By Nate Wolf
In a bygone era, an initial public offering was a way for investors to get in on the ground floor of a promising company. In 2026, it's more like parachuting onto the roof.
When SpaceX goes public in June, the company is likely to carry a valuation approaching $2 trillion. It will probably raise a record $75 billion in the deal. CEO Elon Musk may become humanity's first trillionaire. We're way past start-up.
Thanks to a seemingly bottomless pool of funding, the most exciting companies can stay private for longer and go public at dizzying valuations. Artificial-intelligence rivals Anthropic and OpenAI, data platform Databricks, and payment processor Stripe are all candidates for so-called mega-IPOs at valuations of $100 billion or more if SpaceX's offering goes well.
Bigger isn't necessarily better, though. Historical data show the largest U.S. IPOs tend to underperform the market, with a not-insignificant share of those stocks delivering negative returns. And the coming wave of mega-IPOs presents more risks than usual: Private investors are licking their chops at the prospect of cashing in on long-awaited gains.
Even the savviest, most battle-tested investors may fear missing out. But SpaceX and its fellow IPOs won't behave like normal stocks for months, if not longer, and trading promises to be choppy and unpredictable. Waiting out the chaos may not be exciting. It will be shrewd.
Facebook, now Meta Platforms, still holds the record for being the most highly valued U.S. company at the time of its IPO, with a market cap of $81 billion in May 2012. SpaceX could come public at more than 20 times that size -- even larger than Meta is today.
The AI labs, meanwhile, are still conducting 12-figure private funding rounds of their own. OpenAI secured $122 billion at a $852 billion valuation in late March. Anthropic one-upped its rival the next month, fielding proposals from investors that would value it at as much as $900 billion, according to multiple reports.
Saudi Aramco is the lone historical corollary for IPOs of that size. It went public on Saudi Arabia's stock exchange in 2019 at a valuation of $1.7 trillion.
"The only company that has done something at this scale was a state-funded oil company in one of the less transparent markets in the world," says Avery Marquez, director of investment strategies at IPO research firm and fund sponsor Renaissance Capital. "There is really no relative scale."
The record of the very largest IPOs is spotty at best. Excluding Cerebras Systems, the chip maker that completed its IPO a few weeks ago, 36 U.S. companies have gone public on a U.S. exchange with a market cap of $15 billion or more, according to FactSet. Only nine have beaten the S&P 500's returns from their first-day closing price. Just 17 have generated positive returns at all.
Look down the list of winners and you'll see tech luminaries like Google, now known as Alphabet (+15,500%), and Palantir Technologies (+1,347%). But for every Google, there's a Lyft (-83%). And for every Palantir, there's a UiPath (-85%). Some of the companies, such as telecom equipment maker Lucent Technologies and smartphone precursor Palm, have all but disappeared.
However you slice the data -- narrowing in on tech companies, expanding to IPOs of any size, excluding the dot-com bubble -- you'll notice a pattern. On average, stocks spike on their first trading day but struggle to keep up the momentum over time. The 1,724 U.S. IPOs from 2011 through 2024 had an average first-day pop of 23%, according to data from Jay Ritter, a University of Florida professor dubbed Mr. IPO. Over the next three years, the newcomers lagged behind the market by 25 percentage points.
The trends are especially rough for companies that trade at a high premium to their revenue, suggesting big expectations for growth. Since 1980, issuers with trailing annual sales of at least $100 million and a price-to-sales ratio above 40 have seen an average three-year drop of 45% from their first day's close.
SpaceX will be the next name in that data set. At an estimated market cap of $1.8 trillion, the company would trade at 93 times trailing sales.
"I think there's a very good chance that these IPOs will jump on the first day of trading," Ritter says. "And whether they go up or not, one thing that I'm certain about is the stock is going to be very volatile."
Don't expect the data to spook investors, many of whom have been waiting for years to invest in SpaceX. In fact, there are plenty of reasons to expect yet another explosive first-day gain in June.
To start, the hard numbers are genuinely impressive. SpaceX accounts for the majority of all orbital launches worldwide, and its use of recycled rockets has driven per-launch costs well below what the sector ever thought was possible. Starlink, its satellite broadband system, served 10.3 million customers by the end of March, generating profit margins on earnings before interest, taxes, depreciation, and amortization, or Ebitda, of 63% on $11.4 billion in revenue in 2025.
