The IPO Class of 2026: Discipline Over FOMO
- Hatem Dhiab, CFP
- 4 days ago
- 8 min read
By: Hatem Dhiab
June 21, 2026
The excitement is palpable. It has been difficult to go a single day this past week without a conversation about the SpaceX IPO, at dinner tables, in group chats, and across financial media outlets. The fear of missing out is real. That is precisely why discipline matters most right now.
After years of a closed window, the market for new public companies has reopened in a meaningful way, and 2026 is shaping up as one of the most consequential years for initial public offerings (IPOs) on record. These are not small, unknown names testing the waters. They are household companies arriving with private valuations larger than most of the public market, many sitting at the center of the AI story that has driven this bull market. For our clients, the question is not whether these businesses are remarkable. It is whether the price being asked leaves room to be rewarded for owning them.
The Largest IPO in History
On June 12, SpaceX completed the largest IPO in history. The company priced at $135 per share, opened at $150, and closed its first session near $161, up roughly 19 percent, after raising about $75 billion before the underwriters' over-allotment. That move lifted its market value above $2 trillion and, on paper, made Elon Musk the world's first trillionaire. SpaceX immediately ranked among the largest publicly traded companies in the United States, on record-setting first-day volume that approached Meta's 2012 debut.
The week that followed only sharpened the debate. Shares climbed another 20 percent on the first full trading day and have since changed hands in the $180s, with a market value near $2.4 trillion, well above the offering price. Yet the analyst community is anything but unified. Published price targets run from the low $60s at the cautious end to north of $300 at the bullish end, one of the widest spreads we can recall for a newly public company. The fundamentals underneath are equally striking: SpaceX lost nearly $5 billion in 2025 and spent more than $10 billion on capital projects in the first quarter of 2026 alone, much of it tied to AI following its merger with xAI.
In a nutshell, the market has not agreed on what the business is worth, and any investor buying near current levels is paying well above the $135 that institutions received at the offering. That gap, between a great company and a great entry price, is the entire point of this article.
Why This Wave Is Different
SpaceX is the headline, but it is not alone. Goldman Sachs estimates roughly $160 billion of U.S. IPO proceeds in 2026, among the largest annual totals on record. The two major AI labs are next in line. Anthropic filed confidentially on June 1, days after raising $65 billion at a $965 billion valuation, the richest private AI company yet. OpenAI raised $122 billion in March at an $852 billion valuation and has since filed as well. At these prices, the market is underwriting a long bet that AI becomes a core layer of the economy and that rapid growth converts into durable profits. Being public will test that thesis every quarter.
There is a structural wrinkle that matters even if you never buy a single one of these names. Index rules have changed to let very large new companies join the major benchmarks far faster than before. Nasdaq can now fast-track a large listing into the Nasdaq-100 in as little as 15 days, and FTSE Russell has made similar moves. When a company joins an index, every fund tracking it has to buy it. In plain terms, owners of broad index funds can become shareholders of these companies within weeks of listing. Pair that with low public floats, heavy passive ownership, and a market already concentrated in AI, and the new supply has to be absorbed somehow, which can add volatility for everyone.
What History Counsels
Across two decades of U.S. IPOs, the story is dispersion: the ten best first-year names averaged +120.4% while the ten worst averaged -78.3%, so selection is everything. Size offers no shelter, with the twenty largest IPOs since 2006 down an average 61.8% from their peaks and eight of the ten largest posting negative first-year returns. The pain is durable, not fleeting, as the median IPO stayed underwater through year five, and the group's positive averages are a mirage built on a few moonshots, since excluding the top 10% turns every early-year average negative. The takeaway reinforces discipline over FOMO: a marquee name and a big valuation tell you nothing, the typical experience is years of losses, and the right response to a hot listing is a question of durability and valuation, not a yes-or-no bet.
The mechanics reinforce the math. The IPO price is the price banks allocate largely to institutions; ordinary investors rarely receive it and instead buy after the stock starts trading, often after a first-day pop. SpaceX is the live example, with buyers at the open already paying 11 percent above the offering. A great business can still be a poor entry if the first public price already discounts years of perfect execution. Lockups are the other half of the story: insiders and early investors typically agree not to sell for 90 to 180 days, and when that window expires, additional supply can weigh on the stock just as the early enthusiasm fades.
Our Discipline
When a private company becomes public, we separate three questions that tend to get blended together. Is the business strategically important? Is the model likely to produce attractive long-term economics? And is the valuation attractive enough to compensate for the risk? The answer to the first can be an emphatic yes while the answer to the third is no, and several names in this class may prove exactly that over time.
From there, our framework is consistent. We start with revenue quality, favoring recurring, diversified, well-retained revenue over one-time or concentrated sources. We assess the path to profitability and free cash flow, distinguishing losses that fund durable growth from losses driven by structurally high costs. We hold the line on valuation, recognizing that a high sales multiple must eventually convert into earnings and cash. And we read the structure of each offering, since float, lockups, voting control, and index eligibility all shape near-term trading. None of this is glamorous. All of it is how capital is protected through a cycle that rewards patience.
Four Disciplines for the IPO Class of 2026
1. The IPO price is not your price. The figure in the press is the institutional allocation price. Once a stock trades, the market sets the price, and the gap can be large, as buyers paying up for SpaceX today are learning relative to the $135 offering.
2. History rewards patience. The median new issue has trailed, drawdowns near 50 percent have been common, and fewer than half beat the index in year one. That is not a reason to avoid new companies, but a reason to size positions sensibly and let the story prove itself before chasing it.
3. You may already own this trade. Faster index inclusion means broad-market funds can pick up these names within weeks. If you own the S&P 500 or a Nasdaq fund, you may become a shareholder without ever placing an order, so understand the exposure you already carry.
4. Judge the business and the stock separately. A company can be strategically important and still be a poor investment at a given price. We weigh durability, the path to profit, and whether the valuation leaves room for the story to unfold.
Our View
Our message is balanced and, above all, disciplined. The 2026 class may include one or more truly exceptional businesses, and a few could become the kind of long-term holdings we look back on with admiration. But innovative does not mean investable on day one, and a record-setting debut is a statement about demand, not a verdict on value. SpaceX is the live lesson: a historic company, a historic offering, and a first-week move most investors could never have captured at the listing price.
For our clients, the implication is straightforward. We will participate where the business, the price, and the structure align, and we will wait, or pass, where they do not. Public markets are very good at turning exciting stories into expensive prices. Our job is to judge whether the price still leaves room for the story, and to keep position sizing honest while we do. That patience is not caution for its own sake. It is how we compound capital through cycles like this one.
Hatem Dhiab, CFP® CIMA®
Founding & Managing Partner
Gerber Kawasaki Wealth & Investment Management
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Hatem Dhiab is a Financial Advisor of Santa Monica, California-based Gerber Kawasaki Inc., an SEC-registered investment firm with approximately ~$4.09B billion in assets under management and advisement as of 12/31/25. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which course of action may be appropriate for you, consult your financial advisor. No strategy assures success or protects against loss. Readers shouldn't buy any investment without doing their research to determine if the investments are suitable for their situation. “All investments involve risk and one should consult a financial advisor before making any investments. Past performance is not indicative of future results." Every situation is unique and you should consult a tax professional and a financial advisor before making any decisions.
