Is the Coming IPO Wave a Financial Trap?

Plus: Gambling firms brace for record profits as World Cup kicks off

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Cheddar's Big Business This Week
June 11, 2026

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SpaceX starts selling shares this week in the largest IPO of all time, aiming to raise about $75 billion and valuing the company at $1.7 trillion. Anthropic announced its IPO plans last week, and this week OpenAI filed its first IPO papers with the SEC. None of these companies are profitable, and they are seeking billions of dollars of investor cash. Big banks from JPMorgan Chase $JPM ( ▲ 1.51% ) to Goldman Sachs $GS ( ▲ 3.47% ) are applauding the IPOs, but do the numbers add up? To hear the alternative perspective, Big Business This Week columnist Peter Green spoke with Ed Zitron, a Public Relations professional working in the technology industry who’s been increasingly critical and outspoken lately about the tech industry’s giga-IPOs. An edited and condensed version of their conversation is below.

SpaceX $SPACZZX ( ▼ 0.6% )  wants $75 billion from investors. Anthropic $ANTHZZX ( ▼ 5.17% )  and OpenAI $OPEAZZX ( ▲ 0.37% )  have already burned through tens of billions of dollars each. These companies aren’t profitable. What is going on here? 

The thing no one wants to talk about with the AI bubble is that there isn’t really a business here. Even Anthropic is only getting revenue because it’s subsidizing its customers. Claude Code let you burn thousands of dollars of tokens, and now they have moved customers to token-based billing, and businesses have very suddenly had to switch from a quasi all-you-can-eat model to having to spend what the token basis is, and they quickly find they are burning so much more than they expected. The majority of AI customers have learned to use a product that eventually will not exist, and they have no idea if they can afford it à la carte. It’s a giant cuIt. It generates code, but it also hallucinates, so you have no idea what it costs and no idea if the end product has value. It's laughable to say this stuff has value when you can't say what it costs. We don't even know if the tokens themselves are profitable. None of these companies is profitable. Anthropic raised $95 billion, and they have no real business. They have grown their model through hype or scaring people. A couple of months ago, they said Mythos is too scary to release. I guess not, in the end?

Will these IPOs satisfy their need for cash to prime the pump, and allow them to finally make money? 

Dario Amodea [the Anthropic co-founder] just said that the reason they want to go public is so they can get money from public markets because they need more money to train their models. When does their training end? They are desperate to make people think training is a capital expenditure. It's not. It’s pure operating expense, so these companies will be raising money in perpetuity. They could be raising $100 billion a year. Anthropic and the AI firms are currently monetizing executive incompetence. How does any of this ever work out? No one has a compelling answer, no one can explain how they ever stop being the largest welfare recipient of all time.

Is there anything this can be compared to?

I actually don't think there is any company in history that has needed this much money. Not one. And all of them need that much money and they need it regularly. I just don’t see that the markets have the support for it. When the companies finally show actual financials, people will freak out because these companies are not in a good financial state at all. They’ve done a good job of convincing private investors and the media that they are more healthy than they really are.

So what’s the back story here? Let’s start with the first up, SpaceX. Why are they going public?

Elon is a mess. Elon is trying to find a cash exit for himself and his investors. And that money can only come from retail investors. Look, multiple parts of SpaceX’s business do not make sense. It all loses so much money, except perhaps StarLink.

A lot is riding on the SpaceX IPO because it's first out of the gate and because it’s going to suck up all the cash in the market. How will the success or failure of the SpaceX IPO affect OpenAI and Anthropic? 

The SpaceX IPO makes things more difficult for OpenAI and Anthropic, because if it goes south, no one will invest in the others. And the underlying economics are a horror show with SpaceX. Rockets are a capital expense burden, but it's the AI side, $7B in capex in the last quarter. The most profitable part of xAI is renting computers to Google $GOOGL ( ▲ 0.6% ) .

Every time you read about a deal with the AI firms it looks like a circle. 

Circular finance needs to be made illegal. The only function of some of these deals is to inflate other shareholders, like Google’s, own investment in SpaceX or Anthropic. Retail investors are being used as exit liquidity. And the only thing worse than what's happening at SpaceX is what will happen at OpenAI and Anthropic, which have no business at all.

