A Turning Point for Equity Supply

On June 12, SpaceX completed the largest initial public offering (IPO) in history, raising more than $75 billion at a valuation of $1.8 trillion. That valuation places SpaceX among the ten largest companies in the United States. As further evidence of the enthusiasm surrounding the offering, the IPO was four times oversubscribed, leaving substantial unmet demand for shares.

Surely we can learn something from what many have called a “generational event.” In this paper, we attempt to do just that. While we stop short of drawing a definitive conclusion, we are confident in saying that surging IPO activity should inspire a measure of caution among investors. More importantly, the IPO of SpaceX and others to come may signal a change in conditions that have quietly supported stock returns over the past several years, specifically in the dynamics of equity supply.

Sellers Sell When Conditions Favor Them

Corporations are rational actors. Rational actors choose to sell property—or, in this case, financial securities—when conditions are favorable to them. Just as homeowners often wait until spring to list their homes, issuers of corporate securities are incentivized to wait until market conditions work in their favor. Specifically, companies raise capital, whether equity or debt, when the cost of that capital is low.

Following the onset of the COVID-19 pandemic, interest rates fell to historic lows around the world. In the United States, the 10-year Treasury yield—the benchmark rate upon which many assets are priced—fell to roughly 0.50%. Such a low yield resulted in a negative real return after inflation, making Treasury bonds a decidedly unattractive investment for many investors.¹

For corporations, however, it was an ideal time to issue debt. Companies could borrow at interest rates below inflation, allowing inflation itself to erode a portion of the debt burden over time. A rational actor would seek to lock in such attractive financing, and that is precisely what corporations did. As Chart One shows, U.S. corporations nearly doubled bond issuance during this period of ultra-low rates.²

Corporate CFOs locked in borrowing costs below the rate of inflation. Buyers of those bonds, however, faced a much different outcome. When a seller’s cost of capital is low, a buyer’s expected return is often low as well. That proved true in the years that followed. In 2022, the U.S. Aggregate Bond Index experienced its worst year on record, and many corporate bonds issued during 2021 and 2022 trade well below par value.

Why IPOs Are Arriving Today

In 2021–2022, corporate bond issuers timed interest rates. Today, issuers of stock are timing valuations. And after a strong three-year run in the stock market, it is no secret that stock prices are elevated. What may be less appreciated is how expensive certain sectors have become. During the second quarter alone, the Philadelphia Semiconductor Index rose 102%, with seven of its ten largest constituents more than doubling in value. Such gains leave valuations stretched. The index’s average price-to-sales ratio over the past decade is 5.8; today it stands at 14.3.³ Valuations, in other words, are high and ideal for sellers of stock.

It is into this environment that SpaceX offered the public 555.6 million shares at a fixed price of $135 per share, representing only a fraction of the company’s total equity.⁴ Including shares that remained private, the company carried an implied valuation of approximately $1.8 trillion. Relative to its most recently reported annual revenue of $18.7 billion, SpaceX was valued at roughly 95 times sales.⁵ Only one other technology company has secured a higher price-to-sales multiple at its IPO, namely Rivian in November of 2021.

Valuation is arguably in the eye of the beholder, and one could argue that SpaceX’s large addressable market gives it room to grow into this price. However, history has shown such optimism to be excessive. Over the past 20 years of IPOs, the median IPO has generated negative returns in its first five years as a public company.⁶

While SpaceX’s IPO grabbed investors’ attention, the prospect of additional stock issuance may prove even more important. Not only could an additional three-quarters of a trillion dollars of SpaceX stock become available as lockup restrictions expire before year end, but other AI behemoths—Anthropic and OpenAI—are expected to pursue public listings with valuations approaching $1 trillion each. The expected value of shares from all three IPOs would be comparable to an entire decade’s worth of IPO supply compressed into a single year.⁷

Importantly, this coming wave of IPOs may reverse one trend that has quietly supported stock returns in recent years: a shrinking supply of public equity. Over the past eight years, corporations have been major net buyers of their own shares through stock buybacks, reducing the amount of publicly traded equity available to investors. That dynamic may now be changing. New supply from mega-cap technology IPOs, additional issuance from established corporations, and reduced buybacks from technology companies investing heavily in AI infrastructure all point toward a potential inflection point. For years, net equity supply has been negative. In the years ahead, it may become positive. (See Chart 2.)⁸

Whether investor demand will be sufficient to absorb this new supply at current valuations remains unclear.

