How hype, scarcity, and index-fund expectations can distort investor behavior with SpaceX as a timely case study, and a preview of what could follow for Anthropic and OpenAI.
A company going public often feels like the moment ordinary investors are finally being invited into something special. In practice, an IPO is usually a financing and liquidity event: a company can raise new capital, establish a public market price, and broaden the pool of potential shareholders.
That distinction matters because the story told around a high-profile IPO is usually about opportunity, while the function of an IPO is much more practical. Public markets can provide capital, liquidity for early stakeholders, acquisition currency, and eligibility for wider index ownership. [1]
SpaceX is a useful example not because it is ordinary, but because it is not. Private transaction activity has helped push its valuation into territory that naturally pulls in investor attention and invites speculation about what the public listing looks like. [3]
What an IPO is really for
The romantic version of an IPO is that a great company is generously opening its doors to the public. The more grounded version is that going public is often the point where private capital, employees, founders, and early investors gain a larger market in which their ownership can be priced and, eventually, sold.
That does not make IPOs bad. It simply means investors should begin with the right framing: a company can be exceptional and still arrive in public markets at a moment when expectations are already extremely high.
This is part of why IPOs can be so seductive. Scarcity, media attention, and the prestige of getting access to a business that had previously been reserved for insiders can make investors feel early even when they are arriving at a much later stage in the company's life cycle.
The pattern has shown up before
The long-run evidence on IPOs is much less romantic than the headlines that often surround them. Research has shown that first-day pops can be substantial, but the broader long-run record for newly public companies is far less impressive than the excitement around the offering might suggest. [2]
That pattern helps explain an important divide in investor experience. Investors with access at or before the offering price may benefit from early scarcity and underpricing, while investors buying after the debut are often buying amid maximum attention and elevated expectations. [2]
This does not mean every IPO disappoints. It means the average investor should be careful not to confuse a strong debut with strong long-term compounding, particularly when the company reaches the public market during a period of intense thematic enthusiasm. [4]
What the biggest IPOs actually returned
It helps to put real numbers to this. The chart above looks at the ten largest U.S. IPOs since 2000, including names such as Visa, Meta, General Motors, and Uber. Interestingly, these companies typically trailed the S&P 500 not only in its first year, but three and five years out as well.
The chart below compares the median return for that group with the S&P 500 over the same periods.
Ten largest U.S. IPOs since 2000. “Typical” = median price return from the IPO offering price; the S&P 500 is measured over each company’s corresponding window. Rivian’s five-year mark has not yet occurred, and AT&T Wireless was acquired before its fifth year, so both are excluded from the five-year figures. Figures are approximate and for illustration only.
Averages can hide the real lesson: dispersion. The bars show the median, not the average, because a couple of standout winners such as Visa and Meta would otherwise distort the picture. The broader pattern is what matters. The typical IPO in this group lagged at every horizon, even though a small number became exceptional long-term winners. Rivian and Coupang have each fallen more than 50% from their IPO price, AT&T Wireless was acquired below its offer price, and CIT Group eventually filed for bankruptcy. [7]
SpaceX, hype, and the index question
SpaceX sits at the center of nearly every force that can amplify IPO excitement: a high-profile founder, a compelling operating story, genuine technological achievement, and private-market scarcity. That combination naturally attracts attention, but it also increases the odds that valuation discussion becomes driven as much by narrative as by sober expectations for long-term cash flows.
The debate is not just about what these businesses are worth, but also about index construction, passive fund demand, and how much investors should realistically expect from eventual inclusion in major benchmarks. [1]
That point matters because major benchmarks typically have eligibility rules. Listing age, float, liquidity, and other screens can affect when a newly public company is considered for inclusion, meaning the “index bid” is often less immediate than investors assume. [6]
Even when inclusion eventually occurs, it does not guarantee superior returns. There is evidence that the price effect of S&P 500 inclusion has become smaller and more transitory over time. [1]
Where FOMO does the damage
The financial-planning risk is not that investors admire a great company. The risk is that admiration turns into concentration, rule-breaking, or the abandonment of underwriting discipline.
In practice, FOMO tends to show up in a few familiar ways:
· Investors treat access itself as an investment thesis.
· They anchor on private-market valuation marks as if those marks guarantee public-market support.
· They assume index funds will create an automatic and durable tailwind once a company lists.
· They extrapolate the company’s operational success into a certainty of strong shareholder returns.
Very large offerings can hit the market when investor appetite is already stretched, forcing buyers to absorb a heavy wave of new equity supply and sometimes leading high-profile IPOs to deliver weak forward returns after the initial excitement fades. [4]
That framing connects directly to financial planning. A sound plan is built around diversification, liquidity needs, tax consequences, expected return, and position sizing, not around the fear that a compelling narrative might pass us by.
Looking ahead to Anthropic and OpenAI
SpaceX may be the clearest current example, but it is probably not the last. If Anthropic and OpenAI eventually pursue public listings, they will likely arrive with many of the same ingredients: scarcity, extraordinary media attention, high private valuations, and immediate speculation about benchmark inclusion and passive-fund demand. [1]
For investors, the relevant lesson is broader than any one name. Historically, the public debut of a beloved company has often been a point of maximum excitement rather than maximum future return, and the more powerful the story, the more disciplined the investor usually needs to be. [2][4]
The practical question is not whether SpaceX, Anthropic, or OpenAI are remarkable businesses. The practical question is whether buying them at a public-market moment shaped by hype, scarcity, and FOMO would improve the odds of meeting a long-term financial plan.
Sources
This material is for informational and educational purposes only and does not constitute investment, tax, or legal advice, or a recommendation to buy or sell any security. References to SpaceX, Anthropic, and OpenAI are used solely as case studies to illustrate broader principles around IPOs, investor behavior, and index inclusion. Past performance is not indicative of future results. All investing involves risk, including possible loss of principal.
1. Aswath Damodaran, "SpaceX, OpenAI and Anthropic: The S&P 500 Inclusion Question and Investment Consequences!"
2. Jay R. Ritter, "Initial Public Offerings: Updated Long-run Statistics"
3. Reuters, "Musk's SpaceX preparing to launch tender offer in Dec at $135/share"
4. OptimistiCallie, "All you can invest"
5. Jay R. Ritter IPO data page, University of Florida
6. Callan, "Mega-IPOs: Index providers changing IPO inclusion rules"
7. Author’s analysis of public-market IPO offering prices, corporate actions, and subsequent split-adjusted prices for the charted companies. Returns are approximate price returns.
Referenced Article URLs
2. https://site.warrington.ufl.edu/ritter/files/IPOs-long-run-returns-on-IPOs.pdf
4. https://www.optimisticallie.com/p/all-you-can-invest-6b5f
5. https://site.warrington.ufl.edu/ritter/ipo-data/
6. https://www.callan.com/blog/mega-ipos-changing-index-rules/