Experts Warn Against Investing in SpaceX IPO at Peak Valuation

Historical data shows IPOs often underperform the broader market in the long run.

Apr. 17, 2026 at 10:05pm

Got story updates? Submit your updates here. ›

An extreme close-up of intricate SpaceX rocket components and machinery, dramatically lit against a dark background, conveying the immense financial and industrial power behind the company's ambitious plans.The massive scale and technical complexity of SpaceX's operations are on full display as the company prepares for its highly anticipated public debut.Gainesville Today

As SpaceX prepares for what could be the largest IPO in American history, targeting a $2 trillion valuation, finance experts are cautioning investors against jumping in at the peak. Research shows IPOs, especially those with massive retail interest, tend to underperform the broader market by nearly 20% on average over the first three years.

Why it matters

SpaceX is one of the most impressive private companies in a generation, but being a great company doesn't necessarily translate to being a great IPO investment. The easy money has already been made by venture capitalists and early investors, and companies often choose to go public when enthusiasm and hype are at their highest, leading to inflated valuations for retail investors.

The details

Jay Ritter, a finance professor at the University of Florida who has spent decades studying IPOs, has found that on average, IPOs underperform comparable public companies, losing to the broader market by nearly 20% in the first three years. However, the performance can vary widely by company type. While IPOs of high-revenue, non-tech companies tend to underperform by nearly 25%, SpaceX falls into a category of companies that barely underperform, by just 2.3%. Recent mega-IPOs like Meta, Uber, and Rivian have demonstrated wildly different outcomes, with returns ranging from 16x gains to 80% losses.

  • SpaceX has officially filed for what could be the largest IPO in American history.
  • The company is targeting a valuation of $2 trillion, making it larger than Elon Musk's Tesla.

The players

Jay Ritter

A finance professor at the University of Florida who has spent decades studying IPOs and is known as "Mr. IPO" for his comprehensive data set on IPO performance.

Meta Platforms

Formerly known as Facebook, Meta went public in May 2012 at a $104 billion valuation with roughly $1 billion in revenue. IPO investors went on to experience fantastic gains, with a $1,000 investment at IPO now worth about $16,600.

Uber Technologies

Uber went public in May 2019 at an $82 billion valuation. Seven years later, a $1,000 investment at IPO would be worth around $1,740, underperforming the broader market.

Rivian Automotive

Rivian went public in November 2021 at a $66.5 billion valuation with virtually no revenue but a lot of hype. A $1,000 investment at IPO would now be worth about $198, an 80% loss.

Got photos? Submit your photos here. ›

What they’re saying

“IPOs often underperform for a few structural reasons that apply directly to SpaceX.”

— The Motley Fool

“I'm not saying SpaceX is a bad company -- far from it. I mean, it builds reusable rockets -- that's incredible. It's one of the most impressive private companies in a generation. But being a great company and being a great IPO investment are two very different things.”

— The Motley Fool

What’s next

Between the historical data and recent examples of mega-IPOs underperforming, experts suggest investors wait for the initial price pop to subside before considering investing in the SpaceX IPO, as the stock is likely to trade well under its IPO price in the long run.

The takeaway

While SpaceX is an impressive and innovative company, the data shows that IPOs, especially those with massive retail interest and high valuations, often underperform the broader market in the long run. Investors should be cautious about jumping into the SpaceX IPO at its peak valuation.