With launch of SpaceX IPO, AI-related stock rally may lose momentum

This article is by Park Yu-mi and read by an artificial voice. Elon Musk's space company, SpaceX, is set to make its Nasdaq debut on June 12. It's expected to become the largest initial public offering (IPO) in history and potentially reshape global equity markets — and the Korean bourse is no exception. SpaceX is expected to be valued between $1.75 trillion and $2 trillion, with the offering size projected at $75 billion to $80 billion, according to foreign media reports and industry estimates as of June 1. The estimates are more than double the previous record set by Saudi Arabia's national oil company, Saudi Aramco, which raised $29.4 billion during its IPO. SpaceX is scheduled to begin an investor road show on June 4, during which it is expected to finalize details such as the size of the offering, the IPO price and valuation. Investors are closely watching how much capital the listing could draw away from soaring AI-related stocks. "Investment capital seeking future growth opportunities is currently concentrated in AI-related shares," said Kim Il-hyuk, an analyst at KB Securities. "If SpaceX goes public, some investors may reduce their exposure to existing growth stocks and shift funds into the new listing. Stocks whose valuations have risen sharply on expectations of future growth are likely to be affected first." Some industry experts see the recent foreign selling of major semiconductor stocks, such as Samsung Electronics and SK hynix, as a partial reflection of portfolio adjustments ahead of SpaceX's listing. The impact could be amplified in Korea, where retail investors account for a relatively large share of market participation. "Unlike a typical IPO, SpaceX is expected to allocate 20 to 30 percent of its initial free float to retail investors," said Park Hye-ran, an analyst at Samsung Securities. "Short-term selling pressure is likely to fall on stocks that have already seen substantial gains, as well as Tesla and its aerospace-sector peers." Another key issue is the timing of when SpaceX will debut on the Nasdaq-100. Under the Nasdaq's new "fast entry" rule, which took effect on May 1, large IPOs can qualify for index inclusion as little as 15 trading days after listing. That means SpaceX could join the Nasdaq-100 roughly two weeks after its market debut, rather than waiting a year or more. Despite SpaceX's enormous valuation, analysts expect the initial market impact to be limited because only 3 to 5 percent of its shares will be available for trading after the IPO. As a result, index-tracking funds would initially need to buy only about $4 billion worth of stock, according to Samsung Securities. The more significant market impact is expected later when lockup restrictions on existing shareholders, such as founder and owner Elon Musk, begin to expire in stages. "If the free-float ratio [the percentage of shares available for public trading] exceeds 33 percent between mid-September and October, roughly 120 to 140 days after the IPO, passive inflows from index-tracking funds could increase to as much as $31 billion," said Park Hye-ran, an analyst at Samsung Securities. "At that point, SpaceX could surpass Tesla and become one of the seven largest companies in the Nasdaq-100 by market capitalization." SpaceX's listing could mark the beginning of an IPO supercycle in the second half of the year, with other major private technology firms such as OpenAI and Anthropic potentially following. The three companies' combined fundraising target is estimated at around $200 billion, with a combined valuation of roughly $4 trillion. "The burden on global liquidity from such large-scale offerings could be significant, particularly given interest rate uncertainty and other macroeconomic challenges," said one finance industry source. "Many retail investors are being driven by the fear of missing out, but the biggest risks remain uncertainty surrounding future capital flows and corporate valuations." This article was original...