Latest / Bull Market Conversations with Fexingo: Rallies, Momentum, and Riding Market Strength / How Bull Markets Turn IPOs Into Pipe Dream Pipelines
Transcript
- Lucas: So the S&P 500 closed at 7,483 on Friday, Nasdaq at 25,833. Both up over two percent on the week. Small caps actually dipped a little. But here's what I keep coming back to — there's a headline in today's feed that says SpaceX may be the ultimate blueprint for a new wave of mega-cap IPOs. Luna: Yeah, I saw that. It's from CNBC. And it got me thinking — we've been talking about this bull market for months, but the IPO pipeline itself is changing shape because of it. Lucas: Exactly. The traditional model — you know, company raises private rounds, hits unicorn status, files an S-1, roadshow, pop on day one — that's been eroding for years. But this bull market is accelerating a shift where companies don't just want to go public differently. They want to stay private longer, and when they do list, they want to skip the traditional underwriting circus. Luna: And SpaceX is the poster child. It's been private for over two decades. Valued somewhere north of $200 billion. And it's never done a traditional IPO. Lucas: Right. And that's the pipe dream pipeline I'm talking about. The company has this massive secondary market — employees and early investors selling shares to funds — but retail investors are locked out. The bull market is creating this weird dynamic where the most exciting growth stories are staying private, and the public markets are getting the leftovers, or at least the more mature, less speculative names. Luna: But we also saw Palantir jump 14.5 percent this week. That's a public company. And it's been around for a while. So there's still action on the public side. Lucas: No question. Palantir is a great example of a company that went public via direct listing in 2020 and has been a volatile but high-growth name. But the point is, the bull market is making it easier for companies to delay their IPO because private valuations are so rich. Why go through the regulatory hassle and quarterly scrutiny if you can raise capital from SoftBank or Sequoia at a premium? Luna: And that's where the Citadel numbers from this week are interesting. Citadel's hedge funds posted broad first-half gains, and their top-performing strategy actually sidestepped the quant selloff. That suggests that sophisticated capital is finding ways to get exposure to private companies without needing a public listing. Lucas: Exactly. Citadel, along with firms like Tiger Global and Coatue, are essentially providing liquidity to the private markets. They're buying shares in secondary transactions, they're funding SPACs — which, by the way, had a mini-resurgence this year — and they're creating a de facto public market for private companies. The bull market is effectively outsourcing the IPO process to hedge funds and PE firms. Luna: And speaking of SPACs, we saw a bunch of new filings in Q2. Some of them are targeting space tech, which ties right back to SpaceX. But the quality has been mixed. Lucas: Yeah, the SPAC market is definitely not what it was in 2021. But it's still a channel. And the bull market is keeping it alive because there's appetite for risk. The VIX is low, credit spreads are tight, and investors are chasing yield. So a SPAC with a credible target can still get done. Luna: Let's talk about the World Cup headline too. Prediction market volumes are soaring. That's another form of liquidity event — people betting on outcomes. It's like the retail version of what Citadel is doing in private markets. Lucas: That's a great connection. Prediction markets are essentially creating synthetic exposure to uncertain events. And the bull market mentality — the 'everything is going up' mindset — spills over into gambling. People see the S&P up 1.8 percent in a week and think, why not bet on the World Cup too? Luna: And the platforms are seeing record volumes. It's not just sports — there's a growing market for political and economic predictions. The same infrastructure that powers prediction markets is being used to create event contracts that mimic options on private company outcomes. Lucas: You know, I think that's actually the deeper story here. The bull market is creating a parallel financial system. You have private secondary markets, SPACs, direct listings, prediction markets, crypto tokens — all of them competing with the traditional IPO as a way to raise capital and provide liquidity. And the traditional IPO is becoming less relevant by the quarter. Luna: But is that a good thing for the average investor? I mean, retail investors can't easily buy SpaceX shares. They can't buy into Citadel's funds. So they're stuck with the public market, which may be getting the less exciting names. Lucas: That's the tension. The bull market is rewarding risk-taking, but the most attractive risks are increasingly off-limits to retail. Unless you're accredited or have access to a secondary platform like Forge or EquityZen, you're out of luck. And that's why we're seeing more interest in things like small-cap ETFs or thematic funds that try to capture that private market exposure indirectly. Luna: Quick honest thing — and this is totally related to the idea of access. A handful of listeners chip in monthly through buy me a coffee dot com slash fexingo, and that's literally what funds making this many episodes possible. No ads, no paywall, just listener support. It keeps the conversation independent. Lucas: Yeah, and we really appreciate that. It's a small group, but it makes a huge difference. So if our money conversations have helped you think about a decision differently, that's the place. Anyway — back to the IPO pipeline. Luna: So where does SpaceX fit in this new landscape? Are they likely to do a direct listing, a SPAC, or just stay private forever? Lucas: I think the most likely outcome is a direct listing, maybe in the next couple of years. Elon Musk has been hostile to the traditional IPO process — he doesn't want the quarterly earnings pressure or the SEC scrutiny. A direct listing lets them go public without issuing new shares or paying underwriting fees. And given their brand recognition, they don't need a roadshow to drum up demand. Luna: But the valuation is massive. We're talking about potentially a $250 billion listing. That would be one of the largest in history. The market would have to absorb a lot of shares. Lucas: True. But the bull market has shown it can absorb big offerings. Look at how ARM was received in 2023, or even the Reddit IPO earlier this year. There's appetite for iconic names. And SpaceX is arguably the most iconic private company of the decade. Luna: And if they do list, it could open the floodgates for other mega-cap private companies — Stripe, Databricks, maybe even Epic Games. The pipe dream pipeline becomes a real pipeline. Lucas: Exactly. And that's why I think this bull market is different. It's not just about buying the dips and riding the rally. It's about structural changes in how capital markets function. The traditional IPO is becoming a relic, and the new models are being forged right now. Luna: So for listeners who want to position themselves — what should they do? Wait for the SpaceX direct listing? Or look at the companies that are already public and benefiting from this shift? Lucas: I'd say both. Keep an eye on the companies that are enabling the private market infrastructure — like Forge Global or even the exchanges that are innovating with direct listings. But also don't ignore the public names that are acquiring private companies. A lot of the big tech firms are using their high stock prices to buy private innovators, which gives retail investors indirect exposure. Luna: And of course, there's always the risk that the bull market ends and the pipe dream dries up. If the S&P drops 20 percent, suddenly those private valuations look less attractive. Lucas: Absolutely. That's the other side of it. The bull market is what makes these alternative liquidity models viable. If we enter a bear market, the IPO window closes, SPACs collapse, and private secondaries dry up. So the very thing that's enabling this innovation — the bull market — is also what could take it away. Luna: So we're in a sweet spot right now. The question is how long it lasts. Lucas: Exactly. And that's why I find this moment so interesting. We're not just in a bull market — we're in a period where the bull market is reshaping the plumbing of finance. The pipes are being relaid. And where they lead depends on whether the rally holds.