The SpaceX IPO Is Coming: History Says the Stock Will Do This When It Starts Trading

Last month, Elon Musk's SpaceX confidentially filed initial public offering (IPO) paperwork with the Securities and Exchange Commission and the company plans to start its IPO roadshow on June 8, where executives will pitch the stock to institutional investors and analysts.

SpaceX has not set a specific IPO date, but shares will probably start trading in late June or early July. The rocket and satellite manufacturer is reportedly seeking a $1.75 trillion valuation for the listing, which would make it the largest IPO in U.S. history by a wide margin.

Despite the excitement, investors should think twice before buying SpaceX shares right away. From its initial valuation, history says the stock is likely to underperform the S&P 500 (SNPINDEX: ^GSPC) over the long term.

Image source: Getty Images.

History says SpaceX stock is likely to decline sharply during its first year on the public market

Between 1980 and 2025, about 9,300 companies listed on the New York Stock Exchange or Nasdaq Stock Exchange held initial public offerings (IPOs). Those stocks gained an average of 19% on their first trading day, according to Jay Ritter, director of the IPO initiative at the University of Florida.

However, IPO stocks (especially those that go public with large market values) are prone to sharp drawdowns after the initial excitement has fizzled. The chart below shows the top 10 U.S. IPOs (excluding companies that are no longer publicly traded) as measured by market value when shares were listed. The chart also shows three-month and one-year returns following the IPOs.

Data source: Reuters, Stansberry Research, YCharts.

As shown above, the 10 largest U.S. IPO stocks declined by a median of 10% during the three-month period following their public debut, and they fell by a median of 31% during their first year on the market.

None of those companies were close to the $1.75 trillion valuation SpaceX is targeting. Alibaba was largest IPO in U.S. history with a market value of $169 billion when it was listed. However, the historical pattern is clear: Companies that go public with large market values tend to perform poorly during their first year on the market.

History says investors would be better off buying an S&P 500 index fund than SpaceX stock, at least initially

Readers may brush that warning aside because they assume SpaceX will still outperform over the long term. Not so fast! There is more bad news. Most of the stocks mentioned in the previous section have actually underperformed the S&P 500 since their IPOs, meaning a buy-and-hold strategy did not solve the problem. The chart below provides details.

Data source: Reuters, Stansberry Research, YCharts. Returns are current as of May 4, 2026.

As shown above, 7 of the 10 largest U.S. IPOs have underperformed the S&P 500 since shares were first listed, and six have underperformed by more than 100 percentage points. That means investors are generally better off buying an S&P 500 index fund as compared to IPO stocks that go public with large market values.

That does not mean you should avoid SpaceX forever. Reasonable buying opportunities will likely arise over time. For instance, while Uber has underperformed the S&P 500 since its May 2019 IPO, the stock has beat the S&P 500 by 100 percentage points since May 2022. So, investors who waited for a better entry point have been well-rewarded.

Trevor Jennewine has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Airbnb, Meta Platforms, Uber Technologies, and United Parcel Service. The Motley Fool recommends Alibaba Group, Coupang, and General Motors. The Motley Fool has a disclosure policy.