Wall Street’s IPO boom threatens era of shrinking US stock supply

{"text":[[{"start":9.05,"text":"US markets are close to ending more than two decades of declining equity supply as a trio of mega initial public offerings brings a flood of new shares that investors warn could strain the limits of demand."}],[{"start":21.15,"text":"The listing plans of SpaceX, Anthropic and OpenAI come as Wall Street’s existing Big Tech groups look to multibillion-dollar share sales to fund their vast AI spending, in a reversal of decades of share buybacks that have helped US stocks more than triple in price since 2016."}],[{"start":39.45,"text":"Goldman Sachs estimates net supply of equity in the US — measured by new shares hitting the market less equity removed by buybacks or companies going private — will be almost flat in 2026, having been in negative territory since 2003. The bank expects an even greater influx of new shares in 2027, as lock-up periods on this year’s IPOs expire. "}],[{"start":63.35,"text":"Without the tailwind of a shrinking supply of shares, some analysts and investors worry Wall Street’s tech-led rally could finally run out of steam. "}],[{"start":72.65,"text":"“This is a sea change,” said Ajay Rajadhyaksha, global chair of research at Barclays, referring to AI spending that is leaving little room for buybacks and turning some of the biggest companies in the US into net equity issuers."}],[{"start":87.15,"text":"“It will give us a clean test case for how much of the broad stock rally over the past decade has been about a net reduction in shares.”"}],[{"start":null,"text":"

"}],[{"start":94.85000000000001,"text":"Sixty US companies have gone public this year, raising nearly $40bn, the highest year-to-date deal value since 2021, according to data from Dealogic that excludes listings of blank-cheque companies. Goldman expects that figure to rise to a record $225bn this year following the raft of big listings. SpaceX, Elon Musk’s rocket-cum-AI company, is aiming to raise as much as $86bn in its IPO later this week."}],[{"start":125.05000000000001,"text":"Share sales by companies already on public markets could represent a bigger shift. Alphabet last week raised nearly $85bn in a historic equity raise to fund its vast AI investment, a sale expected to turn the Google owner into a net issuer of stock for the first time in 11 years, according to George Pearkes, an analyst at Bespoke Investment Group. The FT reported a similarly large deal is under consideration at Meta."}],[{"start":152.75,"text":"The volumes of new shares being issued remain small compared with the overall size of US equity markets. That, plus red-hot demand for AI-linked investments, means fears of a broader market sell-off triggered by the issuance boom “may be misplaced”, according to Jim Reid, global head of macro research of Deutsche Bank."}],[{"start":171.35,"text":"Even so, some observers worry that investors will need to sell other stocks to make way for fresh equity in their portfolios, leading to further bouts of turbulence such as Friday’s 4.2 per cent fall in the Nasdaq Composite index. Stocks extended their fall on Tuesday, with the Nasdaq down 1 per cent."}],[{"start":190.1,"text":"More than $1tn has been wiped from the value of the Magnificent Seven group of listed US tech giants since SpaceX filed for its IPO last month amid warnings that investors are selling up to raise funds to buy into the new listings."}],[{"start":204.85,"text":"“Everyone is chasing what’s next,” said Jordan Stuart, investment director at Federated Hermes. “Where the money is going to come from is some of the Mag Seven names.”"}],[{"start":215.15,"text":"“There’s no doubt that this is going to be a big cash pull for the market,” said the head of equity capital markets at a global investment bank. “We’ve never seen IPOs this size before. This is a lot of money.” "}],[{"start":226.55,"text":"Some fund managers warn that a flurry of fundraising has in the past often accompanied the top of the market, as company insiders rush to sell their shares at elevated valuations and markets buckle under the weight of new shares."}],[{"start":241.60000000000002,"text":"“Record new issues is one of the classic signs of a bubble,” said Richard Bernstein, chief investment officer at Richard Bernstein Advisors. “The new big three IPOs will dwarf the entire amount raised during the [1999-2000] tech bubble even when accounting for inflation.”"}],[{"start":265.35,"text":""}]],"url":"https://audio.ftcn.net.cn/album/a_1781075710_4297.mp3"}