The IPO of Elon Musk’s SpaceX has investors hoping that investment returns reach the stars.
It is crackin’ up to be the largest IPO of all time, and the media is going to be flooded with interviews and marketing in the weeks to come before it likely starts trading on June 12th.
SpaceX has galactic goals. Its mission pushes even farther, reaching spiritual and religious heights: “Our mission is to build the systems and technologies necessary to make life multiplanetary, to understand the true nature of the universe, and to extend the light of consciousness to the stars.”1
Wowzers.
While the narrator of Star Trek spoke of space as the final frontier, this company tells their investors that space “represents the largest economic frontier in human history.”2 They believe that they have “identified the largest actionable total addressable market (“TAM”) in human history” clocking in at $28.5 trillion.3
Due to the limitations of earth, they “must build infrastructure and industries in space, expanding human capabilities to improve life on Earth and to establish life beyond.”4 Mr. Musk is serious about this, as he gets more compensation when the company establishes “a permanent human colony on Mars with at least one million inhabitants.”5
SpaceX isn’t just starships. It’s artificial intelligence (Grok, designed as a “truth-seeking AI model”6), internet services (Starlink), and social media (X, the renamed Twitter, now owned by xAI—which itself became a SpaceX subsidiary earlier this year). The company frames all these businesses and more under the infrastructure of space, connectivity, and AI.
Even if some balk at the highfalutin mission and market, the bullish argument for the company may launch if it achieves some of its aims.
When you own this company, you may own the future in the stars and a wave of new possibilities for humanity, but you also carry the potential for frightful content. For example, some of the AI—which itself is both a gift of technological breakthrough and has some grim implications for our humanity—has “Spicy” outputs “that present heightened risks, including reputational harm, the generation of potentially explicit content and misinformation or deceptive outputs, potential nonconsensual or exploitative imagery, intellectual property infringement, or content that could be viewed as exploitative, harmful, harassing, abusive, or discriminatory.”7
I don’t tell people whether to buy, sell, or hold stocks over the Internet, but here is some research when considering SpaceX specifically and IPOs in general.
According to Jay Ritter’s work at Warrington College of Business, since the 1980s, IPOs tend to pop big on day one and moderate over the first year. While IPOs spike an average of 18.9% on day one, the average one-year return is only 5.6%.
More recently, the numbers are worse over the first year. Since 2011 the one-day pop is 23%, and the one-year return is -1.7%. Probably the biggest concern for the short to medium term investor is that even after three years, IPOs have underperformed the overall market by more than 20%.
Translation: most of the time, one would have had a better 3-year performance buying a boring broad stock market index fund on the first day the IPO traded than buying the flashy IPO itself.
If you want all the details, here is Ritter’s chart8:
But this is not the average sized IPO, one might say. This is set to be the biggest ever.
What does history show about how some of the biggest IPOs have performed over the first year? It’s not good.
The top 10 US IPOs by size have averaged a decline of 26.8% over the first year. The best performing one, Visa, was still down 6.7% in its initial year.
This does not mean that this will occur for SpaceX, but it does put a cautionary tale on the hype.
Don’t get me wrong. Some of those stocks have turned out quite well over the longer term: Meta (Facebook) and Visa in particular. It’s another reminder of something I’ve written about before: timeframe is a critical part of any investment decision.
That said, investors should gear up for big swings in price for Musk’s space company. One writer picked up by Morningstar noted that: “The critical amplifier is float—at about 3.3%, where Tesla sees 10.0%-15.0% swings on milestone slips, we expect SpaceX to experience 20.0%-30.0% moves on equivalent catalysts.”9 Are you the kind of investor who can handle potentially massive volatility?
Is the possible valuation of the company at $1.75 trillion worth it? According to Braden Dennis & Ryan Henderson, if you strip away all costs and taxes and focus just on its core profitability, it will trade at more than 300 times EBITDA, which is significantly greater than similarly sized companies like Meta (Facebook), Taiwan Semiconductor, and Amazon.10 And guess what? As of May 28th, betting markets like Polymarket think the valuation will be even higher than that by the time it stops trading on IPO day.11
One of the biggest concerns for an early investor on IPO day (not an early investor pre-IPO; they are happier than clams and will be quite pleased to endorse it in the media), is that the day they start buying is not the entirety of shares that will be on the market within the year. There is a risk of dilution. A few writers point to this problem:
Assuming that the $86.25bn gets successfully allocated [an extraordinary amount of stock for underwriters to place at the beginning], the market absorption is still not done. A wall of supply is coming from those insiders that bought SpaceX at a fraction of the price.
The S-1 makes clear that Musk (approximately 42% economic interest - with 85% of voting power via super-voting Class B shares) is subject to a normal lock-up but a lot of SpaceX insider stock joins the free float remarkably quickly.
“Early Release Eligible Shares” have not been quantified in the draft S-1 but the lock-up schedule and triggers are set out below and I have seen estimates that 80-90% of the non-Founder shares will be freely tradeable by November”.12
What might SpaceX do to Musk’s other company Tesla? Interestingly, there have been whisperings about a potential merger between the two. If the IPO doesn’t go well, might they merge? Does it make sense to put both companies under one roof either way? After all, SpaceX has already purchased hundreds of millions of dollars of Tesla products like Megapack and Cybertruck.13 Or might they thrive independently and benefit one another?
Here’s what matters. I don’t do market predictions. And with the cautions above, remember that fundamentals don’t always drive price, especially with a celebrity CEO like Elon.
The question you should be asking is probably not what this company will do or not do on the first day or first year of trading, but how this company or any other investment fits into your overall financial plan.
We do not believe investors should be asking what will help you get rich quick, but what will help you live and leave a legacy.
We may indeed reach the stars through corporations like SpaceX. But make sure you don’t reach so high that you see stars from taking a risk you can’t afford to take.
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Sources:
1. SpaceX’s S-1 SEC Document, page 1. Accessed online.
2. SpaceX’s S-1 SEC Document, page 2. Accessed online.
3. SpaceX’s S-1 SEC Document, page 11. Accessed online.
4. SpaceX’s S-1 SEC Document, page 75. Accessed online.
5. SpaceX’s S-1 SEC Document, page 235. Accessed online.
6. SpaceX’s S-1 SEC Document, page 4. Accessed online.
7. SpaceX’s S-1 SEC Document, page 30. Accessed online.
8. The chart and the data in the above few paragraphs is from “Initial Public Offering Updated Statistics” (May 18, 2026), page 78. Accessed online.
9. “Does SpaceX’s Sky-High Valuation Make Sense?” (March 9, 2026). Accessed online.
10. “SpaceX: Here's What You Get For $1.75 Trillion” (May 24, 2026). Accessed online.
11. “SpaceX IPO Closing Market Cap” (May 28, 2026). Accessed online.
12. “The Physics of SpaceX” (May 24, 2026). Accessed online.
13. SpaceX’s S-1 SEC Document, page F-56. Accessed online.
14. “Four More SpaceX Thoughts” (May 28, 2026) email.