Wall Street is concerned, the stock market has what it takes to absorb the new equity supply. In the 12 months to September 2025, S&P 500 companies issued roughly $1.7 trillion, or roughly $140 billion a month, according to Gavekal Research.
What that means is that SpaceX’s anticipated $75 billion capital raise will absorb just a little over two weeks of shareholder payouts, according to the firm.
It’s not just SpaceX that’s seeking to raise capital. In total, four companies including SpaceX, Anthropic, OpenAI and Alphabet are seeking to raise about $380 billion in the public markets — but even that amounts to roughly two months of issuance, the firm said.
“The point is that in the grand scheme of the U.S. equity market, these share issues are surprisingly digestible,” Gavekal Research’s Will Denyer wrote in a June 3 note. “This suggests any drag on U.S. equity performance from the liquidity drain should be short-lived.”
Both private and public companies are raising record amounts of capital to tap the AI hype. OpenAI recently raised $122 billion on March 31, 2026, led by Nvidia and Amazon.com. A few months later, Anthropic secured $65 billion in Series H financing, pushing its valuation to $965 billion.
While private companies continue to raise capital, major tech companies are not too far behind. Alphabet recently announced an $84.8 billion equity raise, as the tech giant prepared to ramp up its investment in AI infrastructure amid surging demand.
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In recent years, global equity and bond funds have attracted substantial investor money, suggesting that capital markets may have room to absorb new wave of large stock offerings, especially after SpaceX goes public this Friday.
Overall equity and bond flows have remained positive, according to recent data from JPMorgan. While the figures for 2026 are not directly comparable with previous full-year totals, they point towards an increased investor demand as companies race to prepare for IPOs and other equity raises.
IPO volatility
That isn’t to say that investors aren’t in for a rough period as the market absorbs the SpaceX super-sized offering. Even before the imminent debuts of three trillion dollar companies, investors were anticipating a period of consolidation for the stock market after its veritably parabolic comeback off the March lows.
IPOs are already known to be volatile. A Truist Wealth review last 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. Even if the stock market is able to digest the new shares, the IPO could trigger a rotation in tech leadership as investors trim from the existing winners to fund the new issues.
This week gave investors some idea into what a rotation would look like. The S&P 500 is headed for a losing week, as investors shifted out of highflying chip stocks and into defensive sectors such as consumer staples.
There are other risks. Recent rule changes by the Nasdaq, among other exchange operators, have fast tracked the inclusion of newly public companies such as SpaceX into indexes that have previously had to wait to prove their profitability and build a sufficient float.
They’ve also changed how they’re weighted. Instead of using the tradable free float of $75 billion to weight SpaceX, the coming Nasdaq 100 inclusion will use a 3x multiplier that gives the stock a weighting based on a market cap of $225 billion.
That means any moves up or down following the IPO could be exaggerated as passive investors are forced to chase the stock, raising the volatility of the overall index.
Holding the bag
Those changes are especially concerning given the unprecedented level of retail participation. SpaceX’s IPO is supposed be a massive liquidity event, meaning institutional investors who got in on the ground floor of a now trillion dollar company can cash out just as retail traders and passive funds buy in — meaning even first-time investors could be left holding the bag.
“I’m a little fearful that this could be a negative experience for a lot of people,” said Jay Woods, chief market strategist at Freedom Capital Markets. “When you hear your own parents asking you questions about it, you know it’s a little overhyped.”
To be sure, that doesn’t mean SpaceX is a bad investment. Many investors said they’re planning to bide their time after the initial hype of the IPO, or buy only a small portion, and choose a better entry point into the rocket and satellite maker when it goes on sale.
“I do think it’s great that the retail investor is getting an opportunity like they never have before,” Woods said. “My hope is that it doesn’t become a lottery ticket for them instead of an investment, because that’s not how the market works over the long term.”
“This isn’t a moonshot,” Woods added. “This is a long-term investment that will take time to grow into its valuation.”
Demand fatigue
Then there’s the pace of recent IPO announcements that is worrying investors. Justin Bergner, portfolio manager of GABBX at Gabelli Funds, said he worries that AI companies are racing to secure funding before conditions worsen that will make it more difficult to raise capital.
“I think the fact that Open AI and Anthropic are racing to see who can be first after SpaceX is not a good sign,” Bergner said. “They’re worried that whoever doesn’t go first will benefit from reduced demand, or kind of demand fatigue in the market, that’s the signal it sends.”
There’s enough in the broader economy that is worrying investors. Inflation is now above 4%, as higher oil prices start to eat into savings for Americans whose wages can’t keep pace. Bond yields are rising. The next major move from the Federal Reserve is projected to be a hike.
But there’s also abounding optimism that the demand for AI will justify the need for capital. Evan Schlossman and Willy Lee at publicly traded venture capital fund SuRo Capital said the majority of their portfolio companies expect to IPO in the next 12-18 months — a reflection of the strong demand for AI compute.
“I would not be surprised at all if you see a stampede of IPOs that come after this,” Lee said.
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