The IPOs should be a wake-up call for European policymakers before the stampede into America becomes a stampede out of Europe
There could hardly be a more dramatic confirmation of the technological gulf opening up between America and Europe. In the coming months, US tech companies are planning to raise hundreds of billions of dollars on American stock markets.
SpaceX will lead the way next week with an IPO that will value Elon Musk’s satellite, telecoms and social media group at $1.75 trillion. Anthropic has filed plans for its own trillion-dollar-plus IPO, with OpenAI expected to follow shortly. Alphabet, owner of Google, and Meta also plan to issue new shares.
It is set to be the biggest IPO boom in history. The $85 billion that SpaceX alone plans to raise will dwarf the record for the world’s largest stock market flotation, set by Aramco in 2019. And what is galling is that much of this money will inevitably come from Europe. More than half of European equity fund investment is tied up in US shares. Europe’s vast savings surplus, which the Draghi report identified as key to funding the continent’s own technological ambitions, continues to flow disproportionately into US assets.
Europeans can tell themselves comforting stories. Perhaps this sudden rush to the stock market will turn out to mark the peak of a bubble. There are certainly plenty of echoes of the late Nineties dotcom mania. With the top ten stocks in the S&P 500 now accounting for nearly 40% of the blue-chip index, the US stock market has never been so concentrated, and some valuations look extreme. SpaceX, which has yet to make a profit, is only worth 100 times revenues if you believe Musk’s claims that the company will soon be operating data centres in space, mining asteroids or taking paying passengers to Mars.