So who will protect the small shareholder?

I don’t think the Securities and Exchange Commission cares. I don't think we have solid financial regulation in this country. Seeing Goldman say Space X’s revenue will rise 300x? Sellside and buyside analysts have failed the financial industry as well as the small investor. We are going to see in the next few months just how bad an idea this was. Retail investors will  get washed out in SpaceX. They are marks for a larger con. I will be shocked if OpenAI makes it to the IPO. But the SEC won't stand in the way and the media will make them look better than they are. If they do hit the IPO, there will be carnage for the investors. The underlying economics for these companies are broken. The sad thing is they are being allowed to float because of the hope of the AI bubble, with no accounting for the fact that these companies will have no profits, ever. And they never will, because no one has been able to make the AI models less expensive to run.

If it’s such a bad deal, why is everyone flocking to it? 

The reason this is inflated is because all the people joined in the same way. It’s revealed how much of our economy is run by people who don’t really think about what they are doing. Large Language Models do a really good impression of work, which is all you need to convince the CEO that it’s good. It's an exploitation of executive ignorance. It also shows how many companies are run by people who don’t know what they are doing. I mean, remove AI from this world and go to the CEO and say “I gotta spend 10% of headcount on a tool, that I can’t tell you the results,  and I can't tell you the cost.” You’d get laughed out of the building. I don’t want investors to get hurt. That blind faith in some secret formula will only lead regular people into the abyss.

—Peter S. Green

Big Businesses mentioned this week

This week, big business!

War Story

  • The Gulf War Energy Bottleneck That Could Send Oil Soaring Back To 100 Dollars: Donald Trump, Benjamin Netanyahu, and whoever the heck is running Iran all seem content to stay on the Gulf War rollercoaster, ratcheting tensions — and oil prices— up one day and lowering them the next, as the price of oil follows suit, with both a peace deal and full-scale war remaining just out of reach. But the outlook isn't good. While Brent crude fell to just $86.79 a barrel on Wednesday, a bit more than $10.60 above the price on the first trading day after the war began on February 28, and ships have been gingerly leaving the Gulf, few have been entering, and more than 160 large oil tankers remain bottled up behind the Strait of Hormuz. That’s put tremendous strain on the world’s energy supply, and now come fears that oil prices will stay high longer as countries build larger crude reserves so they don’t get whacked the next time rockets fly over the Gulf. Call them "nation preppers,” says the Wall Street Journal, which notes that while it will take 500 million barrels of crude to replenish depleted reserves, there’s only 100 million barrels on ships waiting to leave the Gulf, so it could take a year just to replenish those reserves. And don’t expect oil to stay this low. “Prices may look calm on the screen, but the bottleneck is in tankers, storage tanks, wells, and crews,” says Morgan Stanley’s global commodities strategist, Martijn Rats. He sees Brent crude hitting about $100 a barrel in the third quarter, and only dropping to $80 in mid-2027. 

(Google)

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The Usual Suspects

  • Flying on Empty? The global jet fuel shortage, and attendant high prices for what jet fuel can be found, are setting global airlines and their passengers up for a bad winter, with airlines planning to cut tens of thousands of flights if fuel prices stay high. They’re up about 50% since the war in the Gulf started in February. Passing on those costs is a conundrum for airlines: They can’t afford to absorb higher fuel costs, but passengers are getting squeezed by inflation. “You need to make sure you’re filling every seat,” an airline industry consultant told the Financial Times. “You can’t fly planes that are empty.”

  • Hey Siri, What’s up with Gemini? Apple $AAPL ( ▲ 1.36% ) , the traditional laggard when it comes to AI tech integration, says it’s now leapfrogging the competition with an AI-enhanced Siri, built in conjunction with Google $GOOGL ( ▲ 0.6% ) , the creators of Gemini AI. Apple insists it’s not just wrapping Google’s Gemini in a slick white apple envelope, but it's hard to see what else they’re doing: As 9to5Mac put it, four of the five models are “custom versions of Gemini running on Apple Silicon.” The fifth model is just Google’s standard Gemini model trained on Apple-centric data.  

