Equity scarcity ends as supply rushes back
The multi-decade trend of US stock scarcity driven by massive corporate buybacks is reversing as mega-cap companies pivot to heavy equity and debt issuance.
The argument
The hosts argued that the era of relentless stock buybacks, which erased $12 trillion in S&P shares, is ending. They noted that companies like Nvidia, Oracle, and Alphabet are now issuing massive debt or equity, which could structurally pressure market valuation multiples.
The thesis, stress-tested
✓ What validates it
- ✓S&P 500 average valuation multiples compress over the next 12 to 24 months
- ✓Further announcements of multi-billion dollar equity or debt offerings by mega-cap tech companies
▸ Risks discussed
- ▸Strong economic growth could absorb the new supply without compressing multiples
- ▸Companies might resume buybacks if interest rates fall significantly
Hear it yourself
"They gorged on debt because interest rates were basically free for them too, and they didn't need to issue any more debt. They've been good, better than good. Well, now they're issuing debt. NVIDIA, 20,000,000,000. So we're to get to that two themes, but it's it's kind of amazing. Like, those are mega themes. So we have the SpaceX IPO. Do you think so both of those things are really important. Do you think the average market participant, even professionals, have come to terms with this really big and important change to the conventional landscape? No."
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