Exit Liquidity
SpaceX has proven to be a busted IPO less than a month after it launched, using retail investor cash to fuel its exit liquidity. Investment banks like lead underwriter Goldman Sachs were only too eager to promote this issue, along with the usual suspects (Morgan Stanley, UBS, Bank of America, etc.) Those high fees to issue, paid by shareholders to the tune of $500M, could not be ignored.
Ground Control to Major Tom, this should be a FLASHING RED PANEL to all retail investors.
Big Tech is in cohoots with Big Banking looking to score more lucre. Coming down the pipeline with Trillion-Dollar Valuations include Anthropic and OpenAI. Retail investors need to take pause and consider what happened with SpaceX, as the gameplan Big Tech used with Big Banking is now transparent.
Traditionally the term "Escape Velocity" pertains to the speed at which something, a rocket or spaceship for example, needs to have to be free of the Earth's gravitational pull. For Earth that speed is 25,000 mph. "Exit Liquidity" is somewhat of a similar term in which at what price point can Big Banking, directed by Big Tech, unload a company on the retail investment world.
The goal here is obvious: founders, early employees, and especially venture capitalists are playing a very calculated game of brinkmanship trying to determine what pricing they can shear from the sheeple. All these Gulfstream 650s aren't paying for themselves. Nor is the absolute BOOM in San Francisco real estate (the epicenter of AI) is no coincidence.
Here at ILAF we like new tech and game-changing advances just as much as the next robot, but the shell game being played at the "investment" houses is pretty transparent, especially after the busted SpaceX IPO. Retail investors should be very, very leery of new issues that are simply Exit Liquidity strategies pumped by Big Banking enriching themselves, VC firms, and wildly over-compensated founders.
To date, the biggest retail winners of the SpaceX IPO have been short sellers.
