History Says It's Time to Buy SpaceX Stock Before It's Too Late

After an incredible post-IPO performance, Space Exploration Technologies (NASDAQ: SPCX) stock has gradually returned to earth.

SpaceX officially priced its June 12 IPO at $135 per share and opened at $150 per share. Shares reached their all-time high of $225.64 three days later. After a steep correction, the stock is now hovering around $145.

The space stock is now priced just 7% above its original IPO price, and under the price at which it began trading. Newly published historical data, however, suggest there is more upside to come.

History says SpaceX stock is a buy at $145 per share

Jay Ritter of the Warrington College of Business at the University of Florida has been tracking the performance of IPO stocks for years. On July 7, Ritter released a new report with fully updated statistics. Diving into the data paints an optimistic picture for SpaceX stock today.

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From 1980 to 2024, Ritter documented 9,253 IPOs. Over that time, the average IPO stock returned 19.1% over a three-year period. The data is already looking good for SpaceX stock. While history doesn't suggest huge returns for the stock over the next three years, the returns are nonetheless expected to be positive.

Breaking down the data even further improves SpaceX's prospects. When including only IPO stocks with trailing annual sales of at least $500 million -- a refinement that narrows the universe down to just 1,500 stocks -- the average three-year return improves to 31.8%.

When including only IPO stocks with trailing sales of at least $1 billion, the prospects improve even further. These stocks -- which total 866 in all -- average 32.4% returns over their first three years of trading.

To be clear, there's no telling exactly where SpaceX stock will head from here. Even if shares have plenty of upside at today's prices relative to historical IPO performances, there is a wide range of outcomes for any one stock. And there are plenty of reasons to believe SpaceX stock is overvalued, even following the correction.

Before the June 12 IPO, analysts at the research firm Morningstar valued SpaceX at $63, representing a 53% discount to its IPO price. "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."

I mostly agree with Morningstar's caution. But SpaceX is a unique business with difficult-to-quantify opportunities ahead. Ark Invest, for example, sees SpaceX generating $300 billion in annual revenue by 2030 through the monetization of orbital data centers. If that happens, SpaceX could easily be valued well above $2 trillion.

At the end of the day, investors must acquaint themselves with SpaceX's business prospects and current valuation, and form their own opinion of the company's risk-and-reward dynamic.

Ryan Vanzo 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.