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Should You Chase the Next Big IPO?
Using SpaceX to understand IPO access, pricing, and expected returns.
SpaceX may be a high-profile company, and it is rare for a private company to go public at a valuation that would place it among the largest companies in the market.
In Episode 35 of The Decision Dividend, we use SpaceX to understand IPO access, pricing, and expected returns. We look at what history says about IPO returns and why the first-day “pop” is not always available to ordinary investors.
You’ll learn:
How the outside view changes the IPO question by asking who is selling, who is getting access, and what index funds may be forced to buy later.
What the historical evidence says about IPO pops, long-run returns, and low-float offerings.
Why the irony of diversified investing is that you may already have exposure to the economic benefits of companies like SpaceX, OpenAI, and Anthropic without chasing direct access.
Chapters:
00:00 Should You Chase the Next Big IPO?
Using SpaceX to understand IPO access, pricing, and expected returns.
00:46 Decision vs. Outcome (1)
How base rates and the outside view can help investors evaluate SpaceX, OpenAI, Anthropic, and the next big IPO.
03:04 SpaceX at a Mega-Cap Valuation
Why a remarkable business can still require extraordinary growth to justify an extraordinary price.
05:03 Limited Float, Lockups, and Hype (2, 3)
How limited supply, insider lockups, and investor excitement can shape the early IPO experience.
07:53 IPO Waves and Market Timing (4, 5)
Why companies may choose to go public when public-market prices, sentiment, and funding conditions are favorable.
09:42 How IPO Pricing Works (5, 6)
The role of underwriters, roadshows, allocations, and the tension between what companies want and what investors want.
13:20 Who Captures the First-Day Pop? (2, 3, 5)
Why the IPO “pop” is often measured from the offer price, not the price ordinary investors may actually pay.
22:15 What the IPO Evidence Shows (2, 3, 5)
What decades of research suggest about first-day returns, longer-term returns, low-float offerings, and IPO characteristics.
28:30 How Diversified Investors Get Exposure (7)
Why investors may already benefit through indirect ownership and public companies that finance, supply, and partner with the next big thing.
40:45 The Other Side of the Trade (1)
Why employees, early investors, and concentrated shareholders may be trying to reduce risk at the same time public investors want to add it.
Sources:
https://www.youtube.com/watch?v=4WEK-1gMFd0
https://site.warrington.ufl.edu/ritter/ipo-data/
https://www.dimensional.com/us-en/insights/what-to-know-about-an-ipo
https://www.nber.org/papers/w9858
https://www.nber.org/papers/w8805
https://www.wsj.com/finance/stocks/spacex-ipo-process-preparation-69f97465
https://www.dimensional.com/us-en/insights/hiding-in-plain-sight-private-asset-exposure-through-public-equities
Follow on Apple Podcasts: https://podcasts.apple.com/us/podcast/greenstream/id1795467982
Follow on Spotify: https://open.spotify.com/show/26NYX6WD7godcJAYVE0Yk8?si=Qxj-H7HiRdGmbNlW8uuV9g
Subscribe for Email Updates: https://greenspringadvisors.com/greenstream-podcast
Meet with Pat & Marcus: https://outlook.office365.com/book/MarcusCalendaratGreenspringAdvisors@Greenspringos33.onmicrosoft.com
Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.
References to SpaceX, OpenAI, Anthropic, and IPOs are for educational purposes only and should not be construed as a recommendation to buy, sell, or hold any security, participate in any IPO, or invest in any private company. IPOs and private company investments involve unique risks, including limited information, valuation uncertainty, liquidity constraints, allocation limitations, volatility, and the potential loss of principal. Historical IPO data and examples may not be indicative of future results.
View all episodes
By Greenspring Advisors
5
77 ratings
Using SpaceX to understand IPO access, pricing, and expected returns.
SpaceX may be a high-profile company, and it is rare for a private company to go public at a valuation that would place it among the largest companies in the market.
In Episode 35 of The Decision Dividend, we use SpaceX to understand IPO access, pricing, and expected returns. We look at what history says about IPO returns and why the first-day “pop” is not always available to ordinary investors.
You’ll learn:
How the outside view changes the IPO question by asking who is selling, who is getting access, and what index funds may be forced to buy later.
What the historical evidence says about IPO pops, long-run returns, and low-float offerings.
Why the irony of diversified investing is that you may already have exposure to the economic benefits of companies like SpaceX, OpenAI, and Anthropic without chasing direct access.
Chapters:
00:00 Should You Chase the Next Big IPO?
Using SpaceX to understand IPO access, pricing, and expected returns.
00:46 Decision vs. Outcome (1)
How base rates and the outside view can help investors evaluate SpaceX, OpenAI, Anthropic, and the next big IPO.
03:04 SpaceX at a Mega-Cap Valuation
Why a remarkable business can still require extraordinary growth to justify an extraordinary price.
05:03 Limited Float, Lockups, and Hype (2, 3)
How limited supply, insider lockups, and investor excitement can shape the early IPO experience.
07:53 IPO Waves and Market Timing (4, 5)
Why companies may choose to go public when public-market prices, sentiment, and funding conditions are favorable.
09:42 How IPO Pricing Works (5, 6)
The role of underwriters, roadshows, allocations, and the tension between what companies want and what investors want.
13:20 Who Captures the First-Day Pop? (2, 3, 5)
Why the IPO “pop” is often measured from the offer price, not the price ordinary investors may actually pay.
22:15 What the IPO Evidence Shows (2, 3, 5)
What decades of research suggest about first-day returns, longer-term returns, low-float offerings, and IPO characteristics.
28:30 How Diversified Investors Get Exposure (7)
Why investors may already benefit through indirect ownership and public companies that finance, supply, and partner with the next big thing.
40:45 The Other Side of the Trade (1)
Why employees, early investors, and concentrated shareholders may be trying to reduce risk at the same time public investors want to add it.
Sources:
https://www.youtube.com/watch?v=4WEK-1gMFd0
https://site.warrington.ufl.edu/ritter/ipo-data/
https://www.dimensional.com/us-en/insights/what-to-know-about-an-ipo
https://www.nber.org/papers/w9858
https://www.nber.org/papers/w8805
https://www.wsj.com/finance/stocks/spacex-ipo-process-preparation-69f97465
https://www.dimensional.com/us-en/insights/hiding-in-plain-sight-private-asset-exposure-through-public-equities
Follow on Apple Podcasts: https://podcasts.apple.com/us/podcast/greenstream/id1795467982
Follow on Spotify: https://open.spotify.com/show/26NYX6WD7godcJAYVE0Yk8?si=Qxj-H7HiRdGmbNlW8uuV9g
Subscribe for Email Updates: https://greenspringadvisors.com/greenstream-podcast
Meet with Pat & Marcus: https://outlook.office365.com/book/MarcusCalendaratGreenspringAdvisors@Greenspringos33.onmicrosoft.com
Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.
References to SpaceX, OpenAI, Anthropic, and IPOs are for educational purposes only and should not be construed as a recommendation to buy, sell, or hold any security, participate in any IPO, or invest in any private company. IPOs and private company investments involve unique risks, including limited information, valuation uncertainty, liquidity constraints, allocation limitations, volatility, and the potential loss of principal. Historical IPO data and examples may not be indicative of future results.