SpaceX Stock Is Down 26% From Its Post-IPO High. History Says a $20,000 Investment Will Be Worth This Much by Mid-2027.

Space Exploration Technologies (NASDAQ: SPCX) made its public debut on June 12. The initial public offering (IPO) was historic not only because the company raised a record $75 billion, but also because its market value was an unprecedented $1.7 trillion at the IPO price of $135 per share.

SpaceX soared 50% during the first three trading days, hitting a high of $202 per share amid strong demand from retail and institutional investors. But the stock has since fallen 26% to $150 per share because of anxiety about the company's recent bond offering and the upcoming lockup expiration dates.

Here's what investors need to know.

Image source: Getty Images.

History says SpaceX stock could fall much further in the coming months

Since 1980, the average IPO stock has gained about 19% on the first trading day, according to Jay Ritter, professor emeritus of finance and director of the IPO initiative at the University of Florida. SpaceX fit that pattern perfectly. Shares closed at $161 on June 12, representing 19% upside from the IPO price of $135.

However, excitement surrounding IPOs tends to fade quickly, and companies that go public at large market values have historically performed poorly during the first year. The following chart lists the 15 largest U.S. IPO stocks (by market value at the IPO price) excluding SpaceX; for each stock, it shows (1) the one-year return and (2) the maximum drawdown in the first year relative to the IPO price.

Data source: First Trust, Bloomberg. Returns are relative to IPO prices.

Among the 15 largest U.S. IPOs, the average stock traded 2% below its IPO price after a year, but it dropped 23% from its IPO price at some point during the first year. Past results are never a guarantee of future returns, but we can use those numbers to make an educated guess about what SpaceX stock might do in the future.

If SpaceX's performance matches the historical average, the stock will trade near $132 per share (2% below its IPO price) by June 2027. That implies 11% downside from the current share price of $149. In that scenario, $20,000 invested in SpaceX today would be worth about $17,800 by June 2027.

But history also says SpaceX will drop 23% from its IPO price at some point in the first year. That would bring the stock to $104 per share, which implies 30% downside from the current price. In that scenario, $20,000 invested in SpaceX today would be worth about $14,000 at some point in the next year.

SpaceX shares available for public trading will increase sharply once lockups start expiring

SpaceX issued 555 million shares for its initial public offering, bringing the total number of shares outstanding to 13.1 billion. That means less than 5% of SpaceX stock is currently available for public trading, while the other 95% (held by employees and insiders) is subject to various lock-up periods.

Those lock-up periods start expiring in a few weeks. In late July or early August, following the company's second-quarter financial report, at least 20% of early release shares (about 911 million shares) will become eligible for public trading. That means the float will more than double to reach 1.5 billion shares.

However, lockup expirations don't stop there. Another 7% of early release shares (about 320 million shares) will become eligible for public trading at 70 days, 90 days, 105 days, 120 days, and 135 days post-IPO. That means the float will double again, reaching at least 3 billion shares by late October.

Here's the big picture: Stock prices are determined by supply and demand. The number of SpaceX shares available for public trading will increase greatly in the coming months, and the stock price could drop, perhaps sharply, as the market digests that supply increase.

So investors need not rush to buy SpaceX stock today. More attractive opportunities are likely to arise in the future. That is particularly true because the stock currently trades at 101 times sales, making it the most expensive stock in the Nasdaq-100 by a wide margin. Rocket Lab ranks second at 73 times sales.

Trevor Jennewine has positions in Visa. The Motley Fool has positions in and recommends Airbnb, DoorDash, Meta Platforms, Rocket Companies, Rocket Lab, Snowflake, Uber Technologies, UiPath, and Visa. The Motley Fool recommends Coinbase Global, Coupang, General Motors, and Kenvue. The Motley Fool has a disclosure policy.