Week ended May 22, 2026: mega-IPOs pending

Most of the excitement last week was around NVDA’s earnings and the formal start of a pending IPO for Elon Musk’s SpaceX, which will likely be the largest IPO ever. 

As far as the global economy, inflation remains elevated and oil prices remain volatile and sky-high.  There has been no tangible progress on reopening the Strait of Hormuz.  In spite of the economic risks that are increasingly visible, only the bond market is taking these threats seriously.  The U.S. stock market remains in LaLa Land, with optimism around strong 1Q earnings and A.I. productivity enhancements trumping any and all global macroeconomic concerns.  Long may it continue! 

This coming week is holiday-shortened in the U.S. and the U.K., with Monday being a bank holiday in both countries. 

MARKETS LAST WEEK

• European and Japanese stocks led global stock markets higher last week.  U.S. stocks also advanced, powered by non-tech companies (for a change), with the DJIA closing Friday at a new record high.  Emerging markets stock also advanced, in spite of Chinese equities being slightly weaker. 

• U.S. Treasuries were better at the intermediate- and long-end of the curve.  However, yields at the more policy-sensitive short end of the curve moved higher as expectations are that the Fed’s next move might be to raise the Federal Funds rates rather than lower it.  The CME FedWatch Tool is now projecting that the Fed will raise its policy rate 25bps before the end of this year, a shocking reversal of expectations since the U.S. started the war with Iran.

• Corporate bonds were a touch better in both investment grade and high yield last week, chalking up small gains on the back of a slightly better underlying UST market.

• Oil prices were steadily lower all week, with WTI crude ending the week at $96.60/bbl (-8.6% WoW).  The price of oil continues to be based on the latest information about a resolution of the US-Iran stalemate which is blocking traffic in the Strait of Hormuz.  Price at the pump rose $0.03 last week in the USA, to $4.55/gallon (source AAA).

• The Dollar and gold were both slightly weaker, and Bitcoin continued lower perhaps influenced by the deferral of legislation in Congress to allow tokenised assets linked to stocks. 

See tables at end of this update for current prices and performance metrics.

WHAT MATTERED LAST WEEK

NVDA earnings (and Mag 7 update)

NVDA beat on the top and bottom lines, just another day at the office for this exceptional company.  The company’s gross margin in the quarter was an amazing 75%.  Generating cash “hand over fist”, NVDA raised its dividend from $0.01/sh to $0.25/sh, and increased its stock buyback programme to $80 billion.  The company also raised its guidance for sales for the second quarter to $91 billion (from $86 billion).  As impressive as these results were, investors said “meh”, reflecting both the recent run in NVDA stock and ongoing concerns about how long the company can continue to post such exceptional results.  The shares fell after the results were announced, losing 4.4% by the end of the week, the worst performing Mag 7 company for the week. 

Now that all of the Mag 7 companies have reported earnings, the table below provides an update in share performance since this round of earnings first started for the quarter for the infamous seven.  TSLA was first to report on April 22, so share performance has been measured since April 21 (just prior to TSLA reporting), along with share performance in the last week (when NVDA reported earnings) and YtD.  Valuation metrics have also been updated as of Friday’s close.

Ignoring TSLA (valuation of which is simply stupid), AAPL to me suddenly looks very expensive based on its simple valuation metrics.  With the highest forward P/E and PEG ratios, it raises concerns for me as to why the stock has run so much since mid-April.  On the other hand, META has now become the least expensive stock for those which can swallow the over-riding global risks associated with social media, and MSFT remains reasonably attractive, too.  NVDA’s valuation metrics are rich, but not in the context of the company’s expected future growth.  Questions around its sustainability of growth though remain a key issue, and these are eroding some of the company’s recent pre-earnings gains.  

SpaceX IPO (and others rumoured)

I’m not close to SpaceX, and I do not own any shares in the private company, at least not directly or indirectly that I am aware of.  The company filed its registration statement for an IPO on Wednesday (407 pages….enjoy!), and will list on NASDAQ under the symbol SPCX following two to three weeks of investor meetings.  If the IPO is priced the second week of June as expected, it will likely be the largest IPO ever.  The company is expected to raise $75 billion to $80 billion at a valuation of around $1.75 trillion.  SpaceX has successfully launched SpaceX Starship rockets (reuseable) and operates the Starlink internet service.  The company also owns X (now), having bought the company and largely bailed out the original X investors and lenders.  But chatter about the rather lofty valuation seems to be based mainly around the company’s foray into A.I. and its investment in data centres, even though it trails OpenAI, Anthropic and Alphabet.  As an aside, the company loses money and is not expected to be consistently profitable until 2030, a similar timeframe for OpenAI (and two years longer than Anthropic, which is expected to be profitable in 2028).

I don’t have a view on the SpaceX IPO, aside from the fact that it will be large and wildly overpriced.  I believe that the future opportunity in private-sector space exploration is super-exciting, and – like him or not – Mr Musk has proven to be a visionary as far as developing new markets and cutting-edge tech-related opportunities that are difficult for most people to even contemplate.  However, my guess is that the IPO will be easy money for investors that are allocated shares at IPO price who will then quickly flip the shares, but I don’t expect the stock to perform well once the stabilisation period ends.  Without question, Mr. Musk will have to dedicate significant time – as he does with TSLA – to keep the dream alive for investors, at least as far as supporting eye-watering valuations through hyperbole and far-off promises. 

Clearly, space exploration has been a hot place to be over the last year, as you can see in the graph below from #Bloomberg.

Anthropic and OpenAI are also eyeing IPOs this year, and will certainly be watching the SpaceX IPO closely.  According to an article in the #FT, Anthropic doubled is sales in the second quarter (compared to the first), and turned a profit (which is considered one-off and not likely to continue).  The company is currently doing a $30 billion fund raising in the private market, which would give the company a valuation of $900 billion.  OpenAI is targeting an IPO as soon as September.

MARKET DATA AND TABLES

Below are tables of key indices and asset prices that have been updated for the past week.

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