After four years of subdued activity, the initial public offering (IPO) market is firmly reopening. 44 companies have already gone public in the US this year, more than double the pace seen a year ago, while issuance proceeds have reached their strongest level since 2021. More importantly, the current recovery still appears to be in its early stages.
A broader IPO revival is already underway
Several of the world’s largest private companies are preparing for public listings, suggesting that IPO activity could accelerate meaningfully over the coming quarters. The prospect of a wave of mega-IPOs has inevitably raised concerns about whether markets can absorb the additional supply of shares. We believe these fears are overstated. Even under assumptions of record issuance activity, corporate buybacks are expected to exceed total equity issuance this year. Moreover, a significant portion of shares typically remains locked up after an IPO, meaning that additional supply enters the market only gradually over subsequent quarters rather than all at once. As a result, the supply/demand balance should remain supportive throughout 2026.
The revival in IPO activity has also reignited comparisons with previous market peaks. While periods of elevated issuance often coincide with optimistic investor sentiment, history offers little evidence that large IPO waves consistently signal the end of a bull market. More importantly, today’s environment looks very different from the excesses seen in 1999 or 2021. The number of IPOs remains close to historical averages, while the macro backdrop is considerably more supportive. Unlike in prior cycles, the Federal Reserve is not aggressively tightening policy, earnings growth remains robust, and demand from buybacks, retail investors, and foreign investors continues to support equity markets.
SpaceX: the largest IPO, but not the whole story
Against this backdrop, SpaceX stands out as a first major test case. Plans to raise around USD75bn–86bn at a valuation of USD1.77tn would make it the largest IPO of all time. While SpaceX may dominate headlines and absorb significant attention and capital, it does not define the market on its own.
At first glance, a company of this size would appear destined to become a major constituent of every benchmark index. However, index weights are determined by float-adjusted market capitalisation rather than total company value. According to the S-1 filing, only 4.2% (or 4.9% if the over-allotment option is exercised) of SpaceX shares would initially be freely tradeable. The relatively small float reflects management’s desire to avoid flooding the market with shares while allowing existing shareholders to retain control. With only about 4.2% of shares initially freely tradeable, its index weight is likely to be modest. The key point is that headline valuation alone tells only part of the story. For passive investors, free float matters at least as much as market capitalisation.
SpaceX is not happening in isolation and will not have the impact many expect. It comes alongside a broad-based reopening of capital markets. History offers little evidence that large IPO waves consistently signal the end of a bull market. Rather, they tend to reflect improving confidence in the market environment.
What does this means for investors?
First, SpaceX will matter – but more as a barometer than as a verdict. Its reception will provide insight into risk appetite, not necessarily mark a turning point. Second, the fact that dozens of companies are returning to public markets alongside it points to a healthier environment than in prior IPO peaks. And third, strong demand from buybacks, retail and foreign investors continues to provide a cushion against concerns about excess supply.
In our view, the IPO resurgence should therefore be interpreted less as a warning sign and more as evidence that confidence in capital markets is improving. For now, stay selective, do not confuse a dent in AI leadership with the end of the cycle, and watch closely how this new issuance – from 44 smaller IPOs to one historic listing – is absorbed by the market.