SpaceX IPO and equity capital markets outlook (with Tim Stenbeck, Carol Massar, Bailey Lipschultz)

David Bower (JPMorgan ECM) says the SpaceX IPO is a 'generational' opportunity and signals a healthy IPO market driven by fundamental reindustrialization and AI themes, not just low rates. He sees a very active summer for ECM across sectors, not just mega-cap tech, and notes that valuations are not stretched like 2021. He is confident the market has capacity for more large deals.

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SpaceX IPO and equity capital markets outlook (with Tim Stenbeck, Carol Massar, Bailey Lipschultz)

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Bower sees a healthy IPO market and strong demand for tech/AI names. The Nasdaq is rallying, and he expects a very active summer for ECM, implying continued strength in tech.

Tim Stenbeck

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

This is a great time for ECM. Unlike past cycles, there is a real catalyst: the reindustrialization of America, new ecosystems (space, AI). The euphoria in the IPO market is warranted.
Carol Massar

Asks what the signal is to market participants.
David Bower

The IPO worked (up 19% on Friday, another 15% today). Broader markets are rallying on Iran news. It's 'all systems go' for more issuance.
Bailey Lipschultz

Asks if the SpaceX success translates to other sectors 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 market is working for many sectors.
Bailey Lipschultz

Asks if all themes are still off AI, and if non-AI companies are at risk of being shut out.
David Bower

The market is not shut out for certain issuers. There is a bid for other businesses. Getting started in public markets creates proof points that can expand valuation.
Carol Massar

Asks what is compelling companies to go public now—opportunistic or fundamental?
David Bower

This is more fundamental than 2021 (which was technical, driven by zero rates). The market is looking at the next 3-5 years and investing in businesses worth it, ignoring near-term volatility.
Bailey Lipschultz

Asks if the SpaceX reception gives confidence for Anthropic/OpenAI IPOs.
David Bower

SpaceX is its own animal, but the size and trading success give more confidence that the next wave of big IPOs can get done positively.
Bailey Lipschultz

Asks if AI is still the flavor and what it means for the summer issuance calendar.
David Bower

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

Asks if Google's $90B raise sets a precedent for hyperscalers and if there is risk of oversaturation.
David Bower

The speed of Google's raise shows depth and capacity. 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 it's a concern.
David Bower

The fact that people are acknowledging and dissecting the circular financing is what keeps him sleeping well. Known risks are better than unknown ones. The cycle has room to continue.
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 contracted demand and whether the investment has the right economics to yield a return in 3-5 years. They can bridge to free cash flow if the contracted revenue is high quality.
Bailey Lipschultz

Asks if more PE IPOs are expected in the second half.
David Bower

Yes, definitively. The market will be accommodative, and backlogs suggest a number of PE IPOs in the second half.

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