Good morning everybody. Good afternoon to my friends on the East Coast!
Are we in the golden age of IPOs?
Coming out of COVID, SPACs made headlines bringing company after company public. Lucid Motors (LCID) came out that way. So did what became Trump Media (DJT).
Some of those names are still around. Others aren't. But that vehicle created so many new listings in such a short window that I thought we'd hit a permanent peak.
In sheer numbers, maybe we did. Not in dollars.
Measured by actual market cap, 2026 is going to be the year of the IPO.
We started with Cerebras (CBRS) in May. SpaceX (SPCX) followed in June with the biggest IPO in history, priced at a $1.77 trillion valuation. Then SK Hynix (SKHY) listed in the U.S. in July and raised $26.5 billion, the most a foreign company has ever pulled out of an American debut.
Now we head into the last quarter of the year with two more MASSIVE deals on deck: Anthropic and OpenAI.
Anthropic is nearly upon us. The company is expected to list on the Nasdaq in October, but there's still an outside shot it sneaks in at the end of September.
What can you expect around an IPO this size?
There are three phases, and I watched every one of them play out in SPCX.
- Stocks associated with Anthropic go on a tear, and they're probably not the names you think. Amazon (AMZN), its biggest outside shareholder, is likely NOT one of them. The winners are going to be further under the radar.
- Those same stocks start selling off as the firms that got IPO allocations raise cash to pay for their shares. Raising cash means selling something else.
- The IPO itself ropes in a crowd. The stock runs higher while traders talk about how little float there is (the number of shares actually available to trade). Then it sells off, because it's overpriced and the shorts can finally borrow shares.
Then there's everybody else.
Regular people who might want the stock but aren't dumb enough to buy the IPO at that valuation. They watch it run up and come back to Earth, and they sit on their hands waiting for the lockup to expire (the date insiders are finally allowed to sell), because everybody knows the stock tanks when that happens.
The lockup comes, and the stock goes up.
The traders who watched phase three play out were already long. They bought more into the lockup.
The bottom was in, and the regular people missed it.
Don't be like them.
I'm going to be trading this IPO phase by running what I call my Halo Plan.
That plan includes the under-the-radar names for phase one, when to step aside for phase two, and how I plan to play the listing and the lockup.
Tap this link to join me before Anthropic prices.
Your Only Option,
Mark Sebastian