BNP Paribas warns of $50bn sell-off as SpaceX IPO looms
Greg Boutle of BNP Paribas estimates combined retail and passive fund selling could reach $50 billion, compounding end-of-quarter rebalancing and secondary offerings from tech giants.
SpaceX is preparing for its initial public offering on the Nasdaq under the ticker SPCX, a move expected to value the company at more than $1.75 trillion. The company plans to raise between $75 billion and $85.7 billion by selling over 555 million shares at $135 each. While demand for the stock is anticipated to be high, analysts from BNP Paribas warn that the liquidity required to fund these purchases could trigger significant market volatility and price dislocations across the broader equity market.
Greg Boutle, head of U.S. equity derivative strategy at BNP Paribas, highlighted that the scale of the offering presents unique challenges. He noted that while standalone SpaceX flows might be manageable, the cumulative effect of passive buying, retail investor enthusiasm, and leveraged exchange-traded fund flows could quickly overwhelm liquidity. Boutle estimated that retail and passive investors may sell a combined $50 billion of other stocks to raise the necessary capital for buying SpaceX.
The market impact is further complicated by index inclusion rules. Although S&P Dow Jones Indices declined to accelerate SpaceX’s entry into the S&P 500, adjustments to the Nasdaq 100 rules have triggered purchase demand for passive funds linked to the tech-heavy index. This mandatory buying will require equivalent selling elsewhere in portfolios, with Boutle observing that recent winners and leveraged products are likely targets for liquidation.
Boutle pointed to Friday’s market sell-off, which was led by chip stocks, as a potential early indicator of the price dislocations he has flagged. He described retail investor behaviour this year as FOMO-driven, noting that such herd tendencies tend to amplify market moves. This behaviour is expected to be amplified by passive investment demand, creating a scenario where simultaneous buying and selling pressures could distort asset prices.
The timing of the IPO coincides with the end of the second quarter, a period when more than $100 billion of unrelated stock sales were already expected due to institutional rebalancing. Compounding these pressures, major tech firms are increasing supply; Alphabet recently issued $85 billion in shares through a secondary offering. With OpenAI and Anthropic also planning to go public this year, the market faces a surge in new share availability that tests the depth of investor demand.
