2026: The Year of the Mega IPOs?

0:04The 2026 IPO market looks like it's about to blast off. This is Motley Fool Money.

0:20Welcome to Motley Fool Money. I'm Tyler Crowe, and today I'm joined by longtime Fool contributors, Matt Frankel and Jon Quast. So we're going to get into the 2026 IPO market because there's been quite a bit of chatter in this past week out of who's going public, what companies we could expect to see this year already. And there's some pretty big names on there that I think a lot of people have been clamoring for, especially in the AI space. We're going to talk about IPOs on our radar, perhaps this year or maybe further down the road. But first, we need to talk about Rocket Lab, because they've had a couple of pivotal, and I would say conflicting press releases over the past 24 hours.

1:00Yesterday, the company announced that it had a rupture of a stage one testing tank for its new neutron rocket that has not yet gone into commercial operation. That press release was then followed by a second one where it was announcing that its electron rocket, its smaller one that is currently in commercial operation, had its first successful launch in 2026 and that it was successful at putting two satellites in orbit. Now, as of this taping, shares of Rocket Lab are down about 5%. So it seems like the neutron rocket news is the bigger one here. And guys, I'm hoping you can help me make sense of this a little bit.

1:37The cynical side of me says that an unsuccessful test of its neutron rocket was the bigger deal, and they're kind of papering it over. Am I wrong, or was this kind of expected for the development of the neutron rocket? Well, I mean, the timing of two press releases right there together is a little bit suspect, but I don't think we need to be overly cynical here, Tyler. So on one hand, you have the Electron rocket from Rocket Lab. That's been going just fine for a while now. Rocket Lab is trying to get its larger Neutron rocket up and off the ground. And that's what the press release that everyone's concerned about was.

2:13So there was a rupture of one of the tanks. And on one hand, that's not entirely unusual. So it's happened with Blue Origin. It's happened many times with SpaceX. So the question on everybody's mind with this ruptured tank is just how intentional was the failure? So companies do, especially in this phase of the game, they do push their equipment to the limit to see where the limit is. It's called test of failure. And so management kind of makes it sound like, hey, we were trying to see where the limits of our hardware was. And so on one hand, it seems pretty normal. On the other hand, why do a press release, right?

2:52The question is, is this a little bit unexpected? Is the failed tank going to cause them to push back the first launch that they were planning here for the first quarter? Investors don't like delays, and that's what's on their minds. Yeah, I wouldn't necessarily say that this was expected, but delays like this and incidents like this are par for the course for all of these space companies. Just looking at the Neutron rocket's development itself, it was initially announced in 2021 for a proposed 2024 launch. That was then delayed until mid-2025 because of engine development issues. Then it was delayed to late 2025.

3:29Then it was delayed to early 2026. And now, who knows when it's going to be pushed back to. So, this is the fifth delay that I know of with the neutron rocket itself. And like John said, this happens with virtually every major rocket. They push their parts until they break. And if you invest in Rocket Lab or any of these other space companies, one of the few things you can be sure of is that this won't be the company's last setback in developing a new product. Space has become a popular investing theme and it's gained a lot of momentum, I think, in 2025, coming in here to 2026, in large part because of Rocket Lab and many other competitors, actually, to Rocket Lab, SpaceX, and some of the others.

4:11Now, I'm not a Rocket Lab shareholder myself, and I have my reservations about the increasing competition in the launch space that Rocket Lab works at. But I want to see where you both stand. And are you, either of you, Rocket Lab shareholders, or are you invested in some other space-related companies that keeps you looking at this industry in particular? Well, Tyler, I absolutely love space, and I would love to own a space stock at some point. Rocket Lab is one that's certainly on my radar. I just think there's so much interesting things, so many interesting things in our solar system and beyond.

4:46just for those who are like me and love space. There are some recent developments in the search for Planet Nine out there. It's just really cool things. My biggest hang-up with these public companies has always been they're a little bit more on the speculative end of the investment spectrum than what I'm usually comfortable with. And so, I have steered clear of space stocks in the past. However, Rocket Lab is increasingly showing me that this is a sustainable, substantial, and a real business here. And so it is one that's on my radar. Yeah, I agree. It's absolutely a real business. I don't own Rocket Lab or any other, at least direct space stocks yet.

5:22You can make the argument that some of the data center companies I'm invested in have a lot to do with the space economy, but no direct space investments. And like John said, it's a little more speculative than what I usually invest in, but this is a real business and it's one that's really worth watching. Well, speaking about things that are about to take off after the break, we're going to talk about the 2026 IPO market and the big names that just had some recent announcements. When Johan Rahl received the letter on Christmas Day, 1776, he put it away to read later. Maybe he thought it was a season's greeting and wanted to save it for the fireside.

