She's On The Money - IPO Ceilings and The Trillion Dollar Question

Starting point is 00:00:00 She's on the money. She's on the money. My name's Natasha Bambler. I'm a proud First Nations woman and I'm here to acknowledge country. Hello beautiful friends. We gather on the lands of the Aboriginal people. We thank, acknowledge and respect the Aboriginal people's land that we're gathering on today. Take pleasure in all the land and respect all that you see.

Starting point is 00:00:25 She's on the Money podcast. Acknowledge is culture, country, community and connections, bringing you the tools, knowledge and resources for you to thrive. Hello, my friends and welcome to She's on the Money. the podcast where we discuss all of the issues concerning your wealth goals so that you can feel more confident with your financial future. And that includes any investment milestones along the way. I'm Victoria Devine and you are joining me for a very special solo episode dedicated to IPOs because frankly, they've been dominating the headlines and our DMs.

Starting point is 00:00:54 You might have noticed that there is a lot of buzz going on around SpaceX going public in June, but I don't think that the share market's quite done yet. With a few more mega valuations up at for the rest of financial year 2027. While Beck and I did cover IPOs in 2024, this week I'm bringing you a recap to help you better understand IPOs in today's investing landscape. And by the end of this episode, you'll understand what an IPO actually is, how to approach evaluation without analysis paralysis, how you'd even go about buying one if you wanted to, and most importantly, how to figure out whether any of this is actually right for you. After the break, we'll get into the cautionary tales and finish with how you actually approach this stuff based on your investing goals.

Starting point is 00:01:40 So my friends, don't go anywhere. Welcome back, my friends. Now, I know IPOs have seemed like background noise for most of 2026. But as soon as SpaceX went public, suddenly everyone from Gina Ryanhart to the group chat had an opinion. And for good reason, too, it was one of the biggest IPOs in history. We're talking about a debut valuation of around 1.75.5.000. trillion US dollars. But it didn't stop there. Off the back of that, both OpenAI, the company that's behind ChatGPT and Anthropic, the company behind our friends at Claude, have now confidentially

Starting point is 00:02:20 filed their own paperwork with the SEC to go public to. Arguably, it looks like the two biggest names in tech are racing to list at the exact same time. Now, I know what you're thinking, who filed first, or at least that's what I'm thinking. And the answer is Anthropic. on the 1st of June, offer fresh valuation of $965 billion. Open AI listed a week later on the 8th of June. And depending on who you ask, the two of them could go public anywhere between October and sometime in 2027. But if they list within a week of one another, then why the big gap, you ask? Well, here's where it gets a little bit saucy.

Starting point is 00:03:03 Open AI has reportedly got a self-imposed flaw, as in, They don't want to list below a trillion dollar valuation, and market conditions need to support that. Anthropic, on the other hand, is racing to be the first, because in a two-horse race like this, whoever lists first effectively sets the price for the market users to judge the other one. And after the space X price swing, you can imagine things are feeling a little bit, I don't know, volatile to say the least. And just to give you an idea of scale, analysts reckon that between In SpaceX, Anthropic and Open AI together, they could pull in over $200 billion out of public markets. $200 billion.

Starting point is 00:03:47 For context, the entire US IPO market only raised about $45 billion in the entirety of 2025. As you can imagine, it's a genuinely big moment for markets. But let's go back to the basics for a second, because I think it's worth a refresher on what an IPO actually is. is. So, to begin at the beginning, an IPO stands for initial public offering. Before a company goes public, it's privately owned by its founders, employees, and maybe even a small group of private investors or venture capital firms. But when a company decides to list on the public exchange for the very first time, it's opening itself up to everyday investors like you and me, selling little slices of the business to people who really are interested. Now, you might be

Starting point is 00:04:34 wondering, where do you actually go to buy one of these bad boys? Can I just buy them wherever I get my shares or ETFs? Well, kind of, with a few extra steps. SpaceX listed on the NASDAQ, which is the American Exchange, not the ASX. Same goes for Open AI and Anthropic who are also expected to list in the US, which means you can't just go and buy it like a normal ASX stock if the platform you're using doesn't offer foreign exchanges. You need what's called an international shares account, which most of the big platforms offer as an add-on. Think sharesies or purler, that sort of thing. And because you're a foreign investor, you may need to complete something called a W-8-B-E-N form. Basically, it's a form which drops the US withholding tax on any dividend from 30% down to 15% thanks to an Australia-U-S.

