Are the SpaceX, OpenAI, and Anthropic IPOs 50% Overvalued? Why I'm Wary of Hype Already Pumped in Private Markets

The question: is SpaceX really 50% overvalued?

My answer: I can't say for sure, but I think the downside risk here is greater than the upside. My stance is that with these hyped names, you're often better off keeping your distance than chasing.

With the SpaceX IPO approaching, some commentators believe the company is almost 50% overvalued. You can ask the same question not just of SpaceX but of the whole wave of names rushing to public markets — OpenAI, explosive off ChatGPT; Anthropic, behind Claude; and several others.

The key: these were already pumped in private markets

You have to remember these companies have traded privately for some time before listing. A lot of the time, before a company first comes to market, its value is driven up tremendously behind the scenes by the people bringing it to IPO. There's a tremendous amount of staking before the common person gets a chance to touch the shares.

So I'd issue some caution on these names. It's not something I can say for certain. But in my opinion, there's a ton of hype around them.

What history teaches: the hype comes before the listing

I take history as a measuring stick. Meta — trading as Facebook at the time — and Snapchat, like many stocks, came to market already driven up enormously in the private markets.

Facebook was a very exciting IPO too, and a year later it was much lower. That's just one example, of course, and there are times IPOs do well. But these names tend to front-load their hype before release, not after.

When everyone agrees something is obviously the hottest, most exciting stock, even the smallest amount of disappointment can translate into a significant disappointment in the share price — because the expectations are already priced in.

So how do I approach it

There's an old expression I keep coming back to in the trading and investing world: "Don't chase the girl, let the girl come to you." That's exactly my personal take on these names. Being a little careful might be okay in the end.

I'm not saying excitement is a bad thing. But when everyone is this thrilled and it's so obviously the hottest stock, the excitement itself becomes the risk. For names like SpaceX, OpenAI, and Anthropic, I'd rather wait for the hype to cool and the price to come to me.

FAQ

Q: Why does IPO hype peak before the listing instead of after? A: These companies trade privately for a long time before going public, and their value gets inflated there. By the time retail investors can enter, expectations are already priced in, so even small disappointments can move the stock hard.

Q: Should I avoid IPOs entirely, then? A: No — some IPOs do well. My stance is simply that chasing in at peak excitement is riskier than waiting for the froth to come out and the price to reach a reasonable level.