SpaceX, Anthropic, Anduril,…: The Real Danger of the IPO Craze
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Anthropic, Anduril, and other trendy companies plan to open their capital to investors through Initial Public Offerings (IPOs), following SpaceX's example. Many see this as an opportunity to get rich quickly. But beware, investing in an IPO often turns out to be more disappointing than rewarding.The current craze around IPOs is mainly manifesting outside Europe, where the postponement of the highly anticipated stock market debut of the Franco-German defense group KNDS disappointed many investors, as did that of Visma, a Norwegian software company. IPO exuberance is mainly concentrated in the United States, on AI-focused tech companies. Why? Sentiment has significantly warmed towards these sectors in recent months. Founders and early investors seek to get the most out of their IPO. This enthusiasm drives up prices.Two dynamics are observed. On one side, founders want to sell at a high price or attract cheap capital. On the other, buyers seek to get a good price. Who knows more about the company's real value? Add to that the promotional campaigns of investment banks, and you will understand why I have long asserted that IPOs are generally overvalued.Let's take the example of Verisure – whose stock market debut last autumn marked the largest IPO of the last three years – which has lost 33% since its first session's surge. CSG fell by 38% since its much-hyped introduction in...
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