Every pitch deck has a slide with a very big number on it. Spencer Jakab opens this weekend’s Markets column by noting, with a straight face, that his column’s addressable market is the whole $125.7 billion global news business. It’s a joke with a point: the market-size figure is a sales tool, and the larger, louder and weirdly more precise it gets, the more it should worry you.
Exhibit A is Casper, the mattress-in-a-box company, whose 2020 prospectus invoked a $432 billion global sleep economy. It hoped to sell shares at $17 to $19; the deal priced at $12. A year later — in about the friendliest market money-losing companies have ever had — the stock had sunk to $3.55 by the time Casper accepted an offer to go private. WeWork went bigger: a $3 trillion TAM that counted nearly every office worker on earth, a $47 billion private valuation, a 2019 IPO that had to be pulled and a bankruptcy filing in 2023.
The winners did it too. Airbnb (ABNB) cited $3.4 trillion; Uber (UBER), $5.7 trillion for personal mobility alone. Then SpaceX (SPCX) put $28.5 trillion in its June IPO documents, billed as the largest actionable market “in human history.” NYU’s Aswath Damodaran, valuing SpaceX after the deal, wrote that TAM estimation “has been gamified by Silicon Valley.” And watch the decimal points: Jakab, borrowing from science writer Charles Seife, suggests the false precision is probably no accident — it nudges us to forget how rough the guess is.
The three-year hangover
The record backs the skepticism. Jay Ritter at the University of Florida finds money-losing companies tend to do better than profitable ones on IPO day — a pop individual investors rarely get a piece of — and then, on average across nearly 4,000 of them, trail the market by 30.7% over three years. Bankers, Jakab writes, often “sell the sizzle, not the steak.”
Our read
This is Behavioral finance meeting Investments/Risk (IN04). A giant market-size number does two things to a buyer: it makes the stock look cheap against the dream, and it makes sitting out feel like missing history. That’s FOMO with a footnote. The answer isn’t cynicism about new companies — some of them turn into Uber. It’s asking what the business earns today and what you’re paying for it, and reading the TAM slide as the ad it is.
If you can’t resist a hot new issue, size it like a ticket you can afford to lose: a sliver of the portfolio, bought with money that has no other job, and never on the first day’s pop. SpaceX isn’t owned in any of our model books, and nothing’s being added. If a recent IPO has quietly become one of your biggest positions, that’s worth a conversation now — not after the three-year number shows up.