IPO Winners & Losers: SpaceX Breaks, AI Cracks, and Software Strikes Back

Welcome back to Renaissance Capital's IPO Winners and Losers, the weekly podcast breaking down the biggest stories shaping the IPO market.

Get the newsletter in your inbox every week.

This week:
• SpaceX falls below its IPO price for the first time
• Csquare and Standard Nuclear stumble as the AI infrastructure trade loses momentum
• The IPO Index drops sharply alongside the broader AI selloff
• Software names like SailPoint and Figma rally as investors rotate away from AI
• Jersey Mike's and Cumberland Farms prepare to test demand for consumer IPOs

We also discuss whether this week's pullback is a healthy repricing or the start of something bigger, what SpaceX's weakness could mean for OpenAI and Anthropic, and why the rotation into software and consumer names may be the most constructive signal beneath the selloff.

Transcript

SPEAKER_01 0:01

This week's winner? Software names finally catching a bid. This week's loser, the AI infrastructure trade, from freshly priced IPOs all the way up to SpaceX.

SPEAKER_00 0:11

And when the two dominant themes of 2026, AI infrastructure and mega IPOs, both crack in the same week, you have to ask, where do we stand? Is this a healthy reset or the start of something bigger? Let's get into it.

SPEAKER_01 0:27

Welcome to the IPO Winners and Losers Podcast. I'm your host, Avery Marquez, Renaissance Capital's Director of Investment Strategies.

SPEAKER_00 0:34

And I'm Matt Kennedy, Senior Strategist at Renaissance Capital.

SPEAKER_01 0:38

Quick note before we dive in: this podcast is for informational purposes only, and nothing we discuss should be taken as investment advice or recommendation to buy, sell, or hold any security. Past performance does not guarantee future results, and one cannot invest directly in an index. For the full disclosure, check the end of this recording. So let's walk through the week because for the first time in a while, the market didn't say no, it screamed. Two IPOs pitched it pitched AI infrastructure and both stumbled. More cracks in what has been, until recently, the year's tottest trade.

SPEAKER_00 1:10

Yeah, and it wasn't just the new issues. SpaceX broke below its $135 offer price for the first time. That means the two pillars of this year's market, AI infrastructure and mega IPOs, both wobbled in the same week. And to that point, the year's next largest IPOs, SK Heinrich and Cerebrus, also pulled back this week.

SPEAKER_01 1:29

Yeah, I think it's fair to say that this was driven mostly by that broad sell-off in AI stocks. The circular spending concerns just seem to keep getting louder. But the macro didn't help. We have the Iran war still simmering on top of potentially shifting Fed policy.

SPEAKER_00 1:44

Yeah, I mean, you've got concerns over AI evaluations, leverage, and competition also in the mix. But Avery, much of this isn't really new. I know that last week we talked about that barrage of negative headlines, as well as some of the IPO volatility bubbling under the surface of a calm VIX. At the same time, I think it's important to keep this in perspective. Even after that 8% drawdown this week, the IPO index is still up 15% for the year. So this is a pullback inside of a strong year rather than a collapse.

SPEAKER_01 2:15

Yeah, that's definitely a fair point and uh maybe a silver lining in what looks not so great right now. Uh and with that, let's move to the deal side. Starting with the two that actually made it out the door. Uh we had C Square, the data center operator, that price below the range at a steep discount appears and still finished down 2%. Um a sizable discount can't really buy a pop, I think that's the market talking.

SPEAKER_00 2:40

Yeah, and it wasn't just that sentiment shift in AI. Uh, I think both of these companies had some company-specific risks as well. Uh with C Square, it's a roll-up with high leverage and ongoing losses. Its closest peers are established REITs that are both paying dividends. Uh, investors had a safer way to own the same theme. And despite a very attractive EV to EBITDA here, uh, in a week like this, investors were just looking a little bit more closely at the net margins and the debt profile.

SPEAKER_01 3:05

Mm-hmm. Yeah, and with the other deal, we had standard nuclear, um, and that was definitely a rougher debut. Um, that's the early stage nuclear fuel maker. Um, and this one slashed the offering by more than half ahead of pricing. Price is expected, but then plunged 18%.

