As ultra-large technology companies including SpaceX, Anthropic, and OpenAI move to list on the stock market one after another, some have raised concerns that U.S. equities may be peaking. However, an analysis found that large initial public offerings (IPOs) have not necessarily been a signal of a market top in past cases.
U.S. business media outlet CNBC reported Monday, citing an analysis by Canadian investment bank Canaccord Genuity, that in many cases stock market indexes posted better performance than the listed stock itself during the year following a large IPO.
The bank analyzed the market impact of global ultra-large listings conducted since 2008. The review covered seven cases, including Visa, Facebook, Alibaba, Aramco, Rivian, LG Energy Solution, and ARM Holdings, which were described as the largest in the world by amount raised.
The analysis found that the Nasdaq Composite Index rose an average of 10.9% during the year following these ultra-large IPOs. The S&P 500 index also recorded a positive return, climbing an average of 1.1%.
Looking at individual cases, the Nasdaq jumped 42.2% in the year after Facebook's listing in March 2012, and rose 41.8% after ARM Holdings' listing in September 2023. Following Saudi Aramco's debut in December 2019, it gained 20.3%, and after Alibaba's listing in September 2014, it posted a 15% increase. CNBC reported that "in five of the seven cases reviewed, the Nasdaq continued its upward trend following the ultra-large IPO."
There were exceptions, however. The most notable was Visa. Listed in March 2008, Visa entered the market just before the global financial crisis. Over the following year, the Nasdaq plunged 44.3% and the S&P 500 fell 39.6%.
CNBC noted the fact that market returns outpaced the performance of the IPO stocks themselves. Facebook's share price fell 31.3% in the year after its listing, and Aramco also dropped 26.2%. ARM Holdings, by contrast, surged 131.8% over the same period, delivering exceptional performance. Canaccord Genuity analysts assessed that "looking at recent cases, large IPOs have not acted as a drag on index returns."
Meanwhile, OpenAI said it "recently filed a confidential preliminary registration statement (S-1) with the U.S. Securities and Exchange Commission (SEC)," adding that it "decided to disclose this directly given that it would become known to the market in the future." A specific listing date has not been set. However, the prevailing view in the market is that it could enter the stock market as early as this fall.
SpaceX is scheduled to list on the 12th.
