{"id":1395,"date":"2026-06-14T11:38:30","date_gmt":"2026-06-14T11:38:30","guid":{"rendered":"https:\/\/crosscountrymovingteams.com\/?p=1395"},"modified":"2026-06-14T11:38:30","modified_gmt":"2026-06-14T11:38:30","slug":"the-hottest-debate-on-wall-street-right-now-does-the-flood-of-mega-ipos-and-new-shares-signal-a-downturn-ahead-that-depends","status":"publish","type":"post","link":"https:\/\/crosscountrymovingteams.com\/?p=1395","title":{"rendered":"The hottest debate on Wall Street right now: Does the flood of mega-IPOs and new shares signal a downturn ahead? That depends"},"content":{"rendered":"
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While the stock market has demonstrated stunning durability amid shocks like President Donald Trump\u2019s trade war and Iran war, the flood of new shares has Wall Street debating if a downturn is due soon.<\/p>\n

Read more U.S.\u2019s screwworm fix is still a year away, risking more spread<\/a><\/p>\n

In addition to the $75 billion SpaceX raised, its AI rivals are expected to tap investors for tens of billions more. And that\u2019s after Google parent Alphabet netted $85 billion from a secondary stock offering earlier this month.<\/p>\n

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\u201cWhile the mood music is relatively positive at the time of writing, history suggests caution is in order: major IPOs and periods of high issuance of equity have often preceded peaks in the US equity market,\u201d Jonas Goltermann, chief markets economist at Capital Economics, said in a note on Friday.<\/p>\n

He pointed out that gross equity issuance in the U.S. surged in 1999, 2007, and 2021\u2014years that were all followed by bear markets\u2014with recessions also coming after the tech bubble and housing bubble.<\/p>\n

In fact, even before SpaceX\u2019s IPO and Alphabet\u2019s offering, net equity issuance by U.S. non-financial companies had already turned positive by the first quarter of this year, Goltermann added.<\/p>\n

And with IPOs for Anthropic and OpenAI on deck, he said it\u2019s reasonable to assume issuance for this year will resemble what came in 1999, 2007 and 2021.<\/p>\n

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To be sure, the current market rally has been driven by strong earnings and not pure speculation, while valuations don\u2019t look so overextended when compared to other peak eras, Goltermann noted.<\/p>\n

\u201cThat said, there are more and more similarities between the current market environment and that around previous equity market peaks, which suggests that the AI equity boom may be approaching its final innings,\u201d he warned.<\/p>\n

Read more The Gen Z cofounder of $1.6 billion Whop says his platform has minted over 650 millionaires\u2014he wants to make work fun and money worries obsolete<\/a><\/p>\n

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But analysts at Deutsche Bank drew a much more bullish conclusion while crunching the numbers in a different way.<\/p>\n

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They singled out upcycles in new share supply and looked at the median volume of issuance compared to the S&P 500\u2019s performance. The data showed that equity issuance waves typically coincided with strong stock market returns\u2014not market stress.<\/p>\n

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\u201cThe reason is that companies tend to issue when equity demand is strong, earnings momentum is healthy and investor risk appetite is elevated,\u201d analyst Jim Reid wrote on Tuesday. \u201cIn other words, causality usually runs from strong markets to issuance, rather than issuance causing markets to fall.\u201d<\/p>\n

In fact, issuance waves over the past three decades produced median equity returns of about 8% over three months and more than 20% over 12 months, according to Deutsche Bank, with the main exception being the Great Financial Crisis when companies scramble to raise capital via stock offerings.<\/p>\n

The current upcycle started well before 2026. U.S. stock issuance has jumped from a quarterly run rate of $30 billion in early 2023 to roughly $120 billion now.<\/p>\n

\u201cCrucially, today\u2019s backdrop is characterized by very strong equity demand. Inflows are booming, supported by robust earnings growth, still-modest overall equity positioning and elevated buyback activity,\u201d Reid said. \u201cHousehold balance sheets also retain significant capacity to absorb new supply. As with prior IPO waves, strong demand \u2014 not excess supply \u2014 is likely to be the defining feature.\u201d<\/p>\n

Read more Canadian Prime Minister Mark Carney says \u2018new world order will be built starting with Europe\u2019<\/a><\/p>\n

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“The reason is that companies tend to issue when equity demand is strong, earnings momentum is healthy and investor risk appetite is elevated.”<\/p>\n","protected":false},"author":1,"featured_media":1394,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[191],"tags":[],"class_list":["post-1395","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-ipos"],"yoast_head":"\nThe hottest debate on Wall Street right now: Does the flood of mega-IPOs and new shares signal a downturn ahead? 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