San Francisco Frontiers - Big risks and rewards in upcoming IPOs at SpaceX, OpenAI, Anthropic

That is expected to be followed by artificial intelligence rivals OpenAI and Anthropic. The trio of mega listings, each eyeing valuations around $1 trillion or more, constitutes a heady period of elevated risk and reward.

SpaceX is targeting an initial public offering that would raise up to $80 billion, roughly double the funds generated from all 2025 IPOs.

OpenAI and Anthropic are eyeing IPOs raising $60 billion, also huge numbers compared with the norm.

"We're really in unprecedented times," said Emily Zheng, an analyst for PitchBook, a research platform specializing in private capital. "And this concentration is more extreme than ever."

The trio is poised to enter public markets as the Middle East war adds to inflationary pressures and fogs the geopolitical landscape.

But that factor is not expected to impede the arrival of SpaceX, OpenAI and Anthropic.

"These three companies are kind of unique," said Jay Ritter, a specialist in IPOs at the University of Florida.

Mark Roberts, managing partner at the Blueshirt Group, also expects the offerings to be well subscribed.

"There's enough capital to enthusiastically embrace these three companies if they are priced correctly," Roberts said.

Nasdaq, where SpaceX will trade, announced earlier this spring that it would speed up the timeframe for including such mega listings in its main benchmark index.

The shift is expected to prod additional stock purchases of SpaceX from investment funds built around the index.

- Reward or reckoning? -

Among portfolio managers for larger funds, SpaceX "is probably viewed as a must-have stock," said Roberts.

In anticipation of the listings, there has been a throng of activity on secondary markets where investors are buying unlisted securities, pushing Anthropic's theoretic value to more than $1 trillion.

Both OpenAI and Anthropic have warned investors against securities not authorized by the companies.

Once they begin trading on public markets, their performance will serve as a gauge of the market's appetite for additional offerings, particularly in the AI market.

"If these companies do really well -- especially the AI ones, like OpenAI and Anthropic -- it would be a confirmation of these really massive private-market valuations," Zheng said.

"But the opposite could also be true," she added. "If the companies don't perform well, investors might conclude they're overvalued."

Some investors who have backed the three heavyweights in private markets are poised to cash out, potentially positioning them for the next round of tech companies.

Private equity firms currently hold more than 30,000 companies that they hope to exit, a backlog that has slowed availability of capital for new prospects. A recent Wall Street Journal article highlighted the slowdown, citing one firm that called the dynamic a "winter of exits."

A poor performance by the new entrants could hit the valuations of these private companies, Zheng said.

By going public, the companies will also subject themselves to greater scrutiny from investors.

The market will "be laser-focused on the performance of those stocks from an operational perspective," Roberts said. "So they can't miss their earnings."

Ritter predicted all three companies could see volatility.

"There's going to be big upswings and big downswings, because nobody knows the future," he said. "Owning these stocks is not for the faint of heart."

H.King--SFF