Should You Buy SpaceX Stock on Day 1?

The buzz around SpaceX's (NASDAQ: SPCX) upcoming initial public offering (IPO) this week has reached a fever pitch. With Elon Musk's rocket empire poised to list on the Nasdaq on June 12, retail and institutional investors alike are salivating at the opportunity to own a piece of the company behind Starlink, reusable rockets, and an ambitious sovereign AI roadmap.

The question smart investors are asking is whether scooping up shares on the first day of trading is a smart move, or a costly thrill ride. Spoiler alert: History suggests the latter. While the SpaceX IPO will undoubtedly be a spectacle, buying shares at the opening bell will almost certainly mean overpaying for hype that will fade fast. Read on to learn why.

Image source: Getty Images.

What are the terms of the SpaceX IPO?

SpaceX is likely going to execute the largest IPO in history. The company is offering roughly 555.6 million shares at a fixed price of $135 each. At these terms, SpaceX would raise $75 billion and value the company at around $1.8 trillion.

SpaceX's revenue for 2025 grew 33% year over year to $18.7 billion; however, the company's bottom line shifted from a modest profit in 2024 to nearly a $5 billion loss last year. Such a change underscores the capital-intensive nature of the company's launch business, satellite constellation, and emerging AI compute buildouts.

According to several news outlets, IPO share orders for SpaceX are reportedly hovering around $250 billion -- nearly triple the amount the company hopes to raise from the offering. In my eyes, a heavily oversubscribed setup like this could easily inspire feelings of scarcity, FOMO, and speculation -- driving opening day prices far beyond fundamentals.

Image source: The Motley Fool.

Analyzing case studies of recent tech IPOs

A number of high-profile tech IPOs in recent years reveal a consistent pattern: Explosive opening gains fueled by hype, followed by harsh selling shortly thereafter.

In September 2020, Palantir Technologies (NASDAQ: PLTR) debuted via direct listing. Shares opened at $10, spiked as high as $11.42 in early trading, and then closed the day at $9.50 -- slightly below its first trade.

Famous investment personalities like Cathie Wood made several rounds on CNBC and similar programming, pumping Palantir's data analytics platform after the company's IPO. This commentary helped propel the stock into the $40 range toward the end of 2020 and early months of 2021.

However, Wood eventually dumped her fund's stake in Palantir following a couple of mundane earnings reports from the company. Palantir stock essentially traded sideways between $6 and $8 for almost two years before the AI boom gave it a second wind.

Snowflake's (NYSE: SNOW) 2020 debut was even more dramatic than Palantir's. Priced at $120 per share, the cloud data platform soared to $254 on its first day of trading -- a 112% gain. Eventually, investors realized that Snowflake's business wasn't particularly unique amid a packed competitive landscape. Investor expectations grew, but the company's modest earnings results sent the stock tumbling in a downward spiral for years.

More recent examples echo this same theme. Figma (NYSE: FIG), the collaborative design platform, priced at $33 last July and closed its first day at $115 -- a staggering 250% surge. Cerebras Systems (NASDAQ: CBRS) priced at $185 last month, but opened between $350 and $385. Over the last couple of weeks, Cerebras stock has slid materially from its opening-day price.

PLTR data by YCharts

As the graph above illustrates, Snowflake has not again reached its all-time high of $401 from late 2021. Similarly, Figma stock has not recovered from its IPO surge and now trades well below its opening-day price.

The realities of post-IPO investing

Here's the trillion-dollar question: What happens after the confetti settles on Friday? The easy thing to point out is that SpaceX -- like many of the companies explored above -- boasts a premium valuation, which comes with enormous investor expectations.

Investors who buy SpaceX stock on Day 1 risk holding their shares through years of volatility until a genuine business catalyst emerges. The post-pop gravity seen across Palantir, Snowflake, Figma, and now Cerebras almost makes a post-IPO sell-off inevitable.

Moreover, smart investors are also considering lock-up expirations. Once these agreements expire, employees, insiders, and early investors can (and probably will) unleash waves of profit-taking. This selling brings downward pressure on the stock, sending shares cratering and leaving investors who bought the IPO holding the bag.

To me, exercising patience is the wiser strategy when it comes to investing in the SpaceX IPO. Wait for the dust to settle and business fundamentals to reassert themselves rather than chasing momentum on the opening day. In the end, buying SpaceX stock at the IPO will almost certainly require paying an unsustainable premium.

Adam Spatacco has positions in Palantir Technologies. The Motley Fool has positions in and recommends Figma, Palantir Technologies, and Snowflake. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.