Analysis-Blockbuster SpaceX listing could suck the oxygen out of fragile IPO market

April 7 (Reuters) - As Elon Musk's SpaceX closes in on a $75 billion IPO that could rewrite record books, concerns are mounting that others looking to list in 2026 may find it harder to get deals done under the shadow of the space venture's headline-grabbing debut.

U.S. markets, prized for their depth, face a critical test, as more than half a dozen analysts and industry experts told Reuters that the SpaceX deal would likely absorb an outsized share of investor demand, squeezing out other hopefuls.

"History tells us that a mega IPO like SpaceX can suck up the oxygen in the market. We saw that with Facebook in 2012," said Matt Kennedy, senior strategist at Renaissance Capital, a provider of IPO-focused research and ETFs.

"IPOs are a major marketing event, and companies wouldn't want the noise from a SpaceX offering to drown out coverage of their own deals. So, listing activity may die down a bit during the weeks surrounding the SpaceX IPO."

Companies have waited years on the sidelines for favorable IPO conditions after a prolonged dry spell. A listing like SpaceX, with its celebrity billionaire CEO, hot industry and deep-pocketed backers, could have provided the jolt others need to push ahead.

Instead, its sheer scale threatens to overshadow others, with Wall Street banks and investors pouring a majority of their attention, and money, into the operator of the Starlink constellation of satellites.

Thirty-five IPOs have priced so far this year, according to data from Renaissance Capital, down 37.5% from a year earlier. That could worsen in the months ahead, clouding hopes of a broader market resurgence in 2026.

DISRUPTIONS WEIGH ON IPO MARKET

The IPO market has lined up its biggest pipeline ⁠in decades, analysts and bankers said.

But the war in Iran, spiking oil prices, private credit concerns and AI-led disruption to legacy software firms have set a high bar for which deals successfully break through the volatility - and which ones get left behind.

Now, alongside these disruptions, companies eyeing IPOs must also compete for attention in a market dominated by SpaceX headlines.

While ⁠bankers will probably advise their biggest clients against competing against SpaceX, smaller listings may benefit, said Michael Ashley Schulman, partner at wealth management firm Cerity Partners.

"Smaller IPO debuts may benefit from a tag-along effect in retail enthusiasm that could mentally lump IPOs together under the assumption that if one does well, others will too," he said.

MORE MEGA DEALS TO COME