Iceland, Institutional
Change
Markets are bracing for a wave of “mega” IPOs in 2026, with SpaceX first in line. What happens when a private company of this size goes public – and what might it mean for markets, investors and future IPOs? Multi-Asset Strategist Adam Berger and Head of Equity Capital Markets Matthew Strzepka address three key questions.
SpaceX’s IPO could be the largest IPO in history. Will there be enough investor demand to absorb an IPO of this size?
In our view, the short answer is yes. SpaceX has huge brand recognition and is likely to draw interest from multiple investor segments. And, we expect individual investor participation to be significant, given the high-profile launch (pun intended), and reports that SpaceX is likely to set aside a meaningful portion of the offering specifically for individual investors.
In addition, index inclusion means that a) many passive funds may have to buy the shares in short order and b) active funds will have to consider SpaceX as part of their benchmark opportunity set. Hedge funds and crossover funds, which can invest in public and private companies, may also drive demand. Ultimately, price and valuation matter enormously, but we expect this IPO to be priced at a level where both individual and institutional investors will be willing to engage.
That doesn’t necessarily mean we will avoid stock-level volatility, even if, as we expect, overall volatility remains low. Historically, some mega IPOs have created short-term pressures, but these episodes have not typically resulted in lasting, significant impacts on the broader market. While the new wave of mega IPOs may be larger than these historical examples, it’s worth remembering that the total market cap of the market today is also bigger than it used to be: bigger fish, but a bigger pond too.
There are reports of a wave of mega IPOs in 2026. Will SpaceX’s IPO lead to others?
History suggests that successful IPOs can create a “halo” effect. One successful deal begets another, and a virtuous cycle is created. It has been widely reported that several other large companies are waiting in the wings to go public. If the SpaceX IPO proves successful and performs well in its new public incarnation, we would expect other big deals to follow in its footsteps.
More broadly, the rise in equity markets in 2025 and the first half of 2026 has helped smooth the path for IPO activity, with implications for both public and private equity investors. Two years ago, public market prices were below levels where private owners were willing to sell. With the rally over the last two years, especially in technology stocks, market prices and seller expectations appear more closely aligned.
Several index providers have recently changed their rules. What could this mean for passive and active investors?
The SpaceX IPO is noteworthy not only for its size, but also because it arrives amid shifting rules for how newly public companies are added to broad stock market indexes used by passive investors.
Historically, newly issued companies were added to indexes only after a “seasoning period” that could run several months or longer. This often delayed inclusion until after the IPO lockups expired and potential selling pressure from private holders subsided. More recently, index providers have been evolving their thinking around this. In the past few weeks, two major providers have changed their rules in ways that could allow SpaceX (and any other qualifying mega IPOs that follow) to be added much more quickly: at the time of this writing, 5 trading days for the Russell indexes1, 15 for the Nasdaq 1002.
Importantly, the Nasdaq 100 weights stocks based on their total market capitalization rather than the value of the shares publicly available to trade (aka the free float). In practice, this means that passive strategies tracking the Nasdaq 100 – including large ETFs like QQQ – may need to buy a disproportionate quantity of the SpaceX shares that are available to trade post-IPO, although Nasdaq has put some limits in place.
Taken together, these two factors may drive stronger and faster demand from index-driven passive investors in the wake of the IPO, potentially during a period of maximum investor excitement (or even frenzy). Importantly, index demand comes regardless of share price or fundamentals – whereas active managers can make a deliberate judgment call about how much SpaceX they want to own, based on their own independent assessment of its fundamentals relative to the price at which it trades.
The IPO is likely also to have some impact on the indexes themselves. With each addition to an index comes a corresponding reweighting of existing companies. The effect of this may be felt more keenly at a sector level. If, as we expect, SpaceX receives a significant weight within the Communications sector, companies already listed within this sector could face some selling pressure as indexes are rebalanced to accommodate exposure to SpaceX.
The views expressed are those of the authors at the time of writing. Other teams may hold different views and make different investment decisions. The value of your investment may become worth more or less than at the time of original investment. While any third-party data used is considered reliable, its accuracy is not guaranteed. For professional, institutional or accredited investors only.
