Wall Street investors are eagerly awaiting the expected SpaceX IPO next month, but history suggests that buying into highly valued stock market debuts may not always deliver strong returns. According to a Reuters analysis of the 50 largest IPOs over the past five years, most investors would have earned better profits by simply investing in an S&P 500 index fund.
The report found that investors who purchased shares at IPO prices achieved an average return of 27% through May 21, while the S&P 500 gained roughly 53% during the same periods. Analysts say retail investors often struggle to secure shares at IPO prices, making it even harder to benefit from major stock listings.
SpaceX, Elon Musk’s rocket and satellite company, is expected to trade under the ticker “SPCX” and could launch its public offering as early as June 11. The company is reportedly targeting a massive $1.75 trillion valuation, potentially making it the largest IPO in Wall Street history. Retail investors may gain early access through platforms such as Robinhood and SoFi.
Despite strong excitement surrounding AI and space technology stocks, experts warn that high valuations can create major investment risks. University of Florida professor Jay Ritter noted that companies with extremely high price-to-sales ratios often struggle to outperform the broader stock market over time. SpaceX’s estimated price-to-sales ratio is close to 100, far above Nvidia’s ratio of 24.
Some recent IPOs have produced huge gains. AI chip firms Astera Labs and Arm Holdings have surged since their stock market debuts. However, several high-profile IPOs suffered major losses, including Rivian Automotive, Didi Global, and Figma.
The growing buzz around SpaceX, OpenAI, and Anthropic highlights continued investor demand for innovative technology companies, but analysts caution that strong stories and market hype do not always guarantee long-term stock market success.
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