The SpaceX IPO Is Coming June 12. Here’s Why You Shouldn’t Rush In to Buy

For years, investors have watched private companies stay private longer while Wall Street’s biggest gains increasingly went to venture capital firms and institutional money managers. That’s part of why the upcoming IPO of SpaceX has generated so much excitement. Retail investors finally get a shot at owning one of the world’s most influential companies.

And make no mistake — this is no ordinary IPO. According to Reuters, SpaceX is targeting a June 11 pricing and plans to begin trading on June 12 under the ticker SPCX. Reuters also reported the valuation could reach as high as $1.75 trillion.

That would immediately make SpaceX one of the largest publicly traded companies on Earth. But before investors rush to hit the buy button on opening day, history suggests patience may be the smarter move.

Mega IPOs Often Leave Investors Holding the Bag

The stock market loves a hot IPO story. Few offerings have attracted more anticipation than SpaceX. Between reusable rockets, government contracts, and the Starlink satellite business, the company sits at the center of the modern space economy.

Still, excitement and investment returns are not always the same thing.

According to Nasdaq research, nearly 64% of IPOs underperform the broader market over their first three years. Many trail by more than 10 percentage points as the initial hype fades and valuations normalize.

The data on the biggest IPOs is telling:

SpaceX could face the same issue. At a $1.75 trillion valuation, SPCX would debut worth more than companies like Alphabet were just a few years ago. Investors buying on day one may already be paying tomorrow’s price today.

Granted, SpaceX is not some speculative startup with no revenue. The company dominates global launch services and has transformed satellite internet through Starlink. But even phenomenal businesses can become mediocre investments if the entry price leaves little room for upside.

Retail Investors Could Face a Familiar IPO Trap

One challenge with high-profile IPOs is that retail investors rarely get the best pricing. Institutional investors — hedge funds, pension funds, and large banks — typically receive shares at the IPO price before trading opens. By the time retail investors can buy shares on public exchanges, the stock may already be trading 20%, 30%, or even 50% higher.

We’ve seen this movie before. When Coinbase Global (NASDAQ:COIN) debuted publicly in 2021, enthusiasm surrounding crypto markets pushed the stock to a valuation above $85 billion. Within a year, shares had declined more than 75% as trading volumes cooled and speculative appetite faded. Rivian Automotive (NASDAQ:RIVN) briefly reached a valuation larger than Ford (NYSE:F) despite producing a fraction of the vehicles. The stock later lost more than 80% from its peak.

Surprisingly, the bigger the IPO hype becomes, the harder it often is for investors to earn strong returns afterward. Expectations get inflated quickly. Any slowdown in growth, lower launch cadence, margin pressure at Starlink, or increased competition from rivals like Blue Origin can suddenly make the valuation look stretched.

Regardless of how you look at it, a $1.75 trillion market cap leaves very little room for error.

The SpaceX IPO Could Pressure the Rest of the Market

There’s another issue investors should consider — where the money funding this IPO will come from. Mega IPOs often pull capital away from existing stocks as funds and institutions rebalance portfolios to make room for the new company. In short, investors may sell other holdings simply to buy SPCX, creating two potential risks.

First, existing tech and aerospace stocks could see temporary pressure as money rotates into SpaceX. Second, if broader market conditions weaken after the IPO launches, newly public companies often suffer first because early investors rush to lock in profits.

That matters because the broader market is already trading at elevated levels. The S&P 500 currently trades near 23 times forward earnings, above its long-term historical average of roughly 16 to 18 times. Investors piling into another ultra-premium valuation may discover there is little margin for safety if markets cool.

That said, none of this means SpaceX is a bad company. Far from it. The business could remain one of the defining growth stories of the next decade.

Key Takeaway

In any case, smart investors should separate the company from the stock price. SpaceX may absolutely become a long-term winner. But IPO day enthusiasm has a long history of leading investors to overpay for even the best businesses. Between the massive valuation, likely first-day price spikes, and the tendency for mega IPOs to cool after launch, patience could prove rewarding.

When all is said and done, investors interested in SPCX may be better served by watching the first few quarters unfold before rushing into the market frenzy on June 12.