SPEAKER_00 3:23

And continue to trade down from there. Uh, that one's a sentiment story, as much of a company story here. Resnapio X Energy trading very poorly. I think we highlighted that last week. And uh with appetite for speculative growth cooling, you know, standard nuclear just walked into a room that had already emptied out. Uh now uh a 30% loss is not good, no doubt. But I do think it's worth pointing out that this company priced at a $2.7 billion market cap with virtually no revenue. Uh, even now, a $1.9 billion market cap is nothing to sneeze at. So I think that there's still, I mean, that still says something. I don't want to sugarcoat that loss. Uh, but uh I mean, a few years ago you might not expect a you know two billion dollar company to uh be able to go public with virtually no revenue. So that that lottery ticket trade still I don't want to say it's dead. Uh there might be some legs there.

SPEAKER_01 4:19

Yeah, and you look at the deal size, I mean that was like a I think a 58% cut. Um but then yeah, you absolutely have to look at that valuation. Uh 150 million deal size is, you know, maybe on the smaller side of what we've seen this year, but almost a three billion dollar market cap is yeah. Yeah, nothing uh not that's not small. Um and what strikes me with these two deals is that um they're exactly the kind that would have flown like six weeks ago. So we're having we're seeing the same themes, the same pitch, but a completely different reception. And we always say market conditions can change on a dime, and this is pretty textbook.

SPEAKER_00 4:57

And I think you can make the case that the market isn't rejecting AI infrastructure as a story entirely, it's just not paying any price for it. So just a case of discipline reasserting itself here. You know, it's kind of interesting. Uh, I know that these two deals look very different, uh, provider of co-location services and nuclear fuel. But between C-Square's leverage and on profitability and standard nuclear's early stage, I think they kind of had some similarities too. These are both high-risk bets on that AI build-out thesis, and uh the market just didn't take it this week.

SPEAKER_01 5:29

Mm-hmm. Yeah, and seeing these cracks kind of tie them into a bigger theme because the biggest IPO in history just crossed a line. Nobody really wanted to see SpaceX below its IPO price for the first time since listing. Uh, and symbolically, that's a big moment. Um, the flagship of the mega IPO era is officially trading underwater.

SPEAKER_00 5:51

Yeah, and it matters beyond just SpaceX. Uh IPO investors, along with the mega i uh mega cap unicorns eyeing the window, namely OpenAI and Anthropic, they just watched the year's anchor deal break issue. I wouldn't go quite so far as to say that when SpaceX sneezes, the IPO market catches a cold. Uh, but SpaceX is so large that a sell-off could turn a collective gain on 2026 IPOs into a collective loss. Uh, I mean, like a 20% decline for a $75 billion deal. Uh, that's hitting a lot of investors' portfolios.

SPEAKER_01 6:24

Yeah, uh, I think there is an argument here that breaking issue in a broad AI sell-off isn't a totally fair verdict on the company, um, especially given the profile that was punished this week. Things like heavy AI capex exposure and negative free cash flow. Um, I think there's some element of that here, but I do wonder how much of that really played into the trading and how much was simply an ugly outcome of price discovery.

SPEAKER_00 6:51

And I want to talk a little bit more about that, but first, now is probably a good time to mention that SpaceX was not added to the Renaissance IPO index on a fast entry basis. It will be evaluated for inclusion at the next quarterly rebalance in September. But uh, Avery, I know last month we commented on how SpaceX was sort of priced to perfection. I still think that the $135 offer price was not totally egregious. It looked like maybe it offered 20% relative upside from there, uh, and it kind of traded there initially. But that is the downside of using relative valuation. Uh, some of SpaceX's comps like Rocket Lab, AST Space Mobile, Core Weave, are down 20 to 40% over the past month. So you've got some added competition from Facebook slash meta, and now everyone's wondering if the debt is going to get more expensive via these high higher interest rates uh potentially down the line. All that on top of a fast-approaching lockup release that will more than double the tradable float in the next month. So, you know, that lockup is something that we've beaten the drum on as a technical overhang coming in August.

SPEAKER_01 7:57

And all of those things play into the real question, which is what does this do to the fall IPO calendar? Does a wobbling SpaceX make the next mega deals price more conservatively? Um, or does it make them wait entirely?

SPEAKER_00 8:12

Yeah, I think history says that issuers will read the tape. A humbler SpaceX in the aftermarket might attract uh healthy deals down the line, resets expectations before they set terms.

