The blockbuster stock market debut of SpaceX (NASDAQ:SPCX) last week may mark the beginning of a new phase in the current bull market, according to strategists at Evercore ISI, who see parallels with the transformative impact of Netscape’s IPO in 1995.
SpaceX, trading under the ticker SPCX, raised $75 billion through its initial public offering on Friday at $135 per share, giving the company an implied valuation of $1.75 trillion and setting a new record for the largest IPO ever completed.
The stock gained nearly 19% between its opening trade and closing bell on its first day of trading, a performance Evercore noted was consistent with historical trends for high-profile public listings.
Shares continued to advance on Monday, adding roughly another 6% in premarket trading.
‘Dream Big FOMO’ Could Drive the Next Stage of the Rally
Evercore strategists, led by Julian Emanuel, believe the enthusiasm surrounding SpaceX could create what they describe as a “Dream Big FOMO” effect, encouraging investors to chase exposure to groundbreaking technologies.
They argued that the company’s debut could provide additional momentum to the artificial intelligence-driven rally that has already helped deliver three consecutive years of double-digit gains for the S&P 500.
“SPCX’s IPO today, like Netscape 30 years ago, could catalyze ’Dream Big FOMO’ and the next leg of the Bull Market,” the strategists wrote.
Evercore Rejects Comparisons to the End of the Dot-Com Boom
While some market participants have drawn comparisons between current conditions and the late stages of the dot-com era, Evercore does not believe the market is approaching a similar turning point.
The firm pointed to the lack of recessionary warning signs, relatively stable long-term Treasury yields and robust earnings growth linked to artificial intelligence as evidence that the rally may still have room to run.
According to the strategists, the pace of AI-related earnings expansion is more typical of periods immediately following economic recessions than of mature bull markets.
IPO Activity Remains Below Historic Extremes
Evercore also highlighted that overall equity issuance remains well below levels typically associated with major market peaks.
Even if anticipated offerings from Anthropic and OpenAI move forward, total issuance would remain below the 0.75% share of S&P 500 market capitalisation that has historically accompanied significant market tops.
The number of IPOs also remains far below the levels seen during the technology bubble. This year’s total is running slightly above 150 deals, compared with more than 600 companies that went public in 1999.
Money Market Cash Could Support Further Gains
Strategists also noted that approximately $7.9 trillion remains parked in money market funds, representing a substantial pool of capital that could eventually flow into equities.
Based on that backdrop, Evercore maintained its year-end target of 7,750 for the S&P 500 and continues to see a potential bullish scenario in which the index reaches 9,000.
“We continue to see further Tech-led rally ahead,” the strategists said.
Technology Remains the Preferred Sector
Evercore continues to favour Information Technology, Communication Services and Consumer Discretionary stocks.
The firm noted that Information Technology and Communication Services have been the only sectors to consistently outperform the broader market since the AI-driven bull market began in October 2022, reinforcing their status as key beneficiaries of the current investment theme.