SpaceX Investors Who Bought After the IPO Have Watched Their Gains Nearly Disappear. What Should They Do Now?

Following a blockbuster initial public offering (IPO) that became the largest in stock market history, shares of Space Exploration Technologies (NASDAQ: SPCX) -- best known as SpaceX -- have cooled off.

There was, to put it lightly, a lot of hype surrounding SpaceX's IPO, partly because of the promises it had sold to investors and partly because of the usual cult-like following of its CEO, Elon Musk. Once SpaceX began trading on June 12, tons of retail investors poured money into the stock. But now those gains have virtually disappeared for most investors who got in after the IPO.

Considering the roller-coaster ride the stock has taken investors on so far, is now a time to jump ship until IPO-mania is over, or should investors embrace what many see as inevitable volatility?

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Great businesses don't always make great investments

Any time there's a blockbuster IPO, high volatility is expected in its early trading days. A lot of it comes from people speculating and trying to make a quick dollar off the IPO pop before cashing out, rather than being left holding the bag. SpaceX has so far followed that trend.

Stock speculation aside, SpaceX's value proposition remains the same: It has rocket launch and internet satellite businesses that are huge players in their respective industries; it has an artificial intelligence division after acquiring Musk's xAI (which owns X, formerly known as Twitter); and it's sitting on lots of cloud computing capacity that it can rent out for another revenue stream.

There's a lot to be excited about with SpaceX's business, but that doesn't always make for a good investment -- especially when it's valued as high as SpaceX. Even after its recent pullback, SpaceX is valued at over $2 trillion (as of market close on June 22) and is the seventh-most-valuable public company in the world.

That's a huge valuation for a company that lost nearly $5 billion in 2025 and trades at well over 100 times sales. For perspective, the six companies currently valued ahead of SpaceX are trading at between 3.4 and 20.1 times sales and reported net income between $18.1 billion and $62.6 billion in their most recent quarters.

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What should investors do now?

SpaceX's stock will be a test of who's investing versus speculating. When you speculate, you buy shares simply hoping to profit from price swings, and don't really care too much about the underlying company. When you invest, you're buying shares of a company because you want to own a piece of a business that you believe in.

If you fall into the speculation bucket, you could be in for a long ride that likely won't work out in your favor. If you fall into the investing bucket -- which should absolutely be the case -- then you shouldn't give too much weight to these short-term price swings because they won't matter too much years down the road.

Investing in SpaceX is about believing in a vision that's unlikely to come to fruition for well over a decade. Whether it's data centers in space or other ambitious plans, the focus should be on the long-term opportunities SpaceX is pursuing. You shouldn't jump ship just because of a few bad days, but you should understand that, historically, companies in SpaceX's position have underperformed in the first few years after their IPO.

There's no rush to invest in SpaceX right now. I would wait it out until well after its lock-up periods (when insiders can sell shares) have passed before deciding when it is a good entry point for investing. If you already own shares, I'd hold on to them for now instead of panic-selling; just be prepared to stomach the volatility.

Stefon Walters has positions in Apple, Microsoft, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Amazon, Apple, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.