Analysis: SpaceX IPO will not "break" the bull market, but investors are concerned about rotation in tech stocks and subsequent large-scale AI funding waves

Mars Finance News, June 11, according to CNBC: Wall Street generally believes that the stock market has the capacity to digest the additional stock supply brought by the SpaceX IPO, but investors are still worried about the volatility that may be caused by subsequent further large-scale AI-related IPOs and a financing wave. Data from Gavekal Research shows that, within the 12 months through September 2025, S&P 500 companies will have issued a total of approximately $1.7 trillion in stocks, or about $140 billion per month. The firm believes that SpaceX’s expected $75 billion fundraising size is only a little more than two weeks’ worth of shareholder dividends. Judging by the overall size of the U.S. stock market, these stock issuances are “surprisingly easy to absorb,” so the drag on U.S. stocks from liquidity withdrawal should be short-term.

Not only SpaceX—companies such as Anthropic, OpenAI, and Alphabet are also seeking to raise funds in the public markets. Including SpaceX, the four companies plan to raise a combined total of about $380 billion, equivalent to roughly two months of issuance. However, IPOs themselves are typically accompanied by relatively high volatility. Truist Wealth’s review of 30 large IPOs over the past 15 years shows that the stocks of newly listed companies often fall and experience large pullbacks within the first year after listing; the median decline one year after listing is 9%, and the average maximum drawdown in the first year reaches 54%. The SpaceX IPO may also trigger rotation within tech stocks, with investors potentially selling existing winners to finance new-stock funding. This week, similar signs have already appeared in the market—investors have shifted from chip stocks with strong gains to defensive sectors such as consumer staples.

In addition, changes to Nasdaq rules may further amplify volatility. When SpaceX is added to the Nasdaq 100 index, it will not be calculated solely using the weighting based on tradable floating shares at a $75 billion value; instead, it will use a 3x multiplier, corresponding to a weighting calculated based on a $2.25 trillion market capitalization. This means that post-IPO stock price gains and declines could be magnified by passive funds chasing the index. Retail participation in the SpaceX IPO is unprecedented. Jay Woods, Chief Market Strategist at Freedom Capital Markets, said he worries this could lead many people to have negative experiences, and he said SpaceX is “not a lottery ticket,” but a long-term investment that needs time for its valuation to be realized.