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When newly public companies have been valued as richly as SpaceX, OpenAI and Anthropic seem likely to be, the outlook for ordinary investors has been poor.
Elon Musk doesn’t think small. Already the richest person in the world, he may soon become the first trillionaire. Mr. Musk is preparing to go public with SpaceX, his rocket and satellite maker, at a total valuation for the company of at least $1.25 trillion, and perhaps substantially more.
The founders of two artificial intelligence companies, OpenAI and Anthropic, are also expected to come out shortly with colossal I.P.O.s of their own. Preliminary accounts give each of those companies a targeted total valuation of $900 billion, give or take a few hundred million dollars.
These are stupendous numbers. Top executives of these companies, like Mr. Musk, Sam Altman of OpenAI, and Dario Amodei of Anthropic, stand to unlock great fortunes through these public offerings, and hundreds of other employees will receive bountiful rewards. But for the rest of us — the vast majority of investors who are soon likely to own pieces of these ballyhooed companies through mutual funds, workplace trusts and exchange-traded funds — this is a dangerous moment.
These companies may turn out to have a remarkable future. But for now, at least, don’t get too excited about them as investments.
Market history contains many lessons. It tells us that at the jaw-dropping valuations being discussed for shares of SpaceX, as well as OpenAI and Anthropic, the probability is exceedingly small that these companies will make money for ordinary people over the next few years.
“They may be great as companies but when you buy shares in them, you should pay attention to their price,” said Jay Ritter, an economist and eminent I.P.O. expert at the University of Florida. “At the potential prices that have been reported, it would be very difficult for an investor to come out ahead in a three-year period.”
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