SPEAKER_01 8:23

Um, but now, SpaceX aside, next week should actually be interesting because the calendar is about to completely change flavor. Jersey Mics and Cumberland Farms could both launch in the coming week. So we have subs and convenience stores. And I think that's about as far from AI infrastructure as you could possibly get. Uh and beyond that, we have reformation waiting in the wings. So uh well, yeah, a lot of consumer names uh potentially coming down the line.

SPEAKER_00 8:50

The timing is fascinating here. We've got uh you know a sector like consumer that's just been punished all year long. Uh just remember Bob's, Suja, Once Upon a Farm. Now uh two consumer names are potentially testing the water, right? As some money rotates out of AI.

SPEAKER_01 9:06

I think Suja was the big one. I think that that's got to be down still like 50% from the ITO.

SPEAKER_00 9:12

Surprised Bob's and uh Once Upon a Farm have come back, uh, but there's no way Suja's climbed out of that hole yet.

SPEAKER_01 9:17

Yeah, no. Uh and that rotation might actually be the opening that they've been looking for. Um, if investors are looking for somewhere to redeploy, a familiar brand with real cash flow might suddenly look a lot more attractive than it did even a few months ago.

SPEAKER_00 9:32

Yeah, I think we're gonna frame this as a genuine test of breadth. Uh, a healthy acu market can price a subchain and a data center in the same season. A narrow one can't.

SPEAKER_01 9:43

Yeah, and these are known brands with long operating histories. Um, I think there is a case that if these consumer stories can't find demand, the sector could stay pretty frozen for the rest of the year. Though I do think it's worth noting that the structure of these deals may play into their outcomes just as much, if not more, than the sector aspect itself, for better or worse. Um, both of these are LBOs, and PE deals have delivered pretty mixed trading this year. Um, I'm not sure I should have looked if they're averaging a loss, but I know that it was pretty close uh at the end of the quarter.

SPEAKER_00 10:18

With some new concerns over the uh interest rate question, uh I think pretty valid too.

SPEAKER_01 10:25

Yeah. Um now taking a quick look down the pipeline, um, because the filing activity is quietly picking up. Uh, we expect a slightly busier calendar, late July into early August. Um, we have biotechs leading the recent filers. Um, that's a sector that can often defy the broader market to an extent, um, because company-specific news often drives the trading. Um, on top of the fact that drug development is very expensive, so they can't always wait for the ideal market.

SPEAKER_00 10:53

Yeah, and I think a lot of that is driven by MA. If uh there's a say 10% chance that a biotech is now an acquisition target, that just changes the calculus at IPO. Uh, and then the mix beyond biotech is pretty eclectic. We've got uh nuclear equipment with whole tech nuclear, uh, men's fashion with tailored brands. You may know them from men's warehouse, uh, and then South American power production with YPF Energia.

SPEAKER_01 11:19

Yeah, it's notable that nuclear and power names are still filing into this sell-off. Um, I think some may be conviction that AI power demand will outlast this current wobble. But I do think there are some that were just already in motion and kind of hoping to catch the last of the tailwinds.

SPEAKER_00 11:35

Oh, that's definitely true. Um, you know, I'm sure companies, if they could snap their fingers in price uh when markets are at their peak, they would definitely do it. And now you're kind of getting these uh catch-up companies. But it can be good for investors, you know, now that uh the discipline's there and asking for a better valuation. Uh but uh that diverse filing slate is a good sign, regardless. Issuers across sectors still think the window is worth using.

SPEAKER_01 12:00

Yeah, I was uh surprised to see uh yeah, men's warehouse. I don't know if you're a fan of the office map, but it always makes me think of uh I worked at a warehouse, men's warehouse. Uh yeah. Anyways.

SPEAKER_00 12:16

Is Sparrow public? Is that a public company? It can't be.

SPEAKER_01 12:21

I have no idea, but yeah, my favorite little uh secret New York pizza slice.

SPEAKER_00 12:26

Oh yeah, for sure.

SPEAKER_01 12:28

Uh and with that, let's look at the scoreboard. Uh, this was the roughest week for the IPO index in a while. Uh it finished the week down 8.3% uh compared to the SP down just 1.6%. So that's a nearly seven-point gap in the wrong direction, uh, a mirror image of the outperformers we were highlighting just a few weeks back.

