The SpaceX IPO Will Be an Epic Disappointment, Based on What History Tells Us
Key Points
SpaceX put the wheels in motion for its IPO, with the space and artificial intelligence (AI) titan seeking a valuation of $1.75 trillion.
Many of the largest IPOs in history flopped in the months following their debuts.
Additionally, SpaceX is being priced for perfection amid imperfect and unpredictable industries.
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This year may go down as one of the greatest for initial public offerings (IPO) in history. Toward the latter half of 2026, artificial intelligence (AI) large language model developers OpenAI and Anthropic are considering going public. But likely beating these two companies to the punch is space and AI conglomerate SpaceX.
On April 1, the company run by Tesla's (NASDAQ: TSLA) CEO, Elon Musk, confidentially filed for an IPO. SpaceX is seeking a $1.75 trillion valuation, which would make it the seventh-largest public company in the U.S., ahead of Tesla, and aims to raise around $75 billion.
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The excitement among investors regarding SpaceX has to do with the sky-high addressable markets for the space and AI industries. Fortune Business Insights foresees the space economy growing to $1 trillion by 2034, while PwC's analysts believe artificial intelligence can add $15.7 trillion to the global economy by 2030.
While SpaceX is set up to become the largest IPO in Wall Street history by a long shot, historical precedent also suggests it may be one of the stock market's most epic disappointments.
Wall Street's largest IPOs often fall flat
Over the last 27 years, we've witnessed some truly game-changing IPOs in the U.S. and abroad. At home, we saw Alibaba Group, Visa, Meta Platforms (formerly Facebook), General Motors, and United Parcel Service go public between November 1999 and September 2014, with IPO raises ranging from $5.5 billion to $21.8 billion.
Overseas, oil titan Saudi Aramco currently holds the title of the largest IPO in history, with a capital raise of $29.4 billion.
Largest IPOs in History (by amount raised)
-- Morning Brew ☕️ (@MorningBrew) December 9, 2025
1. SpaceX $30.0B*
2. Saudi Aramco $29.4B
3. Alibaba $21.8B
4. Softbank $21.3B
5. NTT Mobile $18.1B
6. Visa $17.9B
7. AIA... pic.twitter.com/IvLeO2veBe
While investor interest in these IPOs was off the charts -- just as it is with SpaceX ahead of its eventual debut -- the performance of these stocks once public left a lot to be desired.
With the exception of Visa, which rose 23% in the six months following its IPO, each of the aforementioned largest IPOs traded lower six months after their initial-day close:
- Alibaba: Down 9%
- Facebook (now Meta): Down 38%
- General Motors: Down 8%
- UPS: Down 11%
- Saudi Aramco: Down 15%
Although the past can't guarantee what's to come on Wall Street, this return data strongly suggests that investors allow their emotions to get in the way of their better judgment when it comes to IPOs.
But wait -- there's more
In addition to history offering a cautionary tale for prospective SpaceX investors, its valuation -- SpaceX sports a price-to-sales ratio above 60 -- looks borderline unjustifiable.
Like Tesla, SpaceX's valuation has received the "Musk bump." CEO Elon Musk is known for aggressive investments in high-tech/large-dollar addressable markets. Once SpaceX debuts, he'll likely be heading two trillion-dollar companies.
But something else Musk brings to the table is a steady stream of empty promises. At Tesla, he's promised Level 5 full self-driving capabilities for more than a decade to no avail. He also opined that his company would have 1 million robotaxis on public roadways by the end of 2020.
Many of Musk's promises are built into the valuations of his companies. However, these visions often go unfulfilled. SpaceX, like Tesla, is being priced for perfection in industries (space and AI) that are anything but perfect or predictable.
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Sean Williams has positions in Meta Platforms and Visa. The Motley Fool has positions in and recommends Meta Platforms, Tesla, United Parcel Service, and Visa. The Motley Fool recommends Alibaba Group and General Motors. The Motley Fool has a disclosure policy.
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