OpenAI figures are the money they have raised so far, and other companies are the money they have raised in the IPO.
There are talks about IPOs for SpaceX, OpenAI, with Trillion dollar valuation. It doesn’t matter how much money they raise, when they come public, expect market decline.
These IPO’s are going to suck up so much money from the capital markets, and when they start filing 10-Q’s they are going to introduce significant volatility. Usually these companies will have to wait for sometime before getting added to Index. Now, it seems they are going to get into the Index right away. If it happens, buy some puts, I expect at least 5% decline post IPO.
The markets are on fire, the AI investment boom, driving profitability of many companies from Chips manufacturer, to construction companies to HVAC contractors… When the boom bursts, I expect SP500 will give back at least 2/3rd of the profits it gained because of AI boom, or the profit growth will mean revert. What decelerating profits will do to the price is not hard to imagine.
OpenAI recently missed its own targets for new users and revenue, stumbles that have raised concern among some company leaders about whether it will be able to support its massive spending on data centers.
This is behind paywall, for those who have access…
As of now, SP 500 Index is considering reducing the required public trading time from 12 months to 6, and waiving profitability/minimum weight requirements for mega-cap stocks. This will directly benefit SpaceX, OpenAI, or Anthropic.
I still think when these companies come public that is the time to prepare for 5% to 10% drawdown in the index.
