The Dip Is Here for SpaceX. Here's Whether to Buy It or Walk Away.

Elon Musk's Space Exploration Technologies (NASDAQ: SPCX) debuted on June 12, securing its position as the largest initial public offering (IPO) in market history. The stock's first three days were fiery. It closed out its third day with a share price of about $202, about 50% higher than its IPO price of $135.

Since then, gravity has brought SpaceX back down to Earth. Although it still trades above its IPO price, shares have dipped below $155. They're now only slightly higher than the first opening price at $150 per share.

Analysts, on average, assign that stock a price target of about $188, with some predicting an even higher share price of $310 (some, however, forecast a price as low as $62). At the average price target, SpaceX has an implied upside of about 24%, which suggests that today's sell-off might be creating a buying opportunity.

Be that as it may, SpaceX could get bumpier before it smooths out. If history tells us anything, those bumpy parts might create a better buying opportunity for long-term investors than today.

Image source: The Motley Fool.

SpaceX is without precedent, but its IPO is following predecessors'

SpaceX has a very unusual business. It's an eccentric mash-up of recent advances in technology, from artificial intelligence (AI) to satellite deployment to space-based connectivity. That's not to say it lacks a core purpose -- it wants to make humanity "multiplanetary" -- but its businesses differentiate it from most young companies, which focus on one or two things before expanding into something new.

SpaceX is generating billions in revenue, with its Starlink internet services raking in most of that revenue. On its own, that part of the business pulled off a $4.4 billion operating profit in 2025, despite the full business posting a net loss of about $5 billion. Although the company is not profitable yet, it thinks its total addressable market is $28.5 trillion -- a massive opportunity, if the figure is accurate.

That $28.5 trillion revenue estimate was published in its IPO filing in late May, and by mid-June, excitement had reached a feverish pitch. As with many IPOs with massive capital raises, however, that enthusiasm has all but fizzled out now.

That leads us to this: Most IPO stocks have aggressive first days, but their first year on the market can be underwhelming. Take Meta Platforms, formerly Facebook. The stock's debut was a cultural phenomenon; its first year on the market was a deflating 32% loss.

Rivian Automotive is another example of an IPO flop. After opening with an initial price of $78 a share, Rivian became the second most valuable carmaker in the U.S. The stock now trades at about $14.50, down about 89% from its opening price.

Obviously, I'm cherry-picking examples to prove a point. We could, for the sake of fairness, name other high-profile IPOs, like Visa, that were extremely successful in their first year. SpaceX still has over 250 trading days to join them.

Valuation-wise, SpaceX does not look like a good deal right now, with a price-to-sales (P/S) ratio of about 105 and a price-to-book (P/B) ratio of roughly 59. Long-term investors who can patiently wait to buy may want to do so, as the expectations built into this stock could easily turn against it.

Steven Porrello has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Meta Platforms and Visa. The Motley Fool has a disclosure policy.