The SpaceX IPO Is Over. History Says Investors Should Do This Next.

After weeks of excitement and controversy, Space Exploration Technologies (NASDAQ: SPCX) completed its historic initial public offering at a price of $135 per share, successfully selling all of its allotted 555,555,555 shares.

The IPO initially raised $75 billion at a valuation of $1.77 trillion. But underwriter allotments and a growing market cap ultimately pushed proceeds closer to $86 billion, with a current market cap hovering around $2.5 trillion.

For perspective, SpaceX's valuation is already ahead of Tesla, Meta Platforms, Micron Technology, Berkshire Hathaway, and Walmart. After the post-IPO run, the company is now worth more than JPMorgan Chase and Visa combined.

Despite all the hype, investors should understand what the data suggests about IPO stocks over the next few years. After all, this same data predicted the stock's successful IPO and post-IPO price surge.

Here's what history says will happen to SpaceX's stock price after the IPO

From 1980 to 2025, there were more than 9,000 IPOs on U.S. markets. On average, these IPO stocks saw first-day gains of around 20%. The median first-day return, however, was closer to 7%.

Still, no matter how you slice it, buying IPO stocks typically yields positive short-term returns. This is due to a few reasons, the biggest of which deal with stacking the odds in favor of a successful IPO. If an IPO is overpriced, the available supply of stock for sale may exceed demand. This leads to negative headlines and a sinking share price -- not a great start for companies looking to pitch investors on the attractiveness of their shares. Underwriters also want to ensure they can sell their stock allotments in full and earn their potential fees.

Taken together, it's understandable that most IPOs are structurally underpriced -- a dynamic that often leads to positive first-day gains.

But what about after the first trading day? Are IPO stocks still a good idea to buy after the initial debut? On this matter, the data paints a very different picture.

Image source: Getty Images.

The data for long-term IPO returns spans the years 1975 to 2021. Over that time period, 9,195 IPOs were recorded. After three years, roughly 60% of IPO stocks had a negative cumulative return. Most of those had a cumulative buy-and-hold return of at least -50%.

Before SpaceX investors get too concerned about these gloomy statistics, it's important to parse the data more carefully. SpaceX isn't a small start-up. It already operates several multibillion-dollar businesses. Among IPO stocks with trailing annual revenue of $100 million or more, just 48.8% posted three-year cumulative losses following their public debuts. Most of these more mature IPO stocks, therefore, still generated positive three-year returns post-IPO.

Here's the thing: This curated list of IPO stocks still includes more than 4,000 companies. While average returns are helpful to look at, the range of outcomes is wide. Some mature IPO stocks plummeted by more than 50% in the years following their stock listings. Others saw their share price surge by more than 1,000%.

No matter how you slice the data, each company's prospects are ultimately unique to that specific business. And SpaceX, after all, is one of the more unique IPO stocks we've ever seen. The company is still losing money and yet is valued at more than $2.5 trillion. That valuation is somehow not entirely unreasonable, either. The company is pursuing growth opportunities that few other companies in history have pursued. The upside potential of its AI business alone is likely valued deep into the trillions of dollars.

SpaceX's unique growth opportunities don't necessarily make the stock a buy. Neither does historical data from past IPOs. Ultimately, investors will need to do their own due diligence. Given that AI is so critical to the company's success, investors must be very bullish on that division, as well as the company's Starship megarocket that will make many of its AI ambitions a reality.

As a recent report from Morningstar points out: "Only the most optimistic Moonshot scenario, which requires a rapidly reusable Starship and commercially competitive orbital data centers, approaches the IPO price. The IPO price implies the Moonshot scenario is highly likely, but we think the outlook is very uncertain."

JPMorgan Chase is an advertising partner of Motley Fool Money. Ryan Vanzo has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Berkshire Hathaway, JPMorgan Chase, Meta Platforms, Micron Technology, Tesla, Visa, and Walmart. The Motley Fool has a disclosure policy.