⏳ Reading Time: 10 minutesMajor listings, like the recent SpaceX’s IPO, can absorb market liquidity and influence broader markets. Our special contributor and Daily Telegraph columnist David Stevenson explores what that means for investors’ portfolios.
SpaceX’s IPO has prompted many investors to consider the impact of mega listings on their portfolios. And of course, SpaceX is just the first of three giants – we should expect IPOs from Anthropic and OpenAI, which, when including Alphabet’s recent stock issue, could mean that new equity issuance in the US surpasses $330bn and proves a drain on liquidity. Markets will also have to navigate the release of $800bn in SpaceX shares from lock-up between now and the end of November. What impact will all this have on your portfolio and wider markets?
One useful way to think about the impact of IPOs on your portfolio is to consider the stock-and-flow concept used by economists. Most commentary on IPOs, and in fact markets generally, tends to focus on ‘stock’ issues, i.e. looking at existing assets and making a judgement about, say, the relative ‘value’ of the market cap versus earnings. But markets are adaptive and constantly churning, and it’s sometimes better to look at the ‘flow’ side of the equation, i.e. how liquidity changes over time.
