SpaceX IPO: History Says the Stock Will Do This When It Starts Trading (Hint: There's Good News and Bad News)

SpaceX released its registration statement (Form S-1) on May 20, after filing confidential initial public offering (IPO) paperwork with the Securities and Exchange Commission (SEC) in April. SpaceX is targeting a $2 trillion valuation, and the stock will begin trading on the Nasdaq Exchange on June 12 under the ticker SPCX.

IPO stocks frequently pop on their first trading day. In fact, more than 700 companies have listed shares on U.S. exchanges since 2020, and the average price increase on the first day was 30%, according to Jay Ritter, director of the IPO Initiative at the University of Florida. But investors should be more concerned with another statistic.

SpaceX will be the largest IPO in U.S. history by initial market value, and stocks that go public with large market values typically lag the broader market over time. Since listing shares, the 10 largest U.S. IPO stocks on record have underperformed the S&P 500 (SNPINDEX: ^GSPC) by an average of 127 percentage points, according to FactSet Research.

Here are a few more things investors should know about SpaceX ahead of its IPO.

Image source: Getty Images.

SpaceX's revenue growth slowed to 15% in Q1 2026

SpaceX has historically been a rocket and satellite company, but it expanded into artificial intelligence (AI) with the acquisition of xAI earlier this year. So its operations are divided into three business segments: space, connectivity, and AI.

Below is a brief explanation of how the company generates revenue in each segment:

• Space revenue comes from launch and mission services provided with Falcon rockets and (eventually) Starship systems.
• Connectivity revenue comes from subscriptions to Starlink, the world's largest satellite-based broadband internet service.
• AI revenue comes from cloud services, including access to the Colossus supercomputers and the Grok frontier models.

SpaceX's financial results have been somewhat disappointing. In 2025, revenue increased 33% to $18.6 billion, a deceleration from 35% growth in 2024. The company also reported an operating loss of $4.9 billion. In Q1 2026, revenue growth slowed further to 15%, while operating loss widened to $1.9 billion due to heavy spending on rockets and AI infrastructure.

Currently, SpaceX generates most of its revenue through the connectivity segment, but the AI segment is likely to grow quickly in the coming quarters. In May, Anthropic agreed to pay $1.25 billion per month to access compute capacity from the Colossus supercomputers. The three-year deal could lead to a sizable acceleration in revenue growth in the second half of 2026.

SpaceX will go public with a valuation above 100 times sales

SpaceX plans to go public with a market value of about $2 trillion, according to Bloomberg. Revenue totaled $19.3 billion over the last four quarters, which means the initial price-to-sales (P/S) ratio will be 103. Very few stocks have ever achieved such an expensive valuation, and all of them have subsequently declined sharply.

I reviewed more than 100 technology stocks and found only eight that had valuations above 100 times sales at any point in history. All of those stocks dropped sharply after reaching their peak P/S ratios. The declines ranged from 32% to 90%, with an average drawdown of 75%.

What does that mean for SpaceX? History says the stock could lose about three-quarters of its value once it reaches its peak valuation. Of course, it's impossible to say when that will happen. But we can also look at the valuation issue through another lens.

Palantir Technologies currently has the highest valuation in the S&P 500, at 72 times sales. If SpaceX goes public at 103 times sales, it will immediately be 40% more expensive than the most richly valued stock in the S&P 500. That is unsustainable, especially for a company that reported 15% sales growth last quarter.

Here's the bottom line: SpaceX has generated more buzz than any IPO in recent memory. With strong demand expected from retail investors, the stock could pop when it starts trading. But history says SpaceX will likely lag the S&P 500 over time -- meaning investors would be better off buying an S&P 500 index fund -- and the rich valuation suggests the stock will drop sharply at some point in the future.

Trevor Jennewine has positions in Palantir Technologies. The Motley Fool has positions in and recommends FactSet Research Systems and Palantir Technologies. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.