Fundstrat’s Tom Lee stated that the upcoming SpaceX IPO will not mark the top of the bull market, countering concerns from institutional investors. Speaking on CNBC’s Power Lunch on Monday, Lee noted that a significant number of investors view the offering as a potential signal of excessive market enthusiasm. He argued that history suggests otherwise, pointing to the rarity of a single high-profile debut coinciding with a market peak.

Why Investors Are Worried

The concern among investors stems from the sharp market rally and the surge in AI-related stocks. Companies such as Alphabet Inc, OpenAI, Anthropic, and SpaceX are collectively seeking substantial capital to support AI infrastructure and growth initiatives. This has raised fears that liquidity could become stretched, particularly as one of the largest IPOs in history approaches. Consequently, some investors are choosing to take profits and adopt a cautious stance ahead of the offering.

The Historical Counterargument

Lee believes these fears are misplaced. He stated that history shows the SpaceX IPO should not mark the market top, emphasizing that it is rare for a big IPO to signal a peak. Instead, he views the debut as another milestone in an ongoing bull market rather than the event that concludes it.

The $7 Trillion Factor

One reason for Lee’s confidence is the availability of cash. He noted that there is still $7 trillion of cash on the sidelines, which markets can use to absorb the offering. Additionally, he pointed to strong demand from high-net-worth clients eager to gain exposure to SpaceX. This demand, in his view, reduces the likelihood that the IPO will drain liquidity from the broader market.

What Happens After The IPO?

Lee expressed a bullish outlook, suggesting the SpaceX debut could act as a positive catalyst. He predicted that the market will not only absorb the IPO well but will also perform positively post-IPO. While some investors treat June 12 as a potential turning point, Lee sees it as evidence that there is still plenty of cash waiting to be deployed.

SpaceX and Tesla Inc. CEO Elon Musk predicted that the commercial space flight giant could exceed orbital payload timelines and expectations. Musk stated that one million tons to orbit should be possible in roughly five years. This projection follows a new valuation model from research firm Mach33, which outlines significant growth potential for SpaceX's orbital capabilities.

Influencer Sawyer Merritt shared details from the Mach33 valuation model on social media platform X. The model indicates that SpaceX could put over 40,000 tons of Starlink payload into orbit in the next two years. This timeline coincides with the launch of the first datacenter satellites.

Valuation and IPO Prospects

Investor Gene Munster of Deepwater Asset Management touted SpaceX's upcoming IPO as an exciting event for the tech industry. Munster compared the commercial space flight company with Alphabet Inc. but noted that SpaceX holds an edge because Alphabet does not manufacture rockets.

SpaceX's upcoming IPO has generated considerable buzz. Investor Ron Baron predicted the company could eventually be worth $30 trillion. Goldman Sachs Group Inc., the lead underwriter for the SpaceX IPO, reportedly told prospective investors that the company's total revenue could reach over $474 billion by 2030.

Legal Challenges

A proposed class-action lawsuit has been filed against SpaceX and xAI by residents of Mississippi in a federal court. The residents complain of perpetual and inescapable noise stemming from AI datacenters. The lawsuit includes an estimated 10,000 residents of the area, though Musk is not personally named as a defendant.