Could we interest you in $675bn in tech stocks?

Katie Martin (0:06)

Pushkin.

The hands down best bet that any investor could have made in the past few years is to buy US tech stocks. Winner, winner, chicken dinner. Well, the majesty of markets serves to give the people what they want, damn it. So guess what we have coming our way? Yep, it's more tech stocks, a lot more. It's a feeding frenzy, people. Some massive razzle dazzle tech companies are lining up to hit the stock markets for the first time. We've already chatted about one of them, SpaceX, on the show, but we're also talking here about the likes of OpenAI, which runs ChapGPT, and Anthropic, which Rob can't pronounce for some strange reason.

Anthropic?

Rob Armstrong (0:53)

I don't know what you're talking about. I don't even know what company you're referring to. These words are a mystery to me.

Katie Martin (0:59)

Plus, we have a bunch of other tech monsters that are already listed, that are pumping out more of their stocks onto the markets. Today on the show, is this a golden opportunity for investors, or a sign that the exuberance is getting out hand and a crash is coming? This is Unhedged, the markets and finance podcast from the Financial Times, and Pushkin. I'm Katie Martin, a markets columnist at FT Towers in a very soggy London. All the rain, finally. Joining me to the magic of technology in New York City is Rob Armstrong, my partner in crime on the Unhedged newsletter.

Rob, are you excited? Do you feel the buzz, the feeding frenzy?

Rob Armstrong (1:40)

I'm still stinging from you making fun of how I pronounce company names. I just like to say that I'm a visual learner, and that I learned from reading, and so I don't know how to pronounce a lot of things, and I apologize.

Katie Martin (1:54)

Yeah, you live in a cave, and you don't talk to people.

Rob Armstrong (1:57)

But I do feel the buzz, Katie, to answer your real question. It's an exciting moment in markets.

Katie Martin (2:03)

The buzz is real. It's all about three little letters, IPO. These are Initial Public Offerings, which is a fancy way of saying new listings on stock markets. And they are back.

Rob Armstrong (2:14)

Yeah, we hit SpaceX about which we're a little bit skeptical because of the no profits problem, but that makes us fuddy-duddies, sticks in the mud, fun sponges. But there's others.

Katie Martin (2:26)

We are fun sponges. Yeah. So the big picture before we come on to those specific others, the big picture is that stock market listings are like back with a vengeance. So we've had four really slow years for listings, and now we've had 40 deals in the US with a combined value of $28 billion that have hit the market this year. So that's the highest tally to the end of May for any year since 2021 And 2021 was gangbusters. So we've had loads of these things.

We're probably, by the time this year comes to an end, not going to have a super unusually large number of new companies on the stock market. But in dollar terms, these guys are really going for it, right? So Goldman Sachs is saying they reckon there's going to be $225 billion worth of new volume on the market. And including all other stuff, like follow-ons and other issuance from companies that are already listed, they reckon it's going to get to $675 billion. It's a lot.

Rob Armstrong (3:30)

It is a lot. I should note that the total market cap of the US stock market is something like 75 trillion.

So adding less than a trillion to that doesn't sound like a lot. But these things are always quite finely balanced. Adding a couple of percent more supply to something that had a bit of a fixed supply before can make a difference at the margin. And I think we're going to feel that this year for sure.

Katie Martin (3:59)

Yeah. And it's no coincidence that all the really kind of razzle dazzle exciting new listings that are coming, they're all in tech, they're all in AI.

And one interesting thing about that to me is that something that stock market investors, like professionals, whinge about all the time is that companies stay private for ages now. They become like really massive companies while they're still sitting in private hands before they hit the stock market. So then there is a question around how much value has already been juiced out of them by private equity and whatever before they reach the public stock markets. So there has just been a really long wait for some of these companies to fly.