And if "innovative telecom business" is the floor for SpaceX stock, putting solar-powered data centers in space represents the stratosphere. Like many of Musk's ideas, "orbital AI" seems straight out of a sci-fi novel, but the company is already attracting serious partners like Alphabet and Anthropic. At a time when data-center developers are scrambling for power and land, SpaceX is offering to eliminate the need for both.
The AI business, SpaceX says in its IPO prospectus, has a total addressable market of $26.5 trillion, nearly as large as the entire U.S. gross domestic product of $31.9 trillion.
Then there's the hype: "SpaceX has been the most famous private company in the world, attached to one of the most polarizing public figures alive, and inaccessible to most investors for two decades," explains Jake Miller, co-founder of Opto, a tech platform for private investing. "That's a generational IPO story, not a normal one."
For now, it's also an unprofitable one. In the first quarter of 2026 alone, the company reported a $1.9 billion operating loss, driven by a $2.5 billion loss in the AI segment.
SpaceX didn't respond to Barron's requests for comment.
By all accounts, investors are pining for shares. SpaceX has yet to declare the size of its IPO offering, but it will likely be a single-digit percentage of the company's total shares outstanding. The company plans to set aside much of that for retail investors, including those with accounts at Charles Schwab, Fidelity, Robinhood, and SoFi.
The retail focus makes sense given Musk's unique pull among a certain set of self-directed traders, according to Marquez, who expects retail demand to be strong. One bracket higher, some high-net-worth investors are pitching the stock to their advisors, rather than the other way around.
"In all my years in this business, I've never had so many inbound inquiries on an IPO like this," says Drew Freides, a UBS private wealth advisor who is optimistic about SpaceX in the long term but wants to see the valuation before recommending the stock to clients. "We spend a lot of time, you know, reining in clients and just being cautious."
OpenAI and Anthropic are no less famous or exciting. The pair are locked in a warp-speed race to build the future of human technology, and they're starting to generate significant cash. Anthropic said in May that it had hit a $30 billion annualized revenue run rate; earlier this year, OpenAI said its run rate had exceeded $20 billion.
Both companies declined to comment for this article. The Wall Street Journal reported last week that OpenAI is preparing to file a confidential IPO prospectus with regulators in the coming days. There are reasons for the pair to go public soon, particularly if SpaceX's IPO is a success.
Training and running AI models is expensive, and the two companies are in constant need of capital. Public companies can use their stock to open the financing spigot quickly. Competition -- for capital, a record valuation, or good old-fashioned bragging rights -- is the other factor.
"There are no public AI companies," Harrison Rolfes, a research analyst at PitchBook, says. "Whoever IPOs first becomes the market leader."
The real winner of a mega-IPO isn't necessarily the company or public investors, though. Private investors are the ones coming out on top.
Following the financial crisis, legislators designed the 2012 Jumpstart Our Business Startups Act to stimulate public markets. But the law also eased the path for private offerings, by allowing larger companies to keep their financials private. Under the JOBS Act, the threshold for requiring disclosure went from 500 shareholders to 2,000.
With less of a regulatory nudge, companies can soak up round after round of funding from investors looking for exponential returns. It helps that private markets are no longer the exclusive province of venture-capital firms. Institutions, family offices, and high-net-worth individuals are all getting in on the action. Some investors have access through special-purpose vehicles -- a pooled secondary-market investment -- that the companies themselves may not recognize as legitimate.
"If you pay close enough attention, you can find someone who can sell you some SpaceX," says Tom Kerr, co-head of investments at private markets investment firm Hamilton Lane. (Kerr doesn't advise going that route.)
Early investors often have astronomical gains on paper -- SpaceX, for instance, was worth a measly $30.5 billion in 2018 -- but selling shares on the secondary market can get clunky. An IPO solves that problem, giving founders, employees, and other private shareholders an opportunity to sell shares at will. And make no mistake, investors will take at least some chips off the table.
Companies are already stating as much publicly. The London-listed Edinburgh Worldwide Investment Trust, which has had a stake in SpaceX since 2018, said in April it would propose a tender offer following the SpaceX IPO allowing shareholders in the closed-end fund to "crystallize" their returns. On an earnings call in February, Cannae Holdings CEO Ryan Caswell said the investment firm's SpaceX stake "seems like it'll be a source of cash for us over time."
Lise Buyer, founder of IPO advisory firm Class V Group, says private-market investors are under pressure to provide liquidity to clients. "It's hard to go out and raise new funds if you haven't put any money back in the pockets of your previous investors."
