After an underwhelming few years, initial public offering (IPO) enthusiasm is back with Space Exploration Technologies' (SPCX 5.43%) historic IPO. There has been a lot of hype surrounding the SpaceX IPO, with tons of insiders making tons of money, but unfortunately, that doesn't guarantee the same for the average investor.
On SpaceX's first day of trading (June 12), the stock finished up 19%. On its second trading day (June 15), the stock rose another 20%.
These immediate gains have been beneficial, no doubt, but the focus should always be on a stock's long-term performance. Nobody can predict how a stock price will move, but what could a $1,000 investment potentially become in three years? Let's take an educated guess.
Image source: The Motley Fool.
Is history on the side of initial IPO investors?
An initial post-IPO pop is expected and par for the course for most blockbuster IPOs. Here is how the "Magnificent Seven" stocks performed on their first day of trading:
| Company | First Day Trading Gains | Year |
|---|---|---|
| Nvidia | 64% | 1999 |
| Tesla | 41% | 2010 |
| Microsoft | 33% | 1986 |
| Apple | 31% | 1980 |
| Amazon | 31% | 1997 |
| Alphabet (Google at the time) | 18% | 2004 |
| Meta (Facebook at the time) | 0.6% | 2012 |
Data source: Dow Jones.
According to University of Florida professor Jay R. Ritter (who specializes in IPO research), companies with more than $100 million in revenue and low float (shares available to the general public) -- such as SpaceX -- experience an average 32.4% pop on their first day of trading.
Unfortunately, Ritter's analysis also shows that buying a stock at its first-day closing price underperforms the market over the following three years by 5.3 percentage points (compared to the S&P 500). Although underperforming the market doesn't mean losing money, it does mean your money would have been better off in the broad index.
NASDAQ: SPCX
Key Data Points
Where will SpaceX's stock be in three years?
Again, we can't predict with 100% certainty how a stock will perform, and past happenings don't guarantee future happenings. If it were that easy, everyone would make money in the market, and very few would lose money.
That said, historical trends can provide insight into typical behavior, and history isn't on SpaceX stock's side. Right now, it's trading at over 100 times its sales, even though its revenue grew only 33% year over year in 2025. That's expensive by any measure, and it means the stock is priced for perfection.
Virtually all aspects of SpaceX's business would have to execute flawlessly to justify its valuation, and anything short of that is likely to lead to a sharp pullback after the initial IPO pop.
I won't put a dollar amount on it, but I expect SpaceX's stock to underperform the market over the next three years once the fear-of-missing-out (FOMO) rush subsides. I won't be surprised if a $1,000 investment today loses a couple of hundred dollars by then.
