Companies like SpaceX and OpenAI command massive private valuations partly because access to their shares is scarce. An IPO removes this barrier, making the stock universally available. This loss of scarcity value can lead to a valuation decline, a pattern seen in other assets like crypto when they became easily accessible via ETFs.
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The traditional IPO exit is being replaced by a perpetual secondary market for elite private companies. This new paradigm provides liquidity for investors and employees without the high costs and regulatory burdens of going public. This shift fundamentally alters the venture capital lifecycle, enabling longer private holding periods.
For highly-capitalized companies like SpaceX and OpenAI, bankers are designing new IPO structures. Instead of standard 90-180 day lockup periods, they're planning staggered share releases over a longer timeframe to manage immense selling pressure from a large base of private shareholders and prevent post-IPO stock volatility.
In a market downturn, public AI companies face mark-to-market stock pressure and employee anxiety. As a private player whose public partners' valuations depend on it, OpenAI could be insulated from this volatility, giving it a stability advantage.
In the current market, companies prioritize liquidity and public market access over protecting previous private valuations. A lower IPO price is no longer seen as a failure but as a necessary market correction to move forward and ensure survival.
The current IPO market is bifurcated. Investors are unenthusiastic about solid, VC-backed companies in the $5-$15B valuation range, leading to poor post-IPO performance. However, there is immense pent-up demand for a handful of mega-private companies like SpaceX and OpenAI.
The venture capital paradigm has inverted. Historically, private companies traded at an "illiquidity discount" to their public counterparts. Now, for elite companies, there is an "access premium" where investors pay more for private shares due to scarcity and hype. This makes staying private longer more attractive.
For trillion-dollar private companies like SpaceX going public, the traditional 90-180 day lockup period is inadequate. The massive volume of insider shares hitting the market at once could crash the stock. Investment bankers are now designing staggered lockup releases to manage this unprecedented liquidity event.
A theory posits that SpaceX's massive potential IPO is a "spite IPO" by Elon Musk. By raising tens of billions in the public market, he could "suck the oxygen out of the room," making it significantly harder for capital-intensive AI competitors like OpenAI and Anthropic to secure their own large funding rounds.
By staying private longer, elite companies like SpaceX allow venture and growth funds to capture compounding returns previously reserved for public markets. This extended "growth super cycle" has become the most profitable strategy for late-stage private investors.
The extreme 65x revenue multiple for SpaceX's IPO isn't based on traditional aerospace. Investors are pricing in its potential to build the next generation of AI infrastructure, leveraging the fact that lasers transmit data fastest through the vacuum of space, making it the ultimate frontier for data centers.
