Ask HN: OpenAI, SpaceX/xAI, Anthropic all to IPO, is this a sign of the peak?

9 points by virgildotcodes 41 days ago | 12 comments

My question is to people far more experienced in this world and familiar with the behavior of investors and startups -> IPO.

Given the leaks recently that they’re all aiming for an IPO asap, is this a strong signal that their investors feel this is the peak of their valuation for the near if not indefinite future?

I understand it’s impossible to know anything for sure, least of all how the market will react regardless of the motivations of these players, but I’m curious to get some perspectives.

codingdave 40 days ago |

IPOs solve two problems: They help the investors/owners increase their personal wealth, and they give the companies a large inflow of both cash and and new structure for their stock. The question becomes what are the companies going to do with their new pile of resources? Cash can be put into operations, growth, research etc. Stock can be used as leverage for M&A activities. It changes the runway, the options for compensation and incentives to the staff, and the options for large expensive projects.

Whether or not this is the peak depends entirely on what they do after the IPO. If they just use their money as an extended runway to keep doing the same stuff they are doing today, they will probably sink. If they use it to take their research and products to new heights, they will probably rise. And if they do M&A and scoop up a lot of small companies, then it depends on how good they are at integrating acquisitions. There is also the question of "Is money a bottleneck for innovation and growth?" If money is not the bottleneck, then the IPO becomes far more about the investors cashing out than the company being empowered by new capital.

So "is the peak?" is going to be answered by a more strategic question of "Does the leadership of this company have the skills to effectively use the incoming resources?"

cyanydeez 40 days ago | |

In a proper world, an IPO means transparency into the finance and a clear need to justify shareholder value from 6-12 months.

It's curious anyone would push for this other than as a parachute to get out at the peak and let the public market eat the remainder.

quantified 41 days ago |

SpaceX is a bit misinterpreted.

There is little chance of Mars being profitable. Every colonization (and we have a rich history of them) is "successful" if it is profitable for the backers. But unlike North America or South Africa for the Europeans, there are no resources there worth bringing back. It's a cool vanity and possibly scientific project but not an interesting business.

Renting out all the GPUs stockpiled by Musk sort of is, unless they get constrained by power, water, etc. Launching them into space may be worthwhile for the short term. That's a business that can be profitable, but not in a way that matches the cost of the equity (with Elon strings attached all over it).

Practically, if you didn't like the idea of Iran threatening cables under the Strait of Hormuz, wait until your Starlinks (and your zero-G factories producing incredibly important whatevers) are threatened by a hostile nation. For commercial applications in space to become normal, military protections in space need to become normal. Now you've bought an interesting new world.

Really, SpaceX is Musk 3.11 for Workgroups and you have however long til he expires to find out how good that is.

ipaddr 40 days ago | |

Going to mars won't be profitable unless each ticket is billions but space offers a new arena where new materials cheaper power and a new surface exists. It's like buying in on Apple in 1979.. it goes on a big run dies and is reborn and 45 years later its worth so much in profits.

Thankfully the richest man in the world owns it and is young and hyper and crazy enough to stick it out.

bruce511 38 days ago | | |

SpaceX could easily be a good buy, but it is indeed different to the others. For starters it's two businesses not one.

SpaceX is clearly a leader in the field and (including StarLink) has some real profit centers. Mars is a distraction, but perhaps a useful way to build out tech that may have usefulness elsewhere.

It comes bundled with xAI. And that's much more of a gamble. The market can probably bear more than 2 (not Open Source) eventual suppliers, but history suggests 2 winners and a bunch of very small 3rd places.

Is xAI in the top 3? Doesn't feel like it at the moment. But clearly this will suck resources away from SpaceX in the short term.

So this one is riskier, but with potentially more upside.

perilunar 40 days ago | |

Mars might not be profitable, but the asteroids may well be.

quantified 36 days ago | | |

I agree. When the focus is Mars and not closer/better things, is that misdirection or ignorance?

Asteroids themselves are not a slam dunk for quite a while, even without inflation you've got well over $1T to invest to get something usable out of one.

wanderingpixel 41 days ago |

Yes, the insiders want to cash out at the peak and reduce their exposure. The general public will be holding the bag here, simply because the passive investments will be forced to buy into these at huge valuations before price discovery can reasonably complete.

bhag2066 40 days ago |

Howard Marks has a useful exercise on where we are in the cycle called Taking the Markets Temperature.

I'd add my opinion is that (specifically financial and not technological) there are few arguments to say we are early in the cycle.

rvz 41 days ago |

Yes it is.

Also what happens when these players cannot afford to keep offering cheap token generation?

ipaddr 40 days ago | |

If things don't change we'll find a way to do things cheaper. If newer models cost more we'll end up with rich players using models that read minds and the poor people will have to type in what they want.

cinntaile 41 days ago |

Yes