Starting point is 00:05:32 tax treaty. Bit of a money win. While this doesn't really matter right now, because something like SpaceX aren't actually paying a dividend, they're choosing to reinvest your money in its rockets and in AI, it is standard practice for any US shares account. Now, you might have read somewhere that people weren't getting their shares that, quote, applied for during the IPO recently. And this is because when a company first launches, there's usually a very small window where everyday people like us can apply for an allocation before the stock starts trading. For SpaceX, applications were brokered by certain firms and platforms and had to be in by a certain deadline with funds in your account ready to go. If you had missed that window, you had to wait for it to start trading

Starting point is 00:06:17 on the exchange and buy it on one of the open markets at the live price no matter what it was. All of this is really worth knowing because IPOs are often oversubscribed, which means that more people often apply than there are actually shares available. Even folks who did apply may have only received a partial allocation or none of it at all. So that's what it means when you read things like initial offering. Okay, so let's get a little bit practical. If you wanted to do your homework on one of these IPOs, where would you even begin? Our first stop is always prospectus. This is a legal document that lays everything out. The company's financials, risks, earnings. who owns what and what it plans to do with the money raised during an IPO. While some of it is

Starting point is 00:07:05 pretty dense, you don't need to read every page like you're a lawyer, but you should review the bits that actually matter to you. So things like revenue, whether the company is actually profitable or if it's losing money, and the risk factors section, which is basically a company telling you in writing all the ways that it might fail, which is low key one of the most underrated sections of any prospectus. If you want to know what could go wrong with an investment, the company's going to tell you right there in black and white because they have to. Now, please go back to our original episode on IPOs if you want to learn more about P.E. ratios and PS ratios, the price to earnings ratio and price to sales ratios. I know they

Starting point is 00:07:48 might sound really technical and overwhelming, but they're genuinely useful in assessing how valuable a stock might actually be for you. Once you've established those, you can then compare them to similar companies or companies within those industries to see how they rate. You can also quickly search what range a good PE ratio might be for a particular industry to get a really good benchmark indicator. Okay, now let's say you've assessed the IPO and you're ready to purchase. How does that actually work? There are generally a few stages to an offering. First, the company might go around to its underwriters pitching big institutional investors to gauge demand before the stock is even available to retail investors like you or I. The big dogs get first dibs. That's just how it works.

Starting point is 00:08:32 Then comes the retail offer, which is the bit we can actually access, usually through a broker's IPO center or something similar. You'll see the offer documents, the prospectus, sometimes an indicative price range and deadline to apply if you have funds ready to go. Then the company prices the IPO, meaning the final share price is locked and loaded. based on that roadshow demand and the stock starts trading on the exchange. If you applied and got an allocation, congrats, my friend, you are now a shareholder. If you didn't or you missed the window,

Starting point is 00:09:06 you can simply buy it on the open market from day one of trading like everybody else. And that first day of trading can be absolutely wild. SpaceX is the perfect case study for this, so let's get into exactly what happened there after the break. Some people are calling it a really big price. swing. I'm calling it what it is, absolutely wild. SpaceX priced its IPO at $135 a share on the 11th of June. Within days, it rose up to around $225 a share, but then it only gave back roughly 32% of those gains in the weeks that followed, which means that some folks who bought it at the top

Starting point is 00:09:49 lost a third of their investment pretty much instantly. And whilst it might not matter to the Reinhards of the world, it can be absolutely devastating to the everyday person who applied for and bought into the biggest IPO in history without necessarily understanding exactly what they were buying. Most didn't understand that SpaceX isn't just rockets and Starlink anymore and that in February 26, Elon Musk's AI company, XAI actually merged into SpaceX. So when you buy SpaceX shares now, a huge chunk of what you're buying, is actually exposure to AI infrastructure spending, not just space. Worse again, in the first quarter of 26 alone,

