Matt Frankel (3:04)

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 rockets development itself, it was initially announced in 2021 for a proposed 2024 launch that was then delayed due to until mid-2025 because of engine development issues. Then it was delayed to late 2025, then it was delayed to early 2026 and now who knows when it's going to be pushed back to. So this is like 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 till 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.

Tyler Crow (3:56)

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. Now 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, are you or are you invested in some other space related companies that keeps you looking at this industry in particular?

John Quest (4:32)

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. Just for those who are like me and love space, there are some recent developments in the search for Planet nine out there. 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.

Matt Frankel (5:17)

Yeah, I agree, it's absolutely a real business. I don't own Rocket Lab or any other at least direct space stocks. Yet you can make the argument that some of like the data center companies I'm invested in have a lot to do with the space economy, but no direct space investments. Just 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.

Tyler Crow (5:37)

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.

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Tyler Crow (6:15)

Part 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. So it looks like 2026 could be a big year for IPOs. Even before this SpaceX announcements, there are rumors that OpenAI and Anthropic could. So we're talking big in names in AI and space, some of the largest private companies in the world. And guys, this touches on a couple of conversations we've had recently. You know, the ongoing AI bubble watch and last week's kind of 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?

Matt Frankel (7:32)

Yeah, so we're seeing kind of 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. So I'm not so sure if it's as much of a rush to IPO before a bubble bursts and is a rush to get in the market before their money runs out. After all, companies like OpenAI and Anthropic 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 trend downward, it's created really favorable macroeconomic conditions for IPO valuations. And 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.

Tyler Crow (8:26)

Matt, 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 the some of the things that you're looking at, you know, when you're kind of less financial information is available.

John Quest (8:56)

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. I 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 kind of gets us maximum excitement going. And so it's right before IPO that 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 kind of go back to the normal trend line. I can't remember which company it was anymore, but I did see, 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.

Matt Frankel (10:11)

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. So after 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. Multiple examples. 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 Klar, which went public in mid-2025, but it's been in business for 20 years. So there's a lot of information out there that's a reasonable valuation, it's been consistently profitable, has a substantial market share, especially in its home market in Europe. With companies like that, I'm interested, but for the anthropics, openais, spacexes of the world, I'm happy to do what John said and wait till they've been public for a few years and really see how their businesses and financial results develop.

Tyler Crow (11:12)

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.

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Tyler Crow (11:49)

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.

Matt Frankel (12:01)

Yeah, 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. So on this, a similar, you know, company, another fintech IPO that I'd love to see is Plaid, and that one's more likely to happen. It was valued at about $6 billion in its latest funding round. And if you're not familiar. This is the company that connects bank accounts to other apps, meaning including other banks. So, 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. So like 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. And it wasn't that long ago that Visa wanted to buy Plaid, where they were actually under. Under agreement to buy Plaid, I think for $4 billion about three or four years ago. And they abandoned their plans because there were regulatory concerns that it would create kind of an unfair advantage for Visa. So that's one that I am really hoping goes public and I can dig into a little bit more.

John Quest (13:06)

For me, I'll be looking to see if Onduro goes public in 2026. This is a defense company. It doesn't really see itself as a defense contractor per se. So the contractor model, it's basically the government kind of decides what it wants its roadmap to be, and then the defense contractor goes out there and makes it happen. Honduro, on the other hand, kind of has its own roadmap to developing its own technology and software and hoping to sell that to the government. And the basic premise of the roadmap is autonomy. And so 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. And I think that there's a chance that investors will kind of view this more like an Apple than a Lockheed Martin, if that makes sense. What I'm saying about a year ago is 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, we 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 Luckey with Unduril, 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.

Tyler Crow (15:15)

I'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 like hears equipment rental for construction and thinks, oh bo, boring, that'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. There, there is a lot of great performance that can be found into these sorts of businesses. Look 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 SO 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. I 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 all the other major industries in the United States over the past 30, 40 years if equipment Share 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. Well, we 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 only on what you hear. All personal finance content follows Motley fool editorial standards and is not approved by advertising. Advertisements are sponsored content and provided for informational purposes only. To see our full advertising disclosure, please check our Show Notes. Thanks for our producer, Dan Boyd, and the rest of the Motley fool team, Rick, Matt, John and myself. Thanks for listening and we'll chat again soon.