SPEAKER_00 12:50

As you might expect, the losers were almost all AI names. Uh Astera Labs at the bottom, down nearly 27%. So when the chip complex sells off, the IPO index feels it more than most.

SPEAKER_01 13:01

Uh, but given everything we've discussed so far on this podcast, the winners column is the most interesting story uh because we have SalePoint up 14%, Figma up 13%. So the money rotating out of AI went somewhere, and this week it went to software.

SPEAKER_00 13:17

And that's a real shift. Uh software was the frozen sector for most of this past cycle. Now it's leading the winners in a down week. That's a real signal, not just noise.

SPEAKER_01 13:26

And it echoes what we've been tracking, which is software showing signs of life, right as software issuers start circling the calendar again. Um, so even after this very challenging week, at least we can say the tape and the pipeline are starting to line up.

SPEAKER_00 13:40

And it's just really interesting that software is appears to be a counterweight to AI stocks. Earlier this year, everyone was afraid that AI would eat up software. But now when AI pulls back, software leaps ahead. These are both companies in the tech sector, uh, but uh I guess software is the yin to AI's yang. Um, if AI does pull back, then it's not going to totally destroy the software industry.

SPEAKER_01 14:05

Um I guess this was the uh antidote to the cyspocalypse.

SPEAKER_00 14:09

Yes. Uh the revenge of the cuspocalypse. I don't know, how you sound like a movie.

SPEAKER_01 14:17

Um yeah, we're gonna have to trademark that. Nobody take that, please. So zooming out now, what did this week actually tell us? The 2026 playbook just cut its first real stress test. Um AI infrastructure deals are stumbling, SpaceX below issue, the index down eight percent. Um, so we're seeing these themes that carried the market um that they're not bulletproof.

SPEAKER_00 14:41

But also look at what didn't happen. Uh the window didn't close, not yet. Deals still priced, filings kept coming, and the index still up 15% for the year. So so far, this is a uh a repricing and not a rejection.

SPEAKER_01 14:54

The circular spending concern around AI is the one to take seriously, though. Um that's not a one-week headline, and uh it's one that we kept seeing. It's a structural question about how much of this demand is real.

SPEAKER_00 15:07

At the same time, like we said when SpaceX went public, it may be best to think of the AI thesis as a uh generally generational investment. Uh sure, you should have some healthy skepticism around companies with multi-billion dollar valuations and no revenue. At the same time, many of these companies are pitching a five to ten year time horizon. Uh and then uh yeah, this week's rotation into software might be the healthiest thing that happened this week. Uh a market that can move money between themes is more durable than one riding a single theme.

SPEAKER_01 15:37

Yeah, but there was still some element of discipline. Um buyer buyers are scrutinizing everything, and that's clear.

SPEAKER_00 15:44

Now the question is whether issuers adjust, uh, if we see humbler valuations, tighter deals, or if uh they keep testing a market that just showed someone it's all right.

SPEAKER_01 15:55

So what are we watching next week? Uh first, Josie Mike's and Cumberland Farms. Uh, both of those could launch, uh, and they will be the consumer test. If punished sectors can find demand, that's a strong signal of the range that we've been looking for.

SPEAKER_00 16:09

And of course, SpaceX's tape. Uh, does it reclaim that $135 offer price or does breaking issue become the new normal? Every mega IPO candidate in the pipeline is watching that chart.

SPEAKER_01 16:20

Yeah, and the AI sell-off itself. Uh, another bad week, or the start of a deeper unwind in the circular spending story. As Terra Labs and the ship names will probably tell us pretty fast.

SPEAKER_00 16:31

So the market flexed its discipline this week. Now we find out what it wants to buy next.

SPEAKER_01 16:36

Yep. So that's it for this week's winners and losers. Get the full newsletter in your inbox by clicking the link in the description. Thanks for listening. And before we go, please listen carefully to our full disclosure. This podcast is for informational purposes only. Renaissance Capital statements should not be considered investment advice or a recommendation to buy, sell, or hold any particular security. Certain of the statements contain maybe statements of future expectations and other forward-looking statements that are based on Renaissance Capital's current views and assumptions, and involve known and unknown risks and uncertainties that could cause actual results, performance, or events to differ materially from those expressed or implied in such statements. Past performance does not guarantee future results. One cannot invest directly in an index.