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Space Exploration Technologies (SPCX), better known as SpaceX, launched its IPO with a strong debut. The stock rose 19% on its first day and has continued trading at levels above its IPO price.
Despite the rally, some investors see potential catalysts that could support additional long-term gains. The company has pointed to a large addressable market, citing growing demand for enterprise artificial intelligence (AI) infrastructure and its ability to serve it. CEO Elon Musk has also suggested SpaceX revenue could reach $1 trillion by 2030, according to a since-deleted post on X.
SpaceX’s IPO is unusual, including its scale. At its IPO price, the company was valued at $1.77 trillion and raised about $85.7 billion in its offering after underwriters exercised an option to buy additional shares—both described as records.
Still, historical IPO performance provides context. Professor Jay Ritter has tracked U.S. IPOs since 1960. The average first-day return across that period is 17.7% through 2025. SpaceX’s 19% first-day return is close to that long-run average, though slightly below the average for IPOs since 2010 (22%).
Longer-term results have been weaker. Since 1980, the average one-year return for IPO stocks has been 5.6%, below the S&P 500’s average return. More recently, the pattern has deteriorated: average one-year returns for IPOs in 2021 through 2024 ranged from -11.6% to -49.1%, and the average since 2011 is -1.7%.
SpaceX is not a typical IPO, but several factors highlighted in the article could work against the stock.
The stock debuted with a price-to-sales ratio of about 92 and now trades for over 140 times sales. The article argues that sustaining such valuation levels would require “out-of-this-world” top-line growth. It also notes that valuation has mattered historically for IPOs: the average IPO with a price-to-sales ratio above 40 produced three-year returns of just 3.1% from its first closing price, compared with stronger results from lower-valued IPOs.
The article also points to float. SpaceX issued about 4% of the company to the public, leaving a large portion of shares locked up with early investors and insiders. As lockups expire, the article says this can create selling pressure and provide opportunities for existing shareholders to liquidate equity.
It cites research showing that average market-adjusted three-year returns from the first close have been worse for companies with more than $100 million in revenue that issued less than 10% of shares, compared with those issuing more than 10%.
Overall, the article concludes that while SpaceX may be able to outperform expectations, it faces a tougher path than the broader historical IPO averages. It states that investors should not assume the stock will follow favorable long-run patterns simply because of its strong debut, adding that the author would not bet on it as an investment.
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