5:56But what it actually was, was a warning delivered to the Hessian colonel, letting him know that General George Washington was crossing the Delaware and would soon attack his forces. The next day, when Raw lost the Battle of Trenton and died from two Colonial Boxing Day musket balls, the letter was found, unopened, in his vest pocket. As someone with 15 ,000 unread emails in his inbox, I feel like there's a lesson there. Oh well, this is The Constant, a history of getting things wrong. I'm Mark Chrysler. Every episode, we look at the bad ideas, mistakes, and accidents that misshaped our world. Find us at constantpodcast.com, or wherever you get your podcasts.

6:43Part of the reason I wanted to touch on Rocket Lab at the top is the other space-related news. Several news outlets today are reporting that SpaceX has lined up several banks for an IPO potentially in 2026. There's been a lot of investor appetite to own shares of SpaceX, even to the point that several asset managers have launched private asset funds and ETFs, which literally say in the market, we own some SpaceX. It looks like 2026 could be a big year for IPOs. Even before the SpaceX announcements, there are rumors that OpenAI and Anthropic could go public. We're talking big names in AI and space, some of the largest private companies in the world.

7:27Guys, this touches on a couple of conversations we've had recently. The ongoing AI bubble watch and last week's volatility and vibes conversation that shaped the results at investment banks. I'm curious to hear your thoughts if this surge of IPOs is some concoction of the vibes are great right now to raise massive amounts of capital for our ambitions. Or is it we better get the bag before the AI speculative stock bubble bursts? Where do you land on that spectrum? Yeah. We're seeing a perfect storm forming in the IPO market. As you mentioned, the AI boom, it's given rise to some high-profile companies that have a massive ongoing need to raise capital.

8:12I'm not so sure if it's as much of a rush to IPO before a bubble bursts, as a rush to get in the market before their money runs out. After all, companies like OpenAI and Anthropics specifically have committed tens of billions of dollars in CapEx already, with plans to accelerate it in the future. Plus, the fact inflation has cooled off significantly, interest rates continue to turn downward, it's created really favorable macroeconomic conditions for IPO valuations. When you add in the fact that we have a regulatory-friendly administration in the White House and in all the agencies to regulate the stock market, there is a good chance we're going to see this surge of IPO activity in 2026.

8:54Matt, I think you were being very generous or modest when you said they have committed tens of billions because I think it's closer to hundreds of billions in commitments. So I want to throw this both at you because thinking about IPO investing in general, some of these big names are obviously going to go public with S1 statements and all that. When looking at companies about to go public or have gone public recently, what are some of the things that you're looking at when you're kind of less financial information is available. Me personally, when I am looking at an IPO prospectus, I'm looking for the longest term financial results that I can possibly get my hands on.

9:34I want to look at long-term trends, and I don't want to necessarily see big recent improvements with the business, especially without that long-term context. And so Tyler, you called this a pre-IPO glow-up, And I think that's a wonderful way to describe this. There are times when companies will engineer, let's say, financial results in such a way that it gets this maximum excitement going. And so, it's right before IPO. It just makes little tweaks here and there to the business that makes it look way better than it is. And then shortly after going public, the results go back to the normal trend line.

10:11I can't remember which company it was anymore, but I did see this one time where there was a company with just net losses, losses, losses, losses, suddenly profitable right before IPO and then after IPO back to the losses. So if I can get my hands on the longer term financial results, that's what I look for. If I see that just recent all of a sudden everything is massively improved, I'm going to take a step back, wait a year or two and see if this is actually a trend. Yeah, I'm in agreement with John, but I'll take it a step further. Over my investing career, which is 15 to 20 years, I've observed countless IPOs, and that includes the 2021 IPO and SPAC bubble.

10:50After that, I am really not interested in buying a newly public company whose business is unproven and unprofitable, inconsistent financial results, like John said, that relies on sustained rapid growth to justify these extreme price-to-sales multiples. I'm looking at some of the recent AI IPOs that we've seen. For example, the most recent public company in my portfolio is Klarna, K-L-A-R, which went public in mid-2025, but it's been in business for 20 years, so there's a lot of information out there. It's a reasonable valuation. It's been consistently profitable, has a substantial market share, especially in its home market in Europe.

11:29With companies like that, I'm interested, but for the Anthropics, OpenAI, SpaceX's of the world, I'm happy to do what John said and wait until they've been public for a few years and really see how their businesses and financial results develop. Well, we're going to put this theory to test because after the break, we're going to look at some IPOs that are on our radar. Thursdays, we normally do our stocks on the radar, but because we're talking so much about IPOs and new speculative companies, we thought we would add a little twist to it this time and do IPOs on our radar. Matt, before the show, you drew short straw, so you go first.

