Iran was still a big story last week, but the latest inflation reports were the big market movers. Higher energy costs were the primary culprit, and rising inflation has some people

talking about the Fed potentially raising interest rates in the near future.

Then there was the SpaceX IPO, which was the biggest in history. The company’s stock launched Friday and closed its first day at just over $160 per share. This, and other AI IPOs are arousing many conversations, see more below!

In The News

Tech Titans Prepare for Blockbuster IPOs in New Front of AI Race

The Hill article highlights:

• SpaceX, OpenAI, and Anthropic are all expected to go public at very large valuations, showing how intense investor demand has become around AI-related companies.
• A major reason these companies are considering IPOs is simple: they need enormous amounts of capital to keep funding AI infrastructure, data centers, servers, and computing power.
• SpaceX h is targeting a possible $1.75 trillion valuation.
• OpenAI is also spending aggressively. It has reportedly told investors it plans to spend $600 billion on computing power by 2030.
• Anthropic has reportedly told investors it expects $10.9 billion in revenue this quarter, and there is speculation that it may be turning profitable, which could make it especially attractive if it comes public after a successful SpaceX offering.
• These companies may be high-profile and fast-growing, but they also come with huge spending demands, uncertain profitability, and valuation questions that investors should not ignore.

As OpenAI, Anthropic Prep IPOs, Here’s One Thing to Know

The Investor Business Daily article highlights:

• IPO excitement is building around major AI companies, with Anthropic reported near a $965 billion valuation and OpenAI around $852 billion.
• A key investor issue is valuation versus reality: headline numbers are huge, but comparisons can be misleading if the underlying financial reporting is different.
• Anthropic and OpenAI appear to use different revenue-recognition methods, which can make side-by-side revenue comparisons less straightforward than they look.
• Anthropic is described as recognizing more revenue on a gross basis, while OpenAI is described as using a net basis through major partners.
• Anthropic reportedly gets about 80 percent of its revenue from enterprise customers, a major reason investors are watching its growth closely.
• Strong demand and private-market buzz do not automatically make a company the right long-term fit for a retirement portfolio; investors still need to weigh valuation, risk, and portfolio fit. This is an inference based on the valuation and accounting concerns above.

SpaceX Going Boldly Where No One Has Gone Before

New Constructs IPO Research Synopsis:

• In our view, SpaceX’s IPO looks more like a way to lure unsuspecting investors into paying off $62.6 billion in debt (78% of expected IPO proceeds), fund an increasingly costly AI race, and lock in a trillion-dollar payday.
• The company faces real competition in its broadband and AI offerings, holds significant customer concentration risk, and flaunts a litany of related-party transactions that should give any potential investor pause.
• We think the projected $1.75 trillion valuation is far too high because it implies SpaceX will simultaneously generate the most revenue and profit of any company in the entire stock market. The expectations for future profits needed to justify SpaceX’s projected IPO valuation are truly out of this world.
• We detail these risks and use our reverse discounted cash flow (DCF) model to show exactly why the projected $1.75 trillion valuation is too expensive.

With any IPO or any investment in general, it is important to avoid hype and emotions. That is why you have us. Our team is always doing research and monitoring of opportunities as well as potential pitfalls with both new offerings like this and all companies. We are here to talk through any questions you may have and what is appropriate for you based on your situation, along with the overall market environment. Just reply to this email or give us a call with any questions!

Just for Fun

Dad Joke of the Week:

I gave my handyman a to-do list, but he only did jobs 1, 3, and 5. Turns out he only does odd jobs

Say What?

Pigeons may be navigating with their liver, study suggests.

Researchers have discovered that pigeons may use specialized immune cells in their liver to sense Earth’s magnetic field and help them navigate. When these cells are removed, pigeons lose their sense of direction. This challenges old theories focused on the beak or eyes. The study suggests that the liver’s iron-rich cells might send magnetic signals to the brain, but more research is needed. Scientists also found these cells in other organs, and say birds likely use a combination of navigation techniques depending on the situation.

(Our creator is pretty amazing!!)

This Week in History

1779 – Spain declares war in Great Britain

1914- Austria’s Archduke Ferdinand was assassinated

1945- United Nations (UN) Charter signed

1985 – Route 66 decertified

2009- “King of Pop” Michael Jackson dies at age 50

What Did it Cost? (Bread)

1980 – $0.48

2005- $1.20

2026 -$2.10