  • Double-Chip Trouble: Nope, it’s not the latest flavor from Ben & Jerry’s, it’s a tie-up of your two worst financial fears: the AI funding circularity and the private credit bubble. Apollo $APO ( ▲ 2.2% ) and Blackstone $BX ( ▲ 1.82% ) say they’ve completed a $35B private credit deal that will fund Anthropic leasing chips from Alphabet $GOOGL ( ▲ 0.6% ) , which already owns about 15% of Anthropic $ANTHZZX ( ▼ 5.17% ) . The circularity doesn't stop there. Alphabet’s Google Cloud is Anthropic's primary cloud provider, and Anthropic uses Google’s proprietary Tensor Processing Unit chips to train Claude AI. And who makes those chips? Broadcom $AVGO ( ▲ 3.55% ) , which not only provides key networking components for Google's data centers, but also agreed to guarantee the private credit loans. Ya know what’s even funnier? The numbers: Nearly half of Alphabet’s $62.6 billion profit in the first quarter, or $28.7 billion, came from writing up the value of its stake in Anthropic. Keeping that stake alive is now a vital part of Alphabet keeping its share price up. And let’s not mention that the deal is straining limits of the $3 trillion private credit market.

  • ‘Nvidia ain’t alone: Las Vegas-based cloud computing startup TensorWave has just raised $350 million to build a data center using chips from Advanced Micro Devices $AMD ( ▲ 7.69% ) , instead of Nvidia $NVDA ( ▲ 2.22% ) . Investors like the idea, valuing the firm at $1.55 billion that nearly quadruples its value in the past year. It joins a roster of firms offering non-Nvidia options for AI labs, including Cerebras $CBRS ( ▼ 4.54% ) , Majestic Labs AI, and Decart. Founder Darrick Horton said he didn't want to have to rely on Nvidia alone. “I don’t like buying things from monopolies,” he told the Wall Street Journal. “You don’t have a lot of leverage.”

  • Rottweiler 2.0? It was billed as the rottweiler of AIs, a killer so dangerous it couldn't be let loose. But now Anthropic is releasing what it says is a gentler, tamer version of  Claude Mythos. This one’s called Fable, and Anthropic says that if it's asked “dangerous” questions about, say, biohazards or weapons systems, it will reroute the query to a dumber version of Claude. But just in case you really want to do something dangerous, Anthropic’s also upgraded Mythos, the AI it said was too dangerous for the public. Only members of the top secret U.S. government-affiliated Glasswing project will get access to Mythos 5, which has fewer safeguards. What could possibly go wrong? According to an essay posted this week by Anthropic founder Dario Amodei, just about everything. “The cyber risks that Mythos-class models present will not be the last that we must face. I believe that biological risks may soon follow, and that serious AI autonomy risks may not be far behind,” Amodeo wrote. Now, he’s urging the government to take swift action to regulate AI. 

  • Return to slender: You would’ve thought that with more than 23% of U.S. households on GLP-1 weight loss drugs, these would be boom times for the apparel industry, as the newly slim splurge on new clothes and shoes and even underwear, with 80% of semaglutide users expecting to refresh their wardrobe. But every silver lining has its cloud, and slimmers turn out to be really bad online shoppers, unable to guess their new sizes. That’s caused a steep rise in returns at online clothiers, with some reporting that as many as 1 in 8 purchases is returned because it’s the wrong size. And returns are deadly for retailers. It can cost a retailer as much as 80% of the sale price to process a returned item.

  • The Data Center Glut: Before we even consider whether there’s enough demand for data crunching to power all the new AI data centers being built, let’s pause to look at the quantum state of Cheyenne, Wyoming. This sleep state capital, population 66,000, is home to 10 data centers, with five more under construction and nine more in the planning stage. Cheap land and abundant natural gas are drawing the centers. Local officials say the construction will generate jobs and keep young people in the state. Local residents say the constant construction traffic has ruined their prairie home. But what's got everyone really upset? A “man camp” to house 5,600 workers — quick-build apartments and RVs offering laundry, internet, dining service and pickleball courts. To get all those men into the camp, Meta $META ( ▼ 0.3% ) is starting a “workforce academy”, a $115 million program in four states, offering five weeks of free training in how to swing a hammer or otherwise learn a skilled trade needed to build data centers. Every graduate is guaranteed a job. Meta didn’t say how many workers it will train but said it's already gotten 35,000 applications. Trade groups say the U.S. is short 350,000 construction workers.

