Mega IPOs to trigger public equity reallocation
The guest argued that upcoming massive private company listings will not crash the market because institutional investors are heavily under-allocated to public equities.
The argument
Although the supply from anticipated IPOs like SpaceX and OpenAI will be historically large, Tom Lee noted that family offices and pensions have spent a decade over-allocating to alternatives and will use these high-profile listings to reallocate back to public markets.
The thesis, stress-tested
✓ What validates it
- ✓High-profile tech IPO filings and successful capital raises
- ✓Data showing institutional fund flows shifting from private alternatives back to public equities
▸ Risks discussed
- ▸Lockup expirations causing severe short-term technical selling pressure
- ▸A broader macro downturn freezing the IPO window entirely
Hear it yourself
"And so that I think has colored people's views of both actions taken by the White House and how investors, unfortunately, interpret the data. Because instead of being unbiased and evidence based, I think a lot of people still have their own subjective overlay in how they see information. So for for instance, when this war started, there's a lot of our clients who said, like, well, this is Armageddon. And they were, not even just worried about like, with the stock market being down, they were worried about their own personal safety. So I do think that there is an overreaction in markets. The University of Michigan, I think, has also become notoriously partisan."
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