Mega IPOs Are Coming: Here’s What Long-Term Investors Should Know

With SpaceX, Anthropic, and OpenAI all expected to go public in the near term, we’ve been fielding related questions from clients. Some are excited about the opportunity, while others are concerned about what these massive offerings could mean for markets and their portfolios. Both reactions are reasonable. Here’s how we’re thinking about it.

You May Own Them Whether You Buy Them or Not

One of the most important things to understand about mega IPOs is that they can affect your portfolio even if you never buy a single share directly. Index providers like S&P, CRSP, and Russell each have published rules governing when and how new stocks enter their benchmarks — typically after a waiting period of 3 to 12 months, along with screens for profitability and available shares.

However, the sheer size of these upcoming IPOs, with SpaceX alone potentially valued near $2 trillion, is leading some index providers to consider fast-tracking inclusion, potentially within days of listing.

That said, initial index weights may be smaller than you’d expect. Most indexes use free-float weighting, which only counts shares available for public trading. Because founders like Elon Musk may retain 90% or more of their holdings, even a major IPO such as SpaceX could represent a relatively small position in broad benchmarks like the CRSP Total Market Index, potentially around 0.10%. Over time, as insider lock-up periods expire and more shares enter the market, those weights will likely grow. The key takeaway: if you own index mutual funds or index exchange traded funds, you’ll undoubtedly gain exposure to these companies, and it will likely increase over time.

Should You Buy IPOs Directly?

It’s natural to wonder whether you’re missing out by not participating in an IPO at launch. But the research suggests patience is usually rewarded. According to data shared by Avantis, between 1980 and 2024, IPOs underperformed existing stocks with similar characteristics by roughly 2% per year over their first five years of trading. Academic research going back to Ritter (1991) has consistently found the same pattern: strong first-day pops followed by long-term underperformance.

This doesn’t mean every IPO is a bad investment, but it does mean the odds don’t favor chasing them. For most long-term investors, waiting until a company seasons in the public markets and enters your portfolio through index inclusion is a more prudent approach.

What History Tells Us

IPO booms have historically coincided with periods of elevated market optimism and speculative risk appetite. The late-1990s dot-com era saw hundreds of unprofitable companies rush to market at extreme valuations. While today’s environment is different in important ways, with many companies approaching IPO already highly capitalized, the underlying behavioral dynamics of excitement and fear of missing out remain the same. Discipline, not timing, is what protects long-term wealth.

How Integris Approaches IPOs

At Integris, direct investment in IPOs at the offering is generally not part of our investment process. IPO pricing is often influenced by short-term hype, supply-and-demand imbalances, and limited share availability, all of which can distort valuations in ways that are inconsistent with our philosophy.

We prefer to invest in companies after their shares have been absorbed into the broader market and trade in a more liquid, transparent environment — where pricing reflects fundamentals rather than excitement. Our focus remains on disciplined portfolio construction, broad diversification, and evidence-based investing.

The Bottom Line

Mega IPOs make headlines, but they don’t require immediate action. If you’re invested in a diversified portfolio of index funds and evidence-based strategies, you’ll likely gain exposure to these companies in due course — at prices set by the market, not by hype, which is just how long-term investing is supposed to work.

The information provided herein is for educational purposes only, and should not be construed as advice, including, but not limited to tax, legal, insurance, investment, or retirement advice. For your specific planning needs, please seek the advice of Integris Wealth Management, your tax accountant, attorney, insurance agent, or other professional as appropriate. Investing involves the risk of loss.