Updated
Deutsche Bank chief global strategist Binky Chadha joins Yahoo Finance to explain how mega initial public offerings (IPOs) from Anthropic (ANTH.PVT), SpaceX (SPAX.PVT), and OpenAI (OPAI.PVT) could affect the broader markets (^DJI, ^GSPC, ^IXIC).
00:00 Speaker A
We’ve been talking a lot about these IPOs lately, especially since the SpaceX, uh, S1 filing. We know we’re going to get OpenAI and Anthropic. But I know in the backdrop of that, from a macro perspective, there is also this um discussion about supply and demand of stocks. That there’s only so much money out there. How are you thinking about it from a macro perspective, the effect that these IPOs could have?
00:34 Speaker B
It sounds like very compelling logic that we’re going to have these huge IPOs. It’s going to suck out all the liquidity and then it’s going to crowd out all the other stocks. So, what I would do is first, you know, just do two simple things. Uh, one is take a step back and, you know, ask, you know, what has happened historically when we’ve had very large IPOs. And I think here, you know, the academic literature is very, very clear, which is that it is robust demand conditions that basically create the environment for the actual uh uh big IPOs to take place. The second very simple thing to do, uh, is to take a look at how markets, uh, basically, how the S&P 500 behaved during, you know, waves of uh, issuance, during and and and around basically uh large IPOs or big IPOs as we’re talking about now. Again, the story is exactly the same, which is uh the market is very strong, issuance then picks up and the market basically remains strong. And at some point, of course, you know, the cycle is going to change, uh but there’s very little evidence to think about, uh, you know, to to to support sort of the the the thesis that, you know, large IPOs are basically going to crowd out uh the rest of the market.
