Did SpaceX Stock Just Peak? Here's What History Says.

Space Exploration Technologies (NASDAQ: SPCX) went public on June 12, and investors have now had more than a week to digest the biggest public offering in history.

Fueled by a limited float, a massive push by Wall Street bigwigs, and the mystique of Founder and CEO Elon Musk, SpaceX soared out of the gate, gaining in its first four sessions to peak at $225.64 a share on June 16, a gain of 67% from its $135 listing price.

The surge out of the gate is typical for high-profile IPOs. Figma, the design software stock, jumped more than 300% in its first two days after its IPO last July, and Cerebras Systems more than doubled from its IPO on its opening day.

Both of those stocks have since fallen sharply from their previous peaks.

After reaching its all-time high on June 16, SpaceX declined over the next two market sessions and was trading lower on Monday morning, down 10.7% as of 1:32 p.m. ET. As the chart shows below, the trendline in SpaceX looks clear following the stock's peak on June 16.

SPCX data by YCharts

What history says about IPO surges

IPO stock surges tend to be fueled by hype, and that seems to be the case with SpaceX. The offering got a ton of attention in the media leading up to it, and the limited number of available shares helped fuel the pop in the stock after it started trading.

However, a surge in the days following an IPO is a generally bearish signal for its performance over the next one to three years.

According to data compiled by University of Florida finance professor Jay Ritter, the average first-day gain from offering price to closing is about 19%, which matches the 19.2% gain SpaceX recorded on its first day.

Using a data set from 1980 to 2024 that covers close to 9,300 U.S.-listed IPOs, Ritter found that the average IPO stock was 21% lower than what a value-weighted market index would have returned, after three years from its closing price on its first trading day. However, the performance was worse for smaller companies with annual revenue of less than $100 million. For companies with annual revenue of more than $500 million, like SpaceX, they underperformed by an average of 5% after gaining 10% after their first trading day.

Other high-profile IPOs that have surged only to plunge after the hype include Rivian and Lyft. Others like Meta Platforms and Uber lost more than 50% after going public and didn't get the opening pop that other IPOs did. Airbnb also surged in its IPO and has since been a disappointment.

There are few examples of big IPOs that have jumped out of the gate and continued to steadily gain.

What it means for SpaceX stock

SpaceX is now down more than 25% from its peak on June 16, meaning the top on the stock is almost certainly in. On average, IPO stocks bottom out three to six months after they go public, though many IPOs underperform through the first three years they are public.

SpaceX was already expensive based on its IPO price, and is now trading at more than 100 times trailing sales.

In addition to the typical post-IPO hype cycle, SpaceX stock is likely to face pressure as its staggered lock-up periods begin to expire, and insiders get a chance to sell the stock.

That selling will come in several stages, starting with its second-quarter earnings report, which is expected to be in August.

The question for investors now is how low the stock will go before it bottoms out. That will depend on how insiders handle the lockup expiration, any subsequent news out on the company, and broader market sentiment.

However, with a market cap already above $2 trillion, the upside for SpaceX seems limited at this point. The stock could easily sink below its IPO price, given the huge expectations baked into the stock price at this point. In the coming weeks, a continued decline seems much more likely than further gains.

Jeremy Bowman has positions in Airbnb, Figma, and Meta Platforms. The Motley Fool has positions in and recommends Airbnb, Figma, Lyft, Meta Platforms, and Uber Technologies. The Motley Fool has a disclosure policy.