2 Reasons to Wait Before Buying SpaceX Shares, and 1 Reason to Buy Right Now

Space Exploration Technologies (NASDAQ: SPCX) (SpaceX) has been dominating investing headlines since its blockbuster IPO on June 12, the largest in stock market history. It finished its first five trading days up nearly 15% but experienced an 8% two-day slide on the back end.

There are tons of people excited about SpaceX and its visionary goals (like data centers in space), but others worry about how expensive the stock is right now and the risk that adds. So, with the current uncertainty surrounding the stock, should you wait to invest or go for it? Here are two reasons for waiting, and one reason to make your move.

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History isn't on the side of blockbuster IPOs

There hasn't been an IPO as large as SpaceX's, but there have been plenty of blockbuster IPOs on the stock market. And unfortunately, most follow the same trend: an initial pop followed by underperformance over the next few years.

Investor enthusiasm and hype drive prices up as people invest in the stock, looking to get a piece of the pie. Some are truly excited about the company, while many are looking for a quick profit, anticipating the initial IPO pop. But eventually, hype cools, and there's a bit of a sell-off.

Past performance doesn't guarantee future performance, and SpaceX could be an anomaly, but it's a safe bet to expect something similar with SpaceX.

There are still many shares that have yet to hit the market

When a company first IPOs, there's a lockup period, which restricts insiders (employees and investors) from selling their shares. SpaceX's float (shares available to the general public) is historically low for its size, meaning there are plenty of shares that have yet to hit the market.

The next round of these will come in August, with more selling than buying likely at that time, which will drive prices down. Employees and investors have been waiting for years to turn their equity into cash, so it's likely many will do so at the first chance they get -- especially if it's valued as it is now.

Why you should buy SpaceX right now

There's a famous saying in the investing world: Time in the market beats timing the market. In other words, instead of waiting for the "perfect" time to invest, investors are usually better off putting their money to work early and benefiting from compounding.

Trying to time the market is often counterproductive. There have been countless cases of investors waiting for a stock to drop while it continues to grow, or vice versa. If you're investing in SpaceX, it should be with the long term (ideally at least a decade) in mind.

If that's the case, the exact entry price doesn't mean too much, and the daily price fluctuations won't matter years down the road.

Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.