SpaceX's Performance Looks Almost Identical to Past Mega-IPOs -- Here's What Usually Happens Next

Space Exploration Technologies (NASDAQ: SPCX) took off like one of its Falcon 9 rockets in the immediate days following its initial public offering on June 12, 2026. That IPO was one for the record books, ranking as the largest ever.

Since then, though, SpaceX's sizzle has fizzled. Actually, its performance looks almost identical to past mega-IPOs. And one thing usually happens next, if history repeats itself.

Image source: Getty Images.

A familiar pattern

I looked at the 10 largest past IPOs. SpaceX's trajectory has followed the paths of several of them. For example, the space stock jumped roughly 19% on its first day of trading -- almost exactly the historical average for mega-IPOs.

SpaceX's subsequent performance perhaps tracks most closely with another highly anticipated IPO. Facebook, now Meta Platforms (NASDAQ: META), listed its shares on the Nasdaq stock exchange on May 18, 2012. The social media stock plunged more than 30% over the next few weeks before rebounding somewhat.

That's what we're seeing unfold with SpaceX. Shares of Elon Musk's space technology company fell more than 30% after rising immediately following the IPO. The stock has bounced back a little since bottoming out, though.

Two potential paths

What usually happens with mega-IPO stocks after their initial declines? Historically, there have been two paths.

Facebook/Meta Platforms represents the more attractive of the two paths. Although the stock performed dismally for most of 2012, it eventually roared back. By the end of 2013, Facebook's shares were up more than 40%.

Patient investors who held onto the stock were richly rewarded. An initial investment of $10,000 in Facebook when it first began trading would be worth more than $169,000 today.

Alibaba Group Holding (NYSE: BABA) is an especially disastrous example of the other path for mega-IPO stocks. When Alibaba listed its shares on the New York Stock Exchange on Sept. 19, 2014, it ranked as the largest IPO in U.S. history at the time. Although the Chinese tech stock struggled for a while, it had more than tripled by late 2020.

But then the bottom fell out for Alibaba. Multiple issues derailed the company's growth. The stock is now down more than 60% below its peak. Since its IPO, Alibaba has delivered a positive return of around 27%, less than one-tenth the S&P 500's return during the period.

What's next for SpaceX?

If SpaceX continues to track with previous mega-IPOs, it's likely to experience significant near-term volatility. The company's staggered post-IPO lock-up release schedule could complicate matters, with the prospects of insider selling over the next few months potentially creating downward pressure on SpaceX's share price.

Eight of the 10 largest U.S. IPOs have underperformed the S&P 500 (SNPINDEX: ^GSPC) since the companies went public. SpaceX could become the ninth member of this group, but this fate isn't guaranteed.

The company's Starlink satellite internet services unit has a real opportunity to disrupt the wireless services market dominated by telecom giants such as AT&T (NYSE: T), T-Mobile (NASDAQ: TMUS), and Verizon Communications (NYSE: VZ)

SpaceX's Starmind initiative, though, could be the game changer that makes it more like Meta than Alibaba. Starmind's goal is to launch up to 1 million satellites that process artificial intelligence (AI) workloads. The results from these AI processes would then be beamed back to Earth stations.

While that might sound like something from a science fiction novel, Musk and the SpaceX team believe they can resolve the technological challenges and make it happen. If so, the competitive advantages Starmind would offer -- including low energy costs from solar power -- could make SpaceX the most powerful player in the AI data center market.

The bottom line is that no one knows for sure which path SpaceX will take over the next few years. The company's destiny won't be dictated by past IPOs, even if its current trajectory looks eerily similar to some of them.

Keith Speights has positions in Meta Platforms and Verizon Communications. The Motley Fool has positions in and recommends Meta Platforms. The Motley Fool recommends Alibaba Group, Nasdaq, T-Mobile US, and Verizon Communications. The Motley Fool has a disclosure policy.