SpaceX IPO in Focus
The stage is set for SpaceX to go public on Friday. OpenAI and Anthropic have reportedly filed confidential S-1 registration statements with the SEC. The IPO market is heating up.
SpaceX is expected to be the largest IPO in history with an expected initial valuation of roughly $1.8 trillion. Here's how SpaceX is expected to stack up against some of today's largest companies:
Given its size, there's a lot of speculation about how the stock may perform post-IPO. For perspective, the chart below illustrates the 12-month performance of some of the hottest tech IPOs in history:
This data highlights just how volatile many high-profile technology IPOs have been in their first year as public companies. While short-term performance can be strong — with several names posting meaningful gains in the first three to six months — the median 12-month return across this group was negative, and the median maximum drawdown during the first year was approximately 54%. Fewer than half of these companies were positive after one year.
That said, some of today's most successful companies experienced significant declines shortly after going public before ultimately generating exceptional long-term returns. The challenge is that no one knows in advance which newly public companies will follow that path.
We have no idea how SpaceX or OpenAI or Anthropic (should they also go public) will perform. History suggests that newly public, high-growth stocks often come with significant volatility, reinforcing the importance of gaining exposure to innovative new companies through a disciplined investment process.
Our Approach to IPOs
Based on this and other data, we have generally avoided making large allocations to newly public companies immediately following an IPO, when price discovery can be volatile and expectations may be elevated. At the same time, we don’t think it makes sense to automatically exclude newly public companies from client portfolios either.
Over time, as new publicly traded stocks become seasoned and more widely held, they can be included in certain indexes based on each index provider’s rules and timelines. Our portfolio construction and risk controls are informed by the opportunity sets represented by various indexes. This means that newly public companies (including SpaceX) may be included in client portfolios over time in a relatively measured manner compared to a large initial investment close to the IPO date.
Additionally, our investment philosophy is built on tilting toward smaller, more value-oriented stocks, while still maintaining exposure to large cap growth companies, including companies like SpaceX, OpenAI and Anthropic should they go public. This means that they have the potential to be included in portfolios, but likely in lower proportions than their eventual weightings in broad market indexes. With many of the major indexes concentrated in relatively few very large stocks, we believe this positioning is the appropriate way to balance risk and reward.
In other words, if these companies ultimately become successful public businesses, we expect client portfolios to participate in their success—but in a diversified and risk-aware manner that we believe is the most prudent path toward long-term wealth creation.
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