IPO market and SpaceX (with Tim Stenbeck, Carol Massar, Bailey Lipschultz)

Bower sees the IPO market as fundamentally driven, not technically frothy like 2021. SpaceX is a unique transformational story, but the broader market is working across sectors. He expects a very active summer and more PE IPOs in the second half.

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JPMorgan 9.0
Investment Bank $3170.00B
David Bower 8.5

IPO market and SpaceX (with Tim Stenbeck, Carol Massar, Bailey Lipschultz)

ndx

Bower is very bullish on the IPO market and tech/AI themes. He sees strong capital formation and a fundamental-driven market looking 3-5 years out. The Nasdaq 100 is up 3% on the day, and he endorses the risk-on environment.

Tim Stenbeck

Asks how market participants should view SpaceX in the context of other IPOs and the broader market.
David Bower

This is a great time for ECM. The catalyst is the reindustrialization of America and new ecosystems (space, AI). The euphoria in the IPO market is warranted and appropriate.
Bailey Lipschultz

Asks whether the success of mega IPOs like SpaceX translates to other industries like software or PE-backed companies.
David Bower

Mega IPOs get headlines, but new issuance volumes are up almost 2x from last year across healthcare, biotech, industrial energy. The markets are working broadly.
Bailey Lipschultz

Asks whether all themes are still off AI, and how to think about companies that don't have AI tailwinds.
David Bower

The market is not shut out for certain issuers. It's a good time to get started; proof points in the public market are worth even more than in the private market.
Carol Massar

Asks what is compelling about this moment for companies to go public, and whether it's opportunistic or fundamental.
David Bower

This is a more fundamental-based market compared to 2021 which was technical (zero rates). The market is looking at the next 3-5 years and looking past near-term volatility.
Bailey Lipschultz

Asks whether the success of SpaceX bodes well for mega IPOs like Anthropic or OpenAI.
David Bower

SpaceX is an end of one, but the market reception gives confidence that the next wave of mega IPOs could get done in a very positive way.
Bailey Lipschultz

Asks about the broadening out of AI themes and whether the summer will be active.
David Bower

Expect a very active summer. Even during the SpaceX period, $10B of equity capital was raised outside of SpaceX last week. The capex cycle for AI is driving capital formation across equity and debt.
Bailey Lipschultz

Asks whether the massive capital raises by hyperscalers like Google could oversaturate the market.
David Bower

The speed at which Google raised shows the depth and capacity of capital markets. As long as companies show ROI and good use of proceeds, markets will be there.
Carol Massar

Asks how to know when the market becomes frothy or exuberant.
David Bower

Fundamentals and valuations are not terribly stretched. Software valuations in 2021 were hitting new records; we are not seeing that writ large today.
Tim Stenbeck

Asks about circular financing (companies buying from each other) and whether that is a concern.
David Bower

The fact that people are having the conversation and dissecting it means the cycle has room to continue. It's the unknown risks that could derail it, not the known ones.
Bailey Lipschultz

Asks about companies that need to spend on AI but don't have hundreds of billions in free cash flow.
David Bower

You have to look at the fundamentals of contracts and what is contracted from demand. If the economics yield a return in 3-5 years, you can bridge to free cash flow.
Bailey Lipschultz

Asks whether there will be more private equity IPOs in the second half.
David Bower

Definitively yes. The market will be accommodative, and backlogs suggest a number of those in the second half.

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