Investors Should Brace for a SpaceX IPO Reality Check

The much-anticipated SpaceX (NASDAQ: SPCX) initial public offering has taken place, marking the biggest IPO in history and giving many retail investors their first chance to invest in one of three major U.S. artificial intelligence (AI) start-ups likely to publicly list their stock this year.

The excitement is understandable -- SpaceX raised more capital than all the IPOs in 2025 put together. It's also promising orbiting data centers, space tourism, and cargo transport to Mars.

Image source: Getty Images.

The momentum behind all these ambitious goals will be hard to sustain, and SpaceX's stock price will likely fall in the coming weeks or months as enthusiasm wanes. Many of the claims and proposals made by SpaceX's CEO, Elon Musk, are hard to quantify or prove. Minor upsets can quickly erode conviction when investing is based on speculation. Ultimately, SpaceX is a risky long-term investment that's trading on short-term hype.

Two reasons why SpaceX's share price will come back to Earth

SpaceX has a pretty big vision to build infrastructure that will support multiplanetary life. The realities of delivering new, untested technologies can be unpredictable and expensive, and that's going to make SpaceX volatile.

Reality check No. 1: Building data centers in space will take time, if it is even possible

A lot of what's proposed in SpaceX's prospectus hasn't yet been tested in practice. The gist of the proposal is that if anyone can do it, SpaceX can. In fairness, it has already achieved a lot. According to research by The Motley Fool, SpaceX conducted over 80% of U.S. space launches last year. It also pioneered large-scale satellite networks and introduced reusable rockets, slashing the costs of space exploration.

But innovating can burn through huge amounts of cash, and, as SpaceX's own words put it, it may not work. For example, it plans to deploy AI orbital satellites -- AI data centers in space -- as early as 2028. To do that, it needs its huge Starship rocket to successfully make repeat trips into orbit carrying hundreds of satellites and other necessary materials. It will need regulatory approvals. The technology needs to work, and there are bound to be hitches. Particularly as just two years ago, the European Space Agency said it would take a decade or two for space-based data centers to become a reality.

Reality check No. 2: SpaceX stock will fall at some point

As the AI industry matures, investors want more reassurance about when high capital expenditure will start to deliver returns. SpaceX's AI-computing deals with Alphabet and Anthropic will go some way to show that its spending will pay off. However, SpaceX is burning through cash.

It spent $12.7 billion on its AI infrastructure in 2025 and a further $7.7 billion in Q1 of 2026. The real returns on investment will take decades, and some investors may not be prepared to wait that long. It's also worth noting that a recent Truist analysis found that stock in more than half of recent major tech IPOs fell in their first year of trading.

SpaceX could do incredible things, but it's still a risky investment

IPOs are always volatile right out of the gate, and SpaceX is unlikely to be an exception. Many investors are betting on Elon Musk's ability to deliver on ideas that are more technically possible dreams than proven and priced-out realities.

SpaceX may eventually deliver on some of its extraordinary propositions, and the stock could have potential in the coming decades. But investors should still brace for SpaceX shares to crash back to Earth at some point in the coming months.

Emma Newbery has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Truist Financial. The Motley Fool has a disclosure policy.