SpaceX, owned by Elon Musk and valued at a potential $1.75 trillion, is expected to debut on the U.S. stock market as early as June 12.
In preparation for SpaceX’s IPO, reports indicate that some large Wall Street mutual funds and passive index funds may reduce other investments in their portfolios to increase cash reserves.
According to Reuters, large Wall Street mutual funds and passive index funds are preparing to include major IPOs such as SpaceX and OpenAI in their portfolios, which may lead to a reduction in their existing holdings of other large stocks.
John Flood, a partner and head of execution services for equities in the Americas at Goldman Sachs, said in a report to clients that the potential inclusion of newly listed companies could force passive funds to reduce their holdings of other large-cap stocks.
The photo shows a Wall Street sign outside the New York Stock Exchange (NYSE) on June 28, 2021
He said investors are increasingly focused on the impact of potential large IPOs.
Based on decades of experience, equity mutual funds typically increase their cash holdings in preparation for potential IPOs, leading up to the listing of the four largest U.S. IPOs.
SpaceX may be included in indices such as the Nasdaq 100 soon.
Previously, the Nasdaq 100 and S&P 500 indices introduced new rules to accelerate the inclusion of newly listed mega-cap companies, potentially applicable to stocks like SpaceX and OpenAI.
SpaceX is pushing forward with its record-breaking IPO, targeting a valuation of approximately $1.75 trillion, which would make it the seventh-largest company by market capitalization in the US.
OpenAI and Anthropic also plan to go public in the coming months. OpenAI’s valuation could reach $1 trillion or higher, while Anthropic is currently in talks to complete a new round of financing, potentially bringing its valuation close to $1 trillion.
