There is expected to be a wave of IPOs (Initial Public Offerings occur when a company first offers shares of stock to the public) over the next six months, including what could become the largest IPO in history: SpaceX. Founded by Elon Musk, SpaceX has revolutionized the rocket industry by dramatically lowering the cost of putting objects into space. Other major IPO candidates include the artificial intelligence companies OpenAI and Anthropic.
But what exactly is an IPO? An Initial Public Offering is the process by which a private company becomes publicly traded by offering shares to investors on the open market. In reality, however, the odds of individual investors receiving shares at the initial offering price are fairly low. Most of those shares are allocated to large institutional investors, meaning the average investor usually has to wait until trading begins publicly.
IPOs once offered investors the chance to get in on the ground floor of a growing company. In the past, businesses often relied on public markets to fund their early expansion. Today, with enormous amounts of private capital available, companies can remain private much longer and often go public only after they have already reached massive valuations. The SpaceX IPO is expected to value the company near $2 trillion, while OpenAI and Anthropic could each be valued at more than $100 billion.
Looking at the history of some of the largest IPOs, including Facebook, Uber, GM, and Visa, the short-term track record has been mixed. The typical pattern is for shares to rise sharply during the first few days of trading, only to struggle once the initial excitement fades. Even Facebook, which ultimately became a strong long-term investment, experienced a steep decline shortly after its IPO.
While these offerings will almost certainly create a strong sense of Fear Of Missing Out, patience is often the better strategy. Waiting until the initial enthusiasm subsides allows investors time to evaluate how the company operates as a public business and whether the valuation truly supports the investment opportunity.