12:00Yeah, the IPO that I would really love to see is Stripe, but their leadership team has made it clear that they're in no rush to go public anytime soon. Very recently, they said this. On a similar company, another fintech IPO that I'd love to see is Plaid. That one's more likely to happen. It was valued at about$6 billion in its latest funding round. If you're not familiar, this is the company that connects bank accounts to other apps, including other banks. For example, if you have one of those budgeting apps and you connect all of your bank accounts to it to be able to monitor everything in one place, Plaid is the company that generally facilitates that.

12:36Like most pre-IPO businesses, the data on Plaid is very limited. But we do know that revenue grew 25 % last year to its highest level ever. It wasn't that long ago that Visa wanted to buy Plaid. They were actually under agreement to buy Plaid, I think, for$4 billion about three or four years ago. They abandoned their plans because there were regulatory concerns that it would create an unfair advantage for Visa. That's one that I'm really hoping goes public, and I can dig into a little bit more. For me, I'll be looking to see if Unduril goes public in 2026. This is a defense company. It doesn't really see itself as a defense contractor, per se.

13:14The contractor model, it's basically the government decides what it wants its roadmap to be, and then the defense contractor goes out there makes it happen. Enduro, on the other hand, has its own roadmap, developing its own technology and software and hoping to sell that to the government. The basic premise of the roadmap is autonomy. It has AI software, it calls Lattice, and this is controlling all this autonomous defense hardware, whether that be underwater or in the air or on land. I think that there's a chance that investors will view this more like an Apple than a Lockheed Martin, if that makes sense, what I'm saying.

13:54About a year ago, it was valued at$30 billion. I'm sure it would be looking for a much higher valuation than that. But for me, what makes it so interesting, this company, is its founder, Palmer Luckey. He reminds me of Elon Musk in a way. And I know that Musk can be a polarizing person. And I want to be conscious that not all of the listeners out there might think that that's a good thing. But the one thing about Elon Musk is he's really driven by this mission. It's not just selling a car or launching a rocket. It doesn't seem to me. He seems to be really driven by this almost life and death. We need to save the planet.

14:31We need to save the species kind of a mindset. And what this does is it gives Elon Musk this incredible clarity and this urgency to what he's doing. And he really kind of wills what he wants into existence. In the same way, Palmer, lucky with UndoReal, he really seems to be on this mission to make a better defense business, one that is driven by better technology, one that's driven by a better roadmap, one that's driven by autonomy, really kind of looking at the world for what it is, not what we would like it to be. And so I think it's really interesting. I think he can be one of these players that just really exerts all of his dedication to making this happen.

15:13I'm going to go a little recency bias because this company is actually going public very, very soon. And it's equipmentshare.com is the actual name. And the ticker is EQPT. It's going public, I believe, this week, perhaps even tomorrow. And it's one of those businesses that you read the founder letter, and it's really one of those ones you can't help but like. It's a construction equipment rental company, which, sure, it sounds boring. I get that. But anyone who hears equipment rental for construction and thinks, oh, boring, it's going to be a lousy business, I would implore you, go look up the long-term returns of other equipment rental companies, United Rental, McGrath Rent Corp, or U-Haul, and tell me those returns are boring.

15:57There is a lot of great performance that can be found in these sorts of businesses. And look, it's an IPO prospectus that Equipment Share put out, so I'm going to take some of the statements it makes with a grain of salt. But what it is, is equipment rental, but it also builds telematics into all of its equipment fleets and connects them into a single software platform to better connect the job site. There's so much, you know, phone tag and kind of inefficiencies in the logistics aspects of construction that it has been one of the more inefficient sort of industries we've had in the United States.

16:30I don't know if what EquipmentShare.com is issuing is the solution to fixing the kind of inefficiency, lack of productivity in the construction market that we've had. But the construction industry has the worst productivity gains of all the other major industries in the United States over the past 30, 40 years. If EquipmentShare can put a dent in improving the productivity of this industry, it's a $1.2 trillion industry begging for efficiency. And I think the ones that can figure it out and people that are willing to pay for it, it could be a big winner. Again, I take some of what they say with a grain of salt, but this is one I really want to look at and see where it goes.

17:13Well, we've got defense, we've got construction, and we've got payments platforms. Kind of a nice concoction of stocks on our radar for this week. It's all the time we have for today. Matt, John, thanks for sharing your thoughts. As always, people on the program may have interests in the stocks they talk about. and The Motley Fool may have formal recommendations for or against, so don't buy or sell stocks based solely on what you hear. All personal finance content follows Motley Fool editorial standards and is not approved by advertisers. Advertisements are sponsored content and provided for informational purposes only.

17:45To see our full advertising disclosure, please check our show notes. Thanks for our producer, Dan Boyd, and the rest of The Motley Fool team. We're Matt, John, and myself. Thanks for listening, and we'll chat again soon.

17:58You