MW Looking to buy into the SpaceX IPO? This scary chart might make you think twice.
By Joseph Adinolfi and William Gavin
Stock performance following previous major tech IPOs has been less than stellar
SpaceX shares may be priced for perfection given a high expected valuation, according to one expert.
One week from Friday, investors will have the opportunity to buy shares of a company expected to stage the biggest initial public offering of all time: SpaceX.
CEO Elon Musk has already set aside a large block of shares to be distributed through popular retail platforms. This, in theory, should make it easier for everyday investors who have been major supporters of other Musk ventures like Tesla $(TSLA)$ to get a piece of the action.
But a quick look at how other newly public technology stocks have fared in recent years might give some eager investors pause. On Tuesday, Keith Lerner, chief market strategist at Truist, shared an analysis of 30 major IPOs and how the corresponding stocks performed during their first year out of the gate. Many have seen substantial volatility, with first-year maximum drawdowns averaging 55%.
Even six and 12 months out, absolute returns have been surprisingly weak, Lerner pointed out.
Company 1 week 1 month 3 months 6 months 12 months Year One max drawdown Facebook -17% -18% -45% -42% -31% -54% Twitter 0% 0% 11% -32% -10% -58% Alibaba -4% -6% 18% -9% -30% -49% Shopify 7% 38% 14% 9% 2% -52% Block -9% -6% -24% -28% -7% -44% Twilio 27% 42% 125% 20% 3% -66% Snap -7% -8% -13% -39% -26% -56% Okta 4% 1% 0% 18% 64% -20% MongoDB -3% -7% -9% 20% 103% -26% Dropbox 10% 2% 18% -7% -24% -54% Spotify 4% 14% 13% 21% -3% -46% Lyft -5% -23% -16% -46% -65% -79% Zoom 5% 45% 54% 9% 142% -40% Pinterest 18% 9% 6% 5% -28% -70% Uber 1% 3% -4% -34% -21% -68% CrowdStrike 33% 22% 19% -18% 64% -67% Cloudflare 10% -13% 0% 6% 90% -32% Datadog -14% -16% 1% -15% 128% -42% Snowflake -14% -5% 30% -9% 27% -52% Palantir 5% 13% 164% 132% 153% -53% DoorDash -17% -19% -28% -28% -13% -47% Airbnb 2% 3% 37% 0% 25% -39% Affirm 9% 44% -29% -40% -26% -65% Roblox 10% 2% 31% 22% -40% -69% Coupang -11% -7% -23% -36% -65% -64% Coinbase -5% -19% -30% -24% -55% -57% Robinhood 46% 35% 2% -64% -74% -90% Rivian 45% 15% -36% -77% -67% -88% Arm Holdings -18% -20% 11% 106% 132% -43% CoreWeave 20% 5% 300% 217% 87% -65% Median 3% 1% 4% -9% -9% -54% Average 4% 4% 20% 1% 14% -55% % Positive 57% 57% 57% 43% 43% n/a Source: Truist
"The projected size and retail participation are likely to drive significant volatility alongside excitement around the SpaceX IPO," Lerner said.
Post-lockup dump
SpaceX, in a somewhat unusual move, has introduced a plan to release "locked up" shares over time, rather than all at once. It's a bid to reduce the usual volatility that comes when longtime shareholders have the chance to cash out. But some Wall Street professionals told MarketWatch that the decision could backfire.
"That's typically the kind of thing that presents itself when the market is very hot," Jeremy Bohne, founder of Paceline Wealth Management, said in an interview with MarketWatch. He noted that Snowflake (SNOW) embraced a similar approach ahead of its hot IPO. That didn't spare the stock from a first-year maximum drawdown of more than 50%.
"Normally the market would not want to see something like that," Bohne said. "But if the stock is well received by the market and if people are very, very eager to get a hand on these shares, which I'm assuming they probably will be, that is something that the market will accept."
Certain SpaceX shareholders have agreed to an extended lockup period that ends shortly after SpaceX reports earnings for the second quarter of 2027 - well over a year from now - although the company has made provisions for some of that stock to be unlocked ahead of that date. Those shares, combined with Musk's shares, which are subject to a 366-day lockup, account for over 60% of SpaceX's outstanding stock.
The rest of the outstanding shares are ineligible for sale for 180 days. However, up to 20% of that stock can be released just two trading days after SpaceX publishes June-quarter earnings. Additional conditions allow for shares to keep trickling out into the market ahead of the six-month expiration date.
Another potential issue: Debuting with a valuation of nearly $2 trillion may leave little room for error. If the business falls short of investors' lofty expectations, that dynamic could weigh on the stock.
"The risk is that SpaceX may debut with a valuation that already prices in years of flawless execution," Mark Vena, CEO and analyst at Nevada-based research firm SmartTech Research, said in emailed comments. "Investors will love the story, but after the opening pop, the market will start asking harder questions about Starship timelines, Starlink margins, government dependence, and whether the rocket-ship valuation has any gravity left."
-Joseph Adinolfi -William Gavin
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June 03, 2026 11:28 ET (15:28 GMT)
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