SpaceX IPO won’t ‘break’ the bull market. But investors are worried about what comes next

SpaceX’s initial public offering this week will be the largest in history, flooding the stock market with new shares that beg the question: Where will the money come from?

As far as Wall Street is concerned, the stock market has what it takes to absorb the new supply of stocks. In the 12 months through September 2025, S&P 500 companies issued roughly $1.7 trillion, or about $140 billion a month, according to Gavekal Research.

This means SpaceX’s expected $75 billion capital raise will pay shareholders in just over two weeks, according to the firm.

It’s not just SpaceX seeks to increase this capital. It was stated that four companies, including SpaceX, Anthropic, OpenAI and Alphabet, aim to raise approximately $ 380 billion from public markets in total, but even this means an issuance of approximately two months.

“The point is that in the grand scheme of the U.S. equity market, these stocks are surprisingly digestible,” Gavekal Research’s Will Denyer wrote in a June 3 note. he wrote. “This suggests that any impact on US equity performance from liquidity inflow should be short-lived.”

Both private and public companies are raising record amounts of capital to capitalize on the AI ​​excitement. OpenAI recently raised $122 billion on March 31, 2026, led by Nvidia. amazon.com. A few months later, Anthropic raised $65 billion in Series H financing, pushing its valuation to $965 billion.

As private companies continue to raise capital, big tech companies are not far behind. Alphabet recently made an announcement. $84.8 The equity raise has come in the billions as the tech giant prepares to increase its investment in artificial intelligence infrastructure amid rising demand.

In recent years, global stock and bond funds have attracted significant amounts of investor money; This suggests that capital markets may have room to absorb a new wave of large stock offerings, especially after SpaceX goes public this Friday.

Overall equity and bond flows remained positive, according to the latest data from JPMorgan. While the 2026 numbers are not directly comparable to the entire prior year, they do point to increased investor demand as companies race to prepare for IPOs and other equity raises.

IPO volatility

That doesn’t mean investors won’t be in for a tough time as the market accepts SpaceX’s super-sized offering. Even before the impending launch of three-trillion-dollar companies, investors had been anticipating a period of consolidation after the stock market’s parabolic comeback from its March lows.

It is already known that IPOs are volatile. Truist Wealth’s review last week of 30 major IPOs of the last 15 years showed that shares of newly public companies tend to decline, experiencing significant declines in their first years.

On a median basis, they were down 9% a year after their debut, meaning not even half of the companies ended the year in positive territory, according to the firm. And in the first 12 months, stocks fell by a whopping 54% on average.

SpaceX’s IPO has the potential to be even more challenging. Even if the stock market is able to digest the new shares, the IPO could trigger a rotation in tech leadership as investors leave existing winners to fund new shares.

This week gave investors an idea of ​​what the rotation will look like. The S&P 500 is heading for a losing week as investors turn away from high-flying chip stocks and into defensive sectors like consumer staples.

There are other risks too. Recent rule changes by Nasdaq, as well as other exchange operators, have accelerated the inclusion in indices of newly publicly traded companies like SpaceX, which previously had to wait to prove their profitability and generate sufficient volatility.

They also changed the way they weighted. Instead of using its $75 billion public float to weigh in on SpaceX, future Nasdaq 100 The inclusion will use a 3x multiple, which weights the stock based on its $225 billion market cap.

This means that any move up or down following the IPO may be exaggerated as passive investors are forced to follow the stock and the volatility of the overall index increases.

holding the bag

These changes are particularly concerning due to the unprecedented level of retail participation. SpaceX’s IPO is thought to be a huge liquidity event; That means institutional investors who are now getting in on the ground floor of a trillion-dollar company can cash in just as retail traders and passive funds can buy in; This means even first-time investors can hold the bag.

“I’m a little bit afraid that this could be a negative experience for a lot of people,” said Jay Woods, chief market strategist at Freedom Capital Markets. “When you hear your own parents asking you questions about it, you know it’s a bit overrated.”

Of course, this doesn’t mean SpaceX is a bad investment. Many investors said they plan to bide their time after the initial excitement of the IPO or buy only a small portion of it and choose a better entry point into the rocket and satellite maker when it goes on sale.

“I think it’s great that the retail investor has an opportunity they’ve never had before,” Woods said. “My hope is that this doesn’t become a lottery ticket for them rather than an investment, because that’s not how the market works in the long run.”

“This is not a moonshot,” Woods added. “This is a long-term investment that will take time to reach its appreciation.”

demand fatigue

There’s also the pace of recent IPO announcements that has investors worried. Justin Bergner, portfolio manager for GABBX’s Gabelli Funds, said he is concerned that AI companies are racing to secure funding before conditions worsen and make it harder to raise capital.

“I think it’s not a good sign that Open AI and Anthropic are racing to see who can be first after SpaceX,” Bergner said. “They’re worried that whoever doesn’t take the first step will take advantage of reduced demand or demand fatigue in the market, that’s the signal this sends.”

There’s enough going on in the broader economy to worry investors. Inflation is now above 4% as high oil prices begin to drain the savings of Americans whose wages cannot keep up. Bond yields are rising. It is predicted that the Fed’s next big move will be an interest rate increase.

But there is also plenty of optimism that demand for AI will justify the need for capital. Evan Schlossman and Willy Lee of publicly traded venture capital fund SuRo Capital said the majority of their portfolio companies expect to go public within the next 12-18 months; This is a reflection of the strong demand for AI computing.

“I wouldn’t be surprised if you see a stampede of IPOs from now on,” Lee said.