SpaceX Could Become Biggest IPO Ever, But History Raises Warning Signs
SpaceX’s highly anticipated IPO is generating major excitement on Wall Street ahead of its expected June debut, but an analysis suggests investors should remain cautious. Data from the past five years shows most large IPOs failed to outperform the broader S&P 500 index over time. While some AI-related listings such as Arm Holdings and Astera Labs delivered huge gains, others including Rivian and Didi Global suffered steep declines after going public. Analysts say SpaceX’s massive valuation and high expectations could create risks for long-term investors after listing.
As investors eagerly await SpaceX’s imminent IPO. An analysis shows that for most major IPOs over the last five years, performance has underwhelmed the broader S&P 500 market.
Key Highlights
- SpaceX could go public as soon as June 11.
- The company targets a massive $1.75 trillion valuation.
- Most Major IPOs Outperformed S.P. 500.
- Investors in high top IPOs lagged by 27% vs. S&P +53%
- Robinhood and SoFi could give retail investors access early
- The Arm and Astera Labs IPOs were some of the best-performing AI-related deals
The SpaceX IPO is Gaining Popularity with Investors
Wall Street gets ready for one of the biggest public debuts in history as Elon Musk’s SpaceX edges closer to its anticipated IPO next month. It is expected to have a valuation of approximately $1.75 trillion, making it one of the most valuable public companies in the world. SpaceX submitted its IPO prospectus; they could take the trade under “SPCX” as early as June 11. Retail investors could also get early access to shares through apps like Robinhood and SoFi.
Most iPods Struggle in the Market
Still, while excitement around SpaceX’s growth prospects was palpable, an analysis reveals a troubling track record of longevity for many of the most-hyped initial public offerings in the past five years: they have failed to consistently outperform the broader stock market. Those who had purchased stock in the 50 biggest IPOs tracked took home an average of 27%, but over similar time spans, the S&P 500 provided average returns of 53%. Analysts said companies commonly arrive on the market with prices already at high levels, thus limiting long-term investor returns post-listing.
High Valuations Are Still a Huge Risk
High valuations can become a problem for new listings, experts said. SpaceX’s expected valuation, its price-to-sales ratio would be just under 100; Nvidia’s ratio is roughly 24. According to reports, SpaceX incurred almost $5 billion in losses last year also. Jay Ritter, a professor at the University of Florida, said companies with the highest price-to-sales ratios tend to struggle most post-IPO due to investors fully pricing in very high growth expectations.
Some IPOs Became Huge Winners
Not every large IPO has left investors unsatisfied. Arm Holdings and Astera Labs were among AI-related chip companies that achieved some of the biggest gains. Astera Labs is up over 700% since pricing its IPO in 2024, while shares of Arm have risen around 400% since going public in 2023. Yet multiple other large firms like Rivian and Didi Global had poor performances from the outset.
FAQs
- When could SpaceX go public?
SpaceX could go public starting on June 11.
- What valuation is SpaceX targeting?
SpaceX's IPO might expect a valuation of $1.75 million.
- Which recent IPOs performed well?
Some IPOs like Arm Holdings and Astera Labs performed well.
- Why are Analysts cautious about SpaceX?
Experts say that excessive valuations make it more difficult to generate significant future returns for IPO investors.
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