Savings & investment
Harry Scargill
If you’ve followed the financial news in recent weeks, you’ll likely have seen the headlines about a string of IPOs – Initial Public Offerings, also known as flotations.
But what does this rash of IPOs mean for investing, particularly for investors focused on long-term growth?
In June, SpaceX completed the largest stock market flotation in history, raising roughly $85 billion and debuting on the Nasdaq at a valuation comfortably above $1.7 trillion.
The shares jumped on their first day of trading, pushing the company’s value past $2 trillion, although it has since fallen to around $1.9 trillion as of the middle of July.
SpaceX may be just the beginning.
The two best-known names in artificial intelligence – Anthropic (the maker of the Claude models) and OpenAI (ChatGPT) – have both quietly filed the early paperwork for their own stock market listings.
Anthropic moved first in early June, hot on the heels of a funding round that valued it at close to $1 trillion; OpenAI followed within days.
We may be looking at three of the most closely watched companies in technology arriving on public markets within months of one another. This is something we haven’t seen since the dot-com era.
But what does this all actually mean for your portfolio?
Behind these headlines sits a trend that we have been following for many years.
A generation ago, a fast-growing company would generally “go public” – selling shares on a stock exchange – relatively early in its life, often while it was still quite small.
Listing was one of the main ways to raise serious money that was needed to grow, and ordinary investors could buy in while the business was still finding its feet.
That has now largely changed.
There is now an enormous pool of private capital available, money from private equity and venture funds, sovereign wealth funds and large institutions, that allows companies to raise tens of billions without ever troubling the stock market.
SpaceX, founded in 2002 and not listing until 2026, is just the latest, and largest, example of that.
Anthropic and OpenAI have each raised sums privately that would have been unthinkable just a few years ago. Anthropic alone closed a $65 billion funding round shortly before filing to go public.
The practical consequence is that by the time these businesses finally do list, much of their dramatic early growth has now already happened – and been captured by private investors.
Companies that once arrived on the market as small, fast-growing minnows now tend to arrive as fully grown giants, already valued in the hundreds of billions or even trillions.
There’s a second feature of these headline names that deserves attention.
Rapid growth and healthy profits are not always the same thing – and in many of these cases, the two have yet to meet.
SpaceX, for all its scale, reported a loss of close to $5 billion in 2025 as it poured money into satellites, rockets and artificial intelligence.
The picture in AI (Anthropic & OpenAI) is similar: these are businesses growing their revenues at extraordinary speed, but spending vast sums to do so, as the cost of building and running cutting-edge AI models can still outstrip the income those models generate. OpenAI, by its own projections, does not expect to be self-funding for some years yet.
None of this means these aren’t remarkable companies. It does mean their valuations rest heavily on expectations of profits far in the future, rather than profits today.
That makes their share prices (when and if they list on stock markets) more sensitive to changing sentiment and potentially more volatile.
Even among professional analysts there’s sharp disagreement. Some see SpaceX as wildly overvalued, while others argue you must judge it over a long-term horizon, with levels of growth that will more than justify the price of shares today.
So where does this leave a sensible long-term investor?
It would be a mistake to conclude that exciting, fast-growing companies have no place in a portfolio.
They can be a valuable source of long-term returns. The key is how you own them and how to appropriately size these positions.
At Fairstone, our model portfolios are deliberately built around diversification, quality and the long term.
We absolutely do seek exposure to some high-growth businesses, but always as one component of a very well-balanced portfolio, sized appropriately to your risk level and your tolerance for volatility along the way.
The aim is to capture the upside of innovation without letting any single bet dominate your financial future.
As I mentioned earlier, companies staying private for longer is a theme that we have been following for some time, and where suitable, we can find ways to invest in these private companies – should we want to.
As an example, our Nova and Multi-Instrument MPS ranges already held exposure to SpaceX while it was still a private company, as well as Anthropic while it is still private.
We hold these positions through Scottish Mortgage – a closed-ended fund which has a suitable structure to invest in these types of businesses, through a well-resourced team that has a great track record in this type of investing.
This means some of our clients participated in part of that growth journey without ever having to gamble on the timing or the valuation of the eventual flotation.
But again, the key really is that this position is held as a part of a very well diversified portfolio that is built for the long-term.
Alongside our actively managed ranges, we also offer a range of passive investing options, including Fairstone Pure Passive, which holds index-tracking funds such as the HSBC American Index and the Vanguard FTSE Developed World ex-UK Equity Index.
These trackers do exactly what their name suggests: they aim to mirror a well-known stock market index as closely as possible, holding positions in companies based on the size of the company.
When a company such as SpaceX joins a major index, every fund tracking that index is obliged to go out and buy the shares automatically.
SpaceX has already been confirmed for entry into the Nasdaq-100 and the Russell 1000, although interestingly, the S&P 500 – the most widely followed benchmark of all – declined to relax its rules and has kept SpaceX out for now, in part because the company is not yet consistently profitable.
However, most major indexes are what is known as “free-float adjusted”, meaning a company is included according to the value of the shares actually available to trade, rather than its full headline valuation.
Because so few of SpaceX’s shares are currently in public hands, it will initially carry only a relatively modest weighting in these indices, despite being one of the largest companies in the world on paper.
The point to keep in mind is that as more of its shares are gradually released over time, that weighting can climb – and trackers will quietly keep buying more of it.
Blockbuster listings make for great reading, and they genuinely do signal interesting shifts in the economy. But they are events, not strategies to focus too much on.
The investors who do best over time are rarely the ones chasing the latest debut at its moment of maximum excitement – they’re the ones who stay invested, stay diversified, and give their portfolios the years they need to compound.
Exciting companies can absolutely play their part, but they work best as carefully measured ingredients in a balanced plan rather than the whole recipe.
That long-term discipline of owning quality, diversifying risk, and matching every portfolio to the investor behind it, remains at the heart of everything we manage on your behalf.
An expert financial adviser can help you to decide on an investment plan that takes into account your circumstances and your approach to investment risk.
They can also help you to stay focused on your financial goals rather than reacting to short-term headlines or the latest investment trend.
Get in touch with an adviser today to find out more.
Disclaimer: This article is for informational purposes only and does not constitute financial, tax, or legal advice. Tax treatment depends on individual circumstances and may change. The value of investments can go down as well as up and you may not get back the full amount you invested. Past performance is also not a reliable indicator of future performance. Always seek professional advice before making financial decisions.
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An Initial Public Offering (IPO) is when a private company lists its shares on a public stock exchange, allowing investors to buy and sell ownership in the business.
They can be, but newly listed companies often experience greater price volatility. Long-term investors typically benefit most when IPO exposure forms part of a diversified investment portfolio rather than a concentrated holding.
Many fast-growing businesses now have access to significant private funding from venture capital, private equity and institutional investors, allowing them to delay public listings until they are much larger.
Large technology companies often attract valuations based on expectations of future earnings and growth rather than current profitability. This can result in higher share price volatility if market expectations change.
Index-tracking funds add newly listed companies once they are included in the benchmark index they follow. The weighting is usually based on the company’s free-float market capitalisation rather than its total valuation.
In some cases, professional investment managers can gain exposure to private companies through specialist investment trusts or private market funds. These opportunities are generally not available through traditional retail investing.
Diversification helps reduce the impact of any single investment performing poorly. Holding IPOs alongside established companies, bonds and other assets can improve a portfolio’s overall risk profile.
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Savings & investment
Savings & investment
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