SpaceX's Stock Sits Below Its June IPO Open. Is That a Warning Sign for Anthropic?

This week, AI giant Anthropic released its S-1 form, the mandatory filing that companies must make with the Securities and Exchange Commission prior to an initial public offering (IPO).

Many investors likely welcomed this news, as there's definitely broad interest in getting portfolio exposure to the AI lab. Still, investors may recall that there was similar enthusiasm ahead of the public debut of Space Exploration Technologies (NASDAQ: SPCX). That stock opened on June 12 -- its first day of trading -- at $150 per share. After surging to above $225 in its first few days, it pulled back significantly to a low in the vicinity of $108, and now, though it has rebounded somewhat, it's still below that initial $150 price.

The question for investors getting ready to snap up shares of Anthropic is whether they should treat SpaceX's brief history as a warning. They would probably be wise to -- not because of SpaceX's behavior specifically, but because of the history of IPOs in general.

Image source: Getty Images.

Why SpaceX is likely a warning

One could forgive investors for assuming that Anthropic's upcoming IPO will resemble SpaceX's.

Investors have long anticipated its stock market launch just like they did SpaceX's. Anthropic's primary competitors in the AI model space are OpenAI (developer of ChatGPT) and Alphabet (developer of Google Gemini). All three are experiencing massive user adoption, and there's reason to think Anthropic could deliver serious long-term returns for shareholders.

Nonetheless, its more immediate challenges could bring near-term headwinds. Both Anthropic and SpaceX have spent heavily on artificial intelligence and infrastructure, and the market's concerns about the size of such outlays -- and whether or not they will deliver profitable returns on investment -- have spurred sell-offs in other AI stocks.

Additionally, like all IPO stocks, during its first year as a publicly traded company, Anthropic will go through periodic lock-up expirations. Each such expiration will make more of the shares held by pre-IPO stakeholders eligible for sale on the Nasdaq, which can increase selling pressure and push share prices downward.

Many of these concerns have been the norm for mega-IPOs in their first 12 months. But they aren't the only reasons to be wary. Warren Buffett famously disliked IPOs, and his reasoning makes sense. As he once stated: "An IPO is like a negotiated transaction -- the seller chooses when to come public -- and it's unlikely to be a time that's favorable to you."

From a company's perspective, the primary reason to go public is to raise capital, not to offer investors a great new stock that could deliver massive returns. Thus, companies tend to go public during bull markets, when valuations are higher.

That leaves early IPO investors more exposed to the cyclical risk of a sector-specific downturn or a broad market decline.

Where SpaceX's history leaves Anthropic investors

SpaceX's brief history offers warnings for Anthropic investors, but it's only one of many cautionary tales in the history of IPO stocks. Though the long-term future of Anthropic appears bright and AI investors should watch it closely, you may want to avoid buying the stock immediately after it goes public.

Will Healy has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.