SpaceX and OpenAI IPOs are unlikely to bring skyrocketing returns that Amazon and Apple did, as companies go public later in life and early investors cash out
Publish Date: 2026-04-02 08:47:00
Source Domain: theconversation.com
- SpaceX is projected to have a massive IPO potentially raising up to $75 billion and valuing the company at $1.75 trillion.
- Recent data suggests that IPOs increasingly function as opportunities for insiders and executives to cash out rather than primarily providing growth opportunities for public investors.
- Historically, IPOs funded company growth, but modern companies now typically wait much longer before going public, often after experiencing significant private-sector growth.
- Researchers found that IPO prices for nearly 1,000 U.S. companies from 2007 to 2022 were 5.7 times higher than the exercise price of stock options granted to executives pre-IPO, indicating substantial value transfer to insiders.
- Companies primarily funded by venture capital and private equity were most likely to show large price gaps, aligning with the incentive for early investors seeking liquidity.
- After going public, companies offering more “cheap stock” options invested less in R&D and capital expenditures, resulting in potential slower future growth and lower stock returns.
- For public investors, much of the significant value growth of a company now happens while it is still private, potentially impacting expectations for post-IPO explosive growth and long-term performance.
