SpaceX's IPO in June, which launched with a valuation of approximately US$1.8 trillion and rose to over US$2 trillion, illustrates a significant shift in the development of companies before their entry into the public capital market. For Aaron Hussein, Global Market Strategist at J.P. Morgan Asset Management, this example shows how crucial access to private markets has become. Companies going public today are often no longer young growth firms, but established entities that have already realised their primary growth before their public debut.
SpaceX, founded in 2002, remained privately owned for 24 years. Its revenue at the time of the IPO was US$18 billion. This level of maturity contrasts with earlier IPOs of significant technology companies. Amazon went public in 1997, three years after its founding, with annual revenues of around US$0.3 billion and a valuation of under US$1 billion. Google followed after six years with almost US$4.8 billion in revenue and a US$40 billion valuation. Meta entered the market eight years after its founding with US$5.4 billion in revenue and a valuation of around US$151 billion.
Changed Maturities Before IPO
During the tech boom of the late 1990s, an average technology company went public in less than six years. This timeframe has now doubled to twelve years. Mr. Hussein emphasises that companies not only remain privately owned for longer but also enter public markets at a fundamentally different stage of maturity. This advanced maturity is reflected in annual revenues: today's technology companies achieve on average almost three times the annual revenue of typical 1990s companies at IPO, whose average revenue back then was below US$50 million.
The private market increasingly offers the opportunity for significant capital raising. An example of this is Anthropic, which raised US$65 billion in a Series H funding round in May 2026, increasing its company value to US$965 billion. This trend of remaining in private hands for longer is reflected in the composition of the markets. A 2023 report by Bain & Company found that 86 per cent of US companies with over US$100 million in revenue remained private. Public equity markets now have almost 30 per cent fewer companies than at the end of the 1990s.
Impact on Investment Strategies
Aaron Hussein also addresses concerns that mega-cap IPOs could crowd out interest in other stocks. He sees three key reasons why these IPOs are unlikely to negatively impact the development of US equities. Firstly, the inclusion of companies such as SpaceX, OpenAI, and Anthropic in major equity indices occurs only gradually despite their combined valuation of over US$4 trillion. This is because free float, and not total market capitalisation, is decisive for weighting. SpaceX, for example, brought only about four per cent of its shares to market. Additionally, there are so-called lock-up periods, which often only allow early shareholders to sell 90 to 180 days after the IPO.
- —For the ten largest IPOs between 2010 and 2025, the free float averaged 45 per cent on the first day.
- —After six months, this proportion increased to around 80 per cent.
- —Secondly, newly listed companies are not automatically included in all reference indices from day one; S&P Global, for instance, requires twelve months of trading history for inclusion in the S&P 500.
The crucial valuation question of whether these technology companies generate a return on their investments remains open and depends on whether companies outside the technology sector can also increase their productivity and profitability. For investors, according to Aaron Hussein, a clear conclusion emerges: to leverage the full spectrum of economic growth and participate in value creation at early stages, a presence in both public and private markets is increasingly necessary.
