SpaceX IPO looms: History warns of post-debut volatility for record-breaking listing
With SpaceX targeting the largest initial public offering in history, historical data from Professor Jay Ritter’s database suggests investors should temper expectations for immediate gains, as mature companies often struggle to outperform the market in their first year.
SpaceX is preparing for a public market debut in the coming weeks, aiming to raise $75 billion and achieve a valuation of $1.75 trillion. This unprecedented scale would make it the largest initial public offering in history. As the company moves toward its listing, market participants are closely examining historical precedents to gauge potential performance, with data suggesting that while first-day pops are common, long-term returns for large, mature issuers have been lacklustre in recent years.
Professor Jay Ritter’s database of IPO statistics from 1980 to 2024 reveals a divergent trend for new issues. Between 2011 and 2024, the average IPO experienced a 23 per cent increase on its first day of trading. However, the average one-year return from the first-day closing price has been negative 1.7 per cent over the same period. The outlook has worsened significantly since 2020, with issues between 2022 and 2024 averaging a one-year decline of 17.9 per cent, despite a broader bull market.
The poor performance of recent large offerings is attributed to companies waiting longer to go public, allowing them to raise billions in private capital. Consequently, firms that do list are often more mature, leaving less room for capital appreciation compared to smaller, rapidly growing entities. Ritter’s data indicates that the only other period with negative one-year returns was 1999 to 2000, driven by speculative dot-com valuations.
Despite the broader trend, venture capital-backed companies with annual sales exceeding $100 million (adjusted for inflation) produced average three-year returns that beat the market by 11 per cent from 1980 through 2024. This suggests that while SpaceX’s size may limit upside, large venture-backed firms can still deliver solid returns if they maintain significant revenue bases and investor confidence.
Speculation surrounding the listing has already impacted related markets. Shares of US space company Momentus (MNTS) surged approximately 110 per cent on 26 May 2026, closing at $15.48, before touching a high of $22.20 the following day. This rally was driven by investor sentiment regarding SpaceX’s planned debut, highlighting the market’s appetite for exposure to the space sector.
Experts suggest that while SpaceX may offer value for risk-tolerant investors at the IPO price, waiting for a post-debut price correction may provide a better entry point. History indicates that the sweet spot for IPOs lies in companies with substantial revenue but not so much maturity that growth becomes difficult. Given the speculative nature of SpaceX’s valuation, which relies on long-term growth expectations, caution is advised for those seeking to enter the stock after its initial trading.
