Our perspectives on the mega-IPO wave

10 JUNE 2026

Three of the most talked-about companies in the world – SpaceX, OpenAI, and Anthropic – are heading toward public listings. Together, their combined valuations would exceed the entire market capitalisation of the Australian share market. None of them is yet profitable. All of them are being priced on a lot of future promise.

The numbers

The valuations being discussed are striking:

• SpaceX: 100× revenue
• OpenAI: 50× revenue
• Anthropic: 22× revenue

We do not dispute the fact the technology is real, and we do believe these are era-defining companies.

But do they make sound long-term investments at these prices?

To sustain and grow into these valuations over the long term, each business will need to generate cash flow at a scale that very few companies in history have ever achieved.

Our stress testing illustrates how demanding that bar actually is.

Take SpaceX. At roughly 100× revenue, and assuming a long-term net margin of 10% (generous, given telecom companies typically earn 5-15% and aerospace companies 5-10%), SpaceX would need to grow revenue at approximately 28% per year, compounded for fifteen years, to justify its current price.

For context, Amazon (one of the greatest growth stories in corporate history) compounded revenue at roughly 20-23% over its last fifteen years[1].

Microsoft, Alphabet, and Meta, three of the most successful businesses ever built, never sustained anything close to 28% revenue growth from a comparable base.

It’s not impossible, but it’s an exceptionally rare achievement, and the market is pricing success as the base case.

At these valuations, everything needs to go right: the technology, the competition, the regulation, the execution (and then some).

There’s no margin for error. No room for a recession. No room for an unexpected legitimate competitor, or more unforeseen technology shifts that render today’s advantage obsolete.

When you pay 100× revenue for a business, you’re not buying a company. You’re buying a specific version of the future. And in our experience, the future has a habit of surprising even the most careful forecasters.

Sign of the top, or a sign of the times?

Decades of investing in IPOs has taught us that oversubscription is the single best short-term predictor of first-day performance, fundamentals be damned. But honeymoons end quickly.

A flood of large IPOs has historically been one of the more reliable warning signs of a market peak. The 1968–69 “go-go” era, the 1999–2000 dot-com bubble, and the zero-rates SPAC boom of 2021 all followed the same script: stratospheric valuations relative to revenue, retail investor fervour running hot.

The current setup ticks both of those boxes even if, unlike the dot-com era, these are real businesses generating real revenue.

This said, we do not believe an extreme market correction is imminent.

With NVIDIA growing revenue at 85% year-on-year and guiding even higher, it’s hard to argue the underlying demand for AI infrastructure is fictional. The fundamentals of the picks-and-shovels layer still look genuinely robust.

Will Plato be investing?

All three IPOs are likely to be heavily oversubscribed. With a wave of retail money chasing what will likely be a limited free float at IPO, there’s little upside in betting heavily against these on day one.

But being meaningfully overweight carries its own risks.

We’ll hold somewhere near benchmark weight – enough to avoid being badly wrong if these businesses do become the next Amazon or NVIDIA, but not so much that we’re hostage to a valuation that leaves no room for error.

We have no lack of conviction about the technology. But we need to maintain discipline on price. The asymmetry simply isn’t attractive enough to take a large active position in either direction.

The conundrum here is greater for global long-only investors. These IPOs provide a useful illustration of how a long/short 150/50 strategy, such as the Plato Global Alpha Fund operates.

Think of our strategy as $100 that is benchmark-aware, plus an additional $50 long and $50 short on top.

The $100 component overweights and underweights the large benchmark names, which means we’re never dangerously exposed if the Magnificent Seven, or for that matter a SpaceX, OpenAI, or Anthropic down the track, goes on a sustained tear.

The additional $50 long and $50 short is devoted purely to stocks outside the benchmark, where we believe pricing inefficiencies are greatest and where active management genuinely earns its keep.

In a market where a handful of mega-cap names dominate index returns, that off-benchmark sleeve is increasingly where we find the most compelling risk-adjusted opportunities.

 

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[1] Amazon has since grown its revenue more than 45,000 times over. If SpaceX were to replicate that multiple from its current revenue base, it would generate roughly $840 trillion, something like 7 or 8 times global GDP. The maths alone tells you why these situations are fundamentally incomparable. SpaceX, OpenAI, and Anthropic are extraordinary businesses,  but they are already enormous, already famous, and already priced for perfection. Amazon at IPO was none of those things. The upside from here is simply a different order of magnitude.