Tom Lee’s clients are worried SpaceX IPO will mark a market top. He’s not
Tom Lee thinks the concerns that the market doesn’t have the liquidity to handle mega-IPOs slated for this year, including SpaceX’s on Friday, are overblown. The Fundstrat managing partner and head of research said in a Monday appearance on CNBC’s ” Power Lunch ” that his clients are fearful SpaceX’s IPO may mark the top of a market that has surged on the artificial intelligence buildout. He called those concerns “misplaced.” “There’s still 7 trillion of cash on the sidelines,” he said. “High net worth clients have a lot of cash available to buy this IPO, so I think the market’s going to not only absorb this IPO really well, but I think the market’s going to do well post IPO.” He added that the broader market is likely to be volatile leading up to the Elon Musk company’s debut. The Nasdaq Composite was up 1.25% in midday Monday trading after tumbling more than 4% on Friday. Some investors believe the drop on Friday was due to investors selling hot chip stocks to free up cash to buy the SpaceX IPO. .IXIC YTD mountain Nasdaq Composite, YTD Lee added that he’s heard worries about when SpaceX’s lock up expires and insiders can start selling shares of the company. He said those nervous investors have compared that to 1999, when a slew of companies that made public debuts that year had their lockups expire and helped mark the top of the dot-com bubble. Again, Lee thinks those fears aren’t warranted, and doesn’t see history repeating itself. “One reason I think it’s going to be less of a sell everything after lockup expiration is that these AI companies, including SpaceX, aren’t fully funded,” he said. “So they are going to try to maintain a cadence of information and a relationship with public markets to make sure they can access capital markets for the next five years.”