  • Playing the Market: What is going on with the U.S. stock market? Just as SpaceX, Anthropic and OpenAI prepare to go public, consumers are fleeing tech stocks. The tech-heavy Nasdaq-100 $NDX ( ▲ 1.59% ) is down 5.5% in the past five days, while the S&P 500 $SPX ( ▲ 1.72% ) is down 3.3%. Bloomberg’s Mag-7 index is down 7% in the past week. The problem seems to be an oversupply of stocks on the market: the vast number of shares the giga-IPOs will unleash will reverse a 23-year trend that saw the net supply of equity in the U.S. (new shares issued minus equity removed by buybacks and firms going private) shrink consistently. That scarcity helped U.S. shares more than triple in price in the past decade. And it will just get worse in 2027, as the lockup periods on the big AI IPOs expire, Goldman Sachs $GS ( ▲ 3.47% ) says. That could actually kill the tech-led stock rally, as funds sell off Mag-7 and other stocks to buy the IPOs. “Record new issues is one of the classic signs of a bubble,” Richard Bernstein, global head of macro investing at Janus Henderson Investors, told the FT.

  • Fortune telling: It’s the world’s biggest sport, and it's about to be the world’s biggest gambling event: The soccer world cup that starts this week in the U.S., Canada, and Mexico is expected to attract some $50 billion in wagers, according to an analysis by Australian bank Macquarie. That’s given new urgency to efforts to regulate online gambling and especially the new prediction markets (we’re looking at you, Kalshi $KALSZZX ( ▲ 0.09% ) and PolyMarket $POLYMARKET ( ▼ 1.58% ) ) like the proposal this week from the Commodity Futures Trading Commission to block prediction bets that are not in the public interest or are susceptible to being manipulated. One target: Sports-related bets on whether a player gets injured, or misses a foul shot. The rules would also ban bets on wars, terrorism and assassinations. This comes after a string of cough, cough, possibly-rigged bets on oil prices that may have been linked to White House officials, and the arrest of a U.S. special forces soldier and a Google $GOOGL ( ▲ 0.6% ) employee for insider trading on prediction markets. Kalshi will now require that some users disclose the identity of their employers. 

Trumplandia

  • Numbers game: Life is getting difficult for American consumers as inflation hit 4.2% and gasoline princess rose 7 percent in May. Grocery prices are up, the job market is stagnant, and the giga-IPOs about to hit the markets could upend many people’s retirement plans. Pity the consumer, but save some of your schadenfreude for Kevin Warsh, President Trump’s newly appointed Federal Reserve chair. Warsh came into office sorta kinda promising to lower interest rates (which he’ll now have to raise) and bring down inflation, (which has now soared again, although not quite to its 9% highs during the pandemic). Trump has shrugged it off. “I love the inflation,” he inexplicably told reporters in the Oval Office on Wednesday, promising that as soon as the Iran war ends, oil prices will drop “like a rock.” But Warsh will have a harder time of it. His job is to keep inflation low, employment high, and the dollar in command. But there’s a lot going on. “What we are seeing is three distinct inflation waves — from tariffs, from oil, and now AI capex — layered on top of each other,” Evercore ISI economist Krishna Guha wrote this week. Warsh says we’re looking at the wrong numbers, and he wants to set policy using less volatile price numbers, which he argues “capture the underlying inflation rate,” not a one-off hike in the price of beef or a war in Iran. But he’s only one of 12 votes on the Fed’s Open Market Committee, which sets rates. And while the Fed’s been keeping its benchmark interest rate high, currently at 3.50% to 3.75%, set in December, to keep inflation in check, it hasn’t helped. “Monetary policy is not restraining the economy,” Dallas Fed president Lorie Logan said in a June 3 speech. “I am increasingly concerned that higher interest rates could be necessary later this year to fully restore price stability and appropriately balance both sides of the Fed’s dual mandate.”  

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Peter S. Green is a veteran reporter and editor who has spent more than two decades covering business and finance from Eastern Europe to New York City, and has worked for Bloomberg News, The New York Post, The New York Times and The Messenger. He lives in New York City and is always looking for the next big story. Email him here.