US funds are "clearing positions" to prepare for super IPOs, and new index regulations will accelerate the "bloodletting" of major stocks like SpaceX.

Large mutual funds and passive index funds are beginning to allocate more cash and prepare to reduce their existing holdings of large-cap stocks in order to include upcoming heavy-hitting IPOs such as SpaceX and OpenAI in their portfolios. John Flood, Managing Director of FICC and Equity Business at Goldman Sachs Global Banking and Markets, stated in a report to clients on May 22nd that for passive funds, the potential inclusion of new listed companies may force them to reduce their existing positions in other large-cap stocks. "Investors are increasingly focused on the potential impact of large IPOs on the market. In the past few decades, U.S. stock mutual funds have increased their cash balances before the four largest IPOs," Flood wrote. As large asset management companies take action, indices such as the Nasdaq 100 and S&P 500 are introducing new rules to speed up the inclusion of new giant stocks in benchmark indices. These new rules are likely to apply to the highly anticipated record-breaking SpaceX IPO. SpaceX, founded by Elon Musk in 2002, officially submitted its S-1 registration statement to the SEC on May 20, 2026, 24 years after its founding, initiating the IPO process. The company plans to dual-list on the Nasdaq and the Nasdaq Texas Exchange under the ticker symbol "SPCX," with listing scheduled for June 12th. The IPO, with underwriting from a consortium of 21 to 23 investment banks led by Goldman Sachs and Morgan Stanley, aims to raise between $750 billion and $800 billion, with a target valuation of $1.75 trillion to $2 trillion, surpassing the previous record of $256 billion set by Saudi Aramco in 2019, making it the largest IPO in history. Based on the latest stock price, this would make it the seventh largest public company in the United States. AI market leaders OpenAI and Anthropic also plan to enter the public market in the coming months, and given their latest valuations, they are likely to qualify for rapid inclusion in benchmark indices. Reports from last October indicated that OpenAI may seek a valuation of around $1 trillion or higher at the time of listing, while Anthropic is currently in discussions to complete another round of financing with a valuation approaching $1 trillion. Analysts tracking large indices suggest that healthy retail cash balances are likely to provide funding for the IPO frenzy. In a report to clients on Tuesday, Deutsche Bank analysts stated, "The market's appetite and ability for equity investments remain strong," adding that this is due to the "enormous cash balances accumulated during the pandemic." Enhanced liquidity from inclusion in benchmark indices Companies included in benchmark indices such as the Nasdaq 100 or S&P 500 can more easily access institutional investors with deep pockets, who typically build large positions in their index funds, thereby gradually expanding their shareholder base and improving liquidity. For company executives and early investors, this deeper liquidity may reduce the impact of large sell orders on the market after the lock-up period (typically 90 to 180 days after the IPO ends). However, this does not completely mitigate the pressure from large-scale insider selling on stock prices. Flood stated that large IPOs quickly included in major indices have a small initial weight in the benchmark, but as the company's float factor increases, their influence will gradually expand. The Deutsche Bank analysts noted in their report on Tuesday, "Even the largest expected IPOs, their financing amounts are only slightly higher than 0.1% of the current total market value of the S&P 500."