Starting point is 00:10:33 SpaceX posted a net loss of $4.28 billion US dollars, a huge jump from the 528 million loss the year before. So while people were flocking to buy it, they perhaps didn't realize they were making a huge bet on AI infrastructure. Truly, something you'd notice if you'd notice if you'd actually read the prospectus. While this is the case for SpaceX, I feel like it might be a sign of things to come for Anthropic and Open AI who are both watching exactly how this plays out before they finalise their own pricing. If you aren't already intimately acquainted, for example,

Starting point is 00:11:11 using AI yourself, Anthropic, the company behind Claude is gunning for an October listing. Their private valuation was $965 billion off the back of a $65 billion funding round. They're aiming for the big T. They want a trillion dollar valuation. And unlike SpaceX, their story is genuinely about including a profit, projecting their first ever operating profit in the second quarter of 2026, which will be around $559 million on close to $11 billion of quarterly revenue. But something worth knowing is there's been some real regulatory noise around them too. On the same day SpaceX listed, a US Commerce Department export control order reportedly took two of Anthropics model offline globally. There's been a Pentagon supply chain review and an ongoing legal dispute

Starting point is 00:12:05 around a Department of Defense blacklisting, which is great if you don't support the military industrial complex. Go off queen. Please keep in mind, whatever the market assigns to Anthropic in October will become the benchmark that everyone uses to judge Open AI when they eventually go public. Now, most people will be familiar with this company because they made chat GPT, which is basically a verb now. With over 900 million weekly active users, their revenue has grown from about $2 billion a year in 2023 to over $20 billion by the end of 2025. But guess what? They're still not profitable. Reports suggest they spent $34 billion alone last year, including $19 billion on research in development. Personally, it all smells a little bit volatile to me. And sure, their CEO has

Starting point is 00:12:58 confirmed that he won't list below a trillion dollar valuation, which is part of why their timeline has slipped. Reporting now suggests that they might wait until 2027 rather than rushing to list before the end of the year, partially because of this valuation anxiety. Okay, so with all of that in mind, you're probably thinking, Victoria, how do we actually approach this and truly Before you even look at a single valuation, please go back and look at your own investment plan and your own investment profile. Measure any potential investments against your existing goals and your existing portfolio, not against any headlines. Ask yourself, what risks can I actually manage? Not what risks sound exciting in theory, but what risk would genuinely not keep you up

Starting point is 00:13:46 at night if the stock dropped 30% tomorrow? Secondly, what reward or opportunity? am I actually trying to capture here? Is it long-term growth? Is it dividends? Is it just wanting exposure to a sector that you believe in? And finally, what volatility can I personally handle, both financially and emotionally? Do I have what it takes to hold on to this for the next decade and not sell out as soon as the tides change? Because, as you know, investment can be deeply emotional if we're not careful and really considered. With all of these things in mind, if you are interested in these IPOs, it really pays to start tuning into the conversation now, rather than waiting until the week at lists and cramming like a VCE student. Follow the reporting, understand the business model and read the

Starting point is 00:14:33 bloody prospectors once it's out so you're not making a decision under pressure once the hype reaches fever pitch. But you know, why wait? Practice reading prospectus now for funsies, I guess. I mean, it's fun for me, space X is public. Get comfortable with the format, the language, the risk factors. So when anthropic or open AI eventually goes up, you know exactly what you're working with and what to look out for. Whatever happens over the next few months. The real takeaway isn't about whether you should buy a particular stock, but whether you understand what you're buying and if it supports where you want to be financially. My friends, thank you for letting me rant. Thank you for joining me in what was, I guess, a very juicy IPO update.

Starting point is 00:15:18 I hope that you feel a little bit more equipped to cut through the headlines next time a trillion dollar listing hits your feed. Please leave us a review if you found this episode helpful and make sure you're subscribed so that you never miss an episode. Take care, my friends, and we'll catch you next time. The advice shared on She's on the Money is general in nature and does not consider your individual circumstances. She's on the Money exists purely for educational purposes

Starting point is 00:15:46 and should not be relied upon to make an investment or financial decision. If you do choose to buy a financial product, read the PDS, TMD, and obtain appropriate financial advice tailored towards your needs. Victoria Devine and She's on the Money are authorised representatives of Money Sherpa PtyY LTD, ABN, 321-649-27708, AFSL-FSL-151-289.

She's On The Money - IPO Ceilings and The Trillion Dollar Question

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