Market watchers are correct to note that SpaceX’s IPO and those that are set to follow are generational events. Together, these companies are expected to bring trillions of dollars of new equity to U.S. public markets, materially expanding the investable universe.⁹ Investors can reasonably debate the significance of these events. What seems less debatable, however, is that the supply side of the equity market is responding to peak favorable conditions marked by high valuations and a public eager not to miss out on the AI story.

Theory and history suggest that these conditions, favorable to sellers, are less ideal for buyers. That does not mean stock prices must fall, nor does it imply that the bull market is over. It does suggest, however, that one of the forces that has supported outsized gains in 2023, 2024, and 2025—a limited supply of public equity—may be weakening. If so, such high returns may be harder to come by.

¹ Bloomberg. The 10-year U.S. Treasury bond closed on August 4, 2020 with a yield of 0.5%. Headline CPI increased at a year-over-year rate of 1.3%, resulting in a negative real rate of 0.8%.

² Bloomberg, U.S. corporate bond issuance (investment-grade and high yield) for calendar years 2015 through 2022. Yield is U.S. Treasury bond yield over the same period.

³ Bloomberg, Philadelphia Semiconductor Index. Total return from March 31, 2026 through June 30, 2026. Stocks whose prices more than doubled during this period: Micron (+242%), AMD (+186%), Intel (+216%), Applied Materials (+112%), KLA Corp (+105%), Marvell Technologies (+201%), and LAM Research (+103%).

⁴ Approximately 4.2% of outstanding SpaceX shares were available to trade following the IPO. See Bailey Lipschultz. “SpaceX Shares Close 19% Higher After Historic $75 Billion IPO.” Bloomberg. June 12, 2026.

⁵ Tatiana Dare. “Precedent for SpaceX’s Lofty Valuation is Worrying.” Bloomberg. June 10, 2026. Only one other tech company has fetched a higher price-to-sales multiple at its IPO: Rivian, in November of 2021 (preceding market peak).

⁶ See “IPO Insights: A Brief History.” First Trust. June 12, 2026.

⁷ Theory Ventures, Bloomberg. For estimates of SpaceX’s share unlock schedule see James Seyffart and Rob Du Boff. “SpaceX Exposed Funds & Buying Pressure from Passive.” Bloomberg. June 4, 2026. Estimated value of additional shares = 4,761.3 million shares x $160.42 per share (closing price July 7, 2026)

⁸ Net equity issuance is defined as total equity offering proceeds less total share buyback value, aggregated by calendar year from 1996 through the date of data retrieval. To mitigate survivorship bias, the universe was constructed by taking annual point-in-time snapshots of Russell 3000 Index constituents at each year-end from 1996 through 2025, combining all snapshots into a single master security list, and removing duplicates. This approach captures companies that were index constituents at any point during the period, including those subsequently delisted, acquired, or removed from the index. The master universe was saved as a custom portfolio and used as the basis for all calculations. Equity offerings include all offering types (initial public offerings, follow-on offerings, and secondary offerings) and are measured at effective date. Share buybacks reflect executed repurchase activity at effective date. Both series are denominated in USD and sourced from Bloomberg’s corporate action dataset via Bloomberg Query Language (BQL). A negative net issuance figure in a given year indicates that aggregate buyback activity exceeded new equity capital raised by index constituents. Note that corporate action data for delisted entities may be incomplete in Bloomberg’s database for events occurring close to or after the delisting date.

⁹ Robert Buckland. “AI Boom Could End the De-Equitisation ‘Put’.” Financial Times. May 16, 2026. Estimated increase in U.S. public equity: 6%.

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