Analysts are drawing parallels between the current wave of initial public offerings (IPOs) from large tech companies and the late-1990s dot-com bubble. SpaceX's upcoming IPO, expected on June 12, aims for a staggering valuation of $1.75 trillion, despite the company reporting a net loss of $4.28 billion in its latest quarter.
The majority of its revenue comes from its Starlink division, while its other ventures, including AI, are not yet profitable. Analysts like John Blank from Zacks caution that such large IPOs often signal a market peak, as seen in 1999. Concerns are also raised about the opaque business models of SpaceX, OpenAI, and Anthropic, all of which are yet to achieve profitability.
Deutsche Bank highlighted the uncertainty surrounding how public markets will value these companies once they disclose their financials. Portfolio manager William de Gale warned that if these firms fail to become profitable, it could lead to a significant downturn in the market.
The situation is precarious, as the valuations of these companies could be unsustainable if they do not demonstrate a clear path to profitability