Others are exiting before the IPO even happens. Marc Lipschultz, co-CEO of embattled private-equity firm Blue Owl Capital, told investors in April that the company had realized roughly 10-times returns by selling about half of its SpaceX investment at a $1.25 trillion valuation.
To be sure, investors won't be able to dump shares right away. Private shareholders typically have a six-month lockup period after an IPO during which they are prohibited from selling.
Issuers and their investment banks are increasingly engineering ways to reduce the cascade of stock at the six-month mark. Cerebras shareholders, for instance, will get a chance to convert and sell 84 million Class B shares in August, then another 87 million shares in September and October -- all before six months pass in mid-November. SpaceX is getting similarly creative, with a portion of shares unlocking after the company's second- and third-quarter earnings report. Another batch unlocks if the stock price reaches certain levels.
"At some point, you're going to have a massive waterfall of stock that's going to be coming to market," says Ken Smythe, CEO of secondary investments firm Next Round Capital. "How the company manages that is going to be critical because there's never been this amount of unlock at one time."
Retail-trader personalities online have a warning for investors trying to buy from institutions: "You are the exit liquidity." With mega-IPOs, that exit liquidity will likely include the index funds held by pension funds and retirement accounts.
Nasdaq rolled out a "fast entry" rule in May that shortened the waiting period for megacap stocks to be included in the Nasdaq 100 index to 15 trading days, down from as long as a year. S&P Dow Jones Indices has also proposed shortening its wait for S&P 500 inclusion to six months from 12 months. It could implement the rule just before SpaceX's IPO.
Dozens of the world's most popular funds are linked to these indexes and will likely be forced to buy recent mega-IPOs sooner than they would have before. This forced buying could create the demand early investors need to unload shares, facilitating an enormous wealth transfer from private markets to public markets.
"The insider is going to be able to cash out at this inflated price, but the index funds are going to be buying at this inflated price," says Ben Schiffrin, director of securities policy at Better Markets, a consumer-focused advocacy group. "That seems, you know, not great for retail investors."
On one hand, the automatic demand is helpful. If issuers like SpaceX can properly time lock-up expiries, they may be able to prevent huge selloffs when new shares become available. On the other hand, markets are in uncharted territory when it comes to the sheer volume of stock changing hands. Investors trying to ride the coattails of funds by buying SpaceX just before it gets included in the Nasdaq 100 or the S&P 500 may find themselves in a crowded trade.
"Once you get past those index inclusions, then where is the demand?" Jim Lebenthal, chief markets strategist at Cerity Partners, puts it . "I suspect that these companies will have a very long, profitable future as public companies, but there might be a little hiccup in the shares after they're included in the indexes."
It will be difficult to ignore the news when SpaceX starts trading in a few weeks. Those who don't buy the SpaceX IPO could easily get the SpaceX FOMO instead.
Freides, the UBS advisor, says client inquiries are more about a fear of missing out and less about company fundamentals. "They feel like, 'I should've been in this thing years ago. And why aren't I in this, and how do I get in this? And I don't care what it costs."
Resisting the urge to chase the stock is the prudent move. Investors should expect wild, unpredictable swings in the first several months of trading, without the venture capital-like upside they would get from a smaller, younger company. SpaceX's future may even include a merger with Tesla, further complicating the growth trajectory and stock upside.
To those tempted by the mega-IPOs, Lebenthal advised an admittedly old-fashioned approach: diversification and dollar-cost averaging.
"There are plenty of retail investors out there who are like, 'I want to move all my chips on to OpenAI.' Good luck, I wouldn't do that," he says. "You get some on the IPO? Great, save some dry powder for whatever may come next."
IPOs the size of SpaceX, or indeed OpenAI and Anthropic, are essentially a new asset class altogether. Each quarter that passes after SpaceX's IPO will offer new data on how the asset behaves. Patient investors get the benefit of seeing more quarterly results and gauging SpaceX's progress toward justifying its valuation. Perhaps more importantly, they will see how both hype-driven investors and billion-dollar institutions react.
Another argument for patience: Investors who bought Meta after its first day of trading are up 1,474% today. Those who bought it six months later have booked gains of 2,454%.
IPOs get treated like the main attraction. Just remember that the real investment story is what happens next.
Write to Nate Wolf at nate.wolf@barrons.com
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May 22, 2026 00:30 ET (04:30 GMT)
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