How mega-IPOs could reshape the public market—and the economy

Nelson Griggs, Nasdaq's president and head of its Capital Access Platforms Division, shared insights with Fast Company senior writer Ainsley Harris at the company's Innovation Festival about how mega-IPOs could transform industries, the public stock market, and the economy. In June, SpaceX made history with a record-breaking IPO, followed shortly by Anthropic's proposed IPO, which could reach a staggering $2 trillion valuation, according to Bloomberg.

OpenAI, the creator of ChatGPT, was also in the running, but safety concerns have slowed its IPO plans. Perplexity AI plans to go public in 2028.

These companies are entering the market as investors increasingly favor private assets. Over the past few decades, the number of publicly listed companies has fallen from around 8,000 in 1996 to about 4,000, according to Morgan Stanley. This decline is partly due to greater access to private capital, which has led to fewer companies going public. However, Griggs believes these mega-IPOs could help smaller companies go public, especially with stricter regulations on "micro-cap IPOs" following alleged pump-and-dump schemes.

Griggs maintains that public and private markets should not be seen as mutually exclusive. He notes that there's a significant appetite for investing in public markets, while the private market is growing at three times the pace of public markets globally. This allows companies to build durable businesses and be better prepared for eventual public listings. SpaceX, for instance, remained a private company for 24 years before going public in June.

To improve public markets, Griggs suggests making private markets more liquid and transparent. AI companies are opting for IPOs due to the massive capital required for AI buildout. Public markets offer consistent liquidity, which is crucial for these capital-intensive ventures. However, there are concerns that a bubble could form if profits don't grow fast enough.

Griggs acknowledges these worries but believes the AI buildout is currently keeping the U.S. economy from entering a recession. He urges smarter minds to figure out how to keep this momentum going.