What History Shows Us About IPOs

SpaceX has been publicly listed for just over one week. The company went public on June 12th, and its shares surged in the first few days, briefly surpassing Microsoft to become the world’s fourth-largest company by market cap at almost $2.94 trillion. Shares have since cooled but remain about 37% above the $135 IPO price, largely due to retail investor interest.

The excitement is clear, but mega-IPOs typically underperform. All 10 of the largest U.S. IPOs since 1999 posted negative returns after 11 years, averaging a 26.5% loss.

Research from 2010 to 2020 on traditional IPOs shows underperformance relative to the broader market, with this tendency worsening over the intermediate term. There may be an initial pop in a high-profile debut, but nearly two-thirds of IPOs lag their benchmark index by the three-year mark.

SpaceX's fundamentals raise concerns beyond IPO trends. At its current valuation, investors pay about 133 times revenue per share. This far exceeds norms for AI or satellite companies. The Nasdaq 100's average price-to-revenue ratio is about 7x, close to its historic high.

Elon Musk expects the company to reach $1 trillion in revenue by 2030, a steep climb from last year’s $18.7 billion. This goal requires commercial viability. Even with strong recent growth, the company lost $4.9 billion in 2025, primarily due to heavy strategic investments and operational losses in the AI division. SpaceX was the only 4-comma club company to lose money last year.

None of this is to say SpaceX can’t succeed. It may well prove the historical pattern wrong. However, it’s important to understand the company remains speculative for now. The market is pricing in outcomes that haven't happened yet, at a scale rarely achieved. That's a lot of uncertainty to price in, and a lot of noise to tune out. Whatever unfolds, the investors most likely to come out ahead aren't the ones who timed the trade perfectly. They're the ones who stayed disciplined, stayed diversified, and let their plan do the work.

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This information is for education only and is not investment advice or a solicitation to buy or sell securities. Investments carry risk and no guarantees. Consult a qualified adviser before making investment decisions.