Could Investing in the SpaceX IPO Set You Up for Life? History Offers an Answer That's Crystal Clear.

The countdown has begun. But not to SpaceX's next rocket launch. Instead, investors are counting the minutes until the Elon Musk-led company's initial public offering. Why is the offering attracting so much attention? Its size is one reason. SpaceX, aiming for a valuation of more than $1.7 trillion, is on track for the biggest IPO on record. The company's work in the exciting high-potential areas of space and artificial intelligence (AI) is also drawing attention. And finally, Elon Musk, known for his innovation and high ambitions, has often intrigued at least a certain part of the investment community.

All of this has brought the SpaceX IPO to center stage in recent days. And it may also prompt the following question: Could investing in this mammoth IPO or in SpaceX over the days following the market debut set you up for life? History offers an answer that's crystal clear.

Image source: Getty Images.

A leader in rocket launches

So, first, let's consider the SpaceX story. Elon Musk founded the company nearly 25 years ago and has since made it a leader in rocket launches -- it completed 165 last year, the most of any company -- and a hopeful in the AI race. After the acquisition of Musk's xAI earlier in the year, SpaceX became a big player in this market that may reach beyond $2 trillion by the end of the decade. In fact, SpaceX sees its total addressable market, which includes all of its businesses, at a mind-boggling $28 trillion.

Goldman Sachs, lead underwriter of the IPO, is optimistic too, predicting SpaceX's revenue will soar to more than $400 billion in five years -- that's from $18 billion last year -- according to a report in The Financial Times.

All of that sounds fantastic, but it's important to keep in mind that SpaceX also carries some risk. For example, it must invest significantly in its AI business to reach its goals, and last year, that resulted in a $6.3 billion loss for that business. It's also key to note that certain SpaceX goals depend on technology that hasn't yet been proven -- and some goals, if reached, may take longer than expected. All of this could get in the way of profitability and potentially result in poor stock performance, too.

So, yes, SpaceX could become a major success story and see its stock skyrocket (excuse the pun), but this success isn't guaranteed. This means the stock might be right for certain aggressive investors, but cautious investors may want to watch from the sidelines -- at least for now.

A look at previous historic IPOs

But if you don't mind the risk and consider picking up SpaceX shares either by participating in the IPO or buying during the first days of trading, could the stock set you up for life? A look at the performance of some of the biggest U.S. IPOs shows that four rose and three fell in the five years following their market debuts.

So the answer is crystal clear: A big IPO doesn't necessarily lead to a winning stock market performance. And when the stock does deliver a positive performance, history tells us that it is still likely to offer additional buying opportunities down the road. For example, a look at Meta shows that if you invested later in the story, you would have gained considerably.

META data by YCharts

What does this mean for you today as an investor, with the SpaceX IPO approaching? Never rush into an IPO just because the operation is big and the company seems exciting. Instead, examine if the company is really the right fit for your portfolio over the long term, and if it is, you might add it to your portfolio at any point in time. History shows us that buying around the time of the IPO doesn't always lead to a win.

Finally, it's never a good idea to rely on one stock to set you up for life. It's unlikely that one company alone will do the job. Instead, aim to invest in at least 50 quality stocks -- progressively, according to your budget -- and hold on for the long term. That's the best way to grow wealth over time.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Goldman Sachs Group, Meta Platforms, Uber Technologies, and United Parcel Service. The Motley Fool recommends Alibaba Group and Coupang. The Motley Fool has a disclosure policy.