The hidden danger of chasing hyped initial public offerings? Skipping the fine print.
SpaceX stock has fallen below its IPO price. That's an important lesson for investors.
SpaceX shares now trade below the company's IPO price, but is buying the dip too risky?
Not long ago, I was at a dinner where a guest described the lengths they had gone to in pursuit of SpaceX shares $(SPCX)$. They searched for venture funds that happened to own the company. They looked for former employees willing to sell. They explored secondary marketplaces where shares traded at eye-watering premiums. They tried to get into a co-invest. They asked custodians if there was any way to source stock at IPO. Each path led to another dead end or another markup they shied away from.
Then SpaceX finally went public.
And now, ironically, after spending so much time trying to gain access before the IPO, this person faces a different question entirely, with SpaceX shares trading below the company's IPO price: Is buying the dip too risky?
I've heard this question more times than I can count. And every time, I think back to Google.
Every era has its wealth engines. Railroads. Oil. Automobiles. Electricity. The internet. Cloud computing. Artificial intelligence. Each redrew the economy. Each created new fortunes. Each forced families, advisers, markets and institutions to adapt. When Google - now Alphabet $(GOOG)$ $(GOOGL)$ - went public at $85 a share in August 2004, plenty of smart people asked: What does the company really do? An internet search engine? Surely that couldn't be worth that kind of valuation.
We know how that story ended.
Today, the names have changed. It's Anthropic. OpenAI. Stripe. Databricks. These are leaders of the newest generation of what many investors consider to be extraordinary private companies. And the conversation feels remarkably familiar. Was Google too expensive at $85? Was Amazon,com (AMZN) too expensive after doubling? Was Nvidia (NVDA) too expensive after tripling?
My first mentor walked me through the way investors experience bull runs. In the first bull run, you don't know enough to do anything. When the second bull run occurs, you don't have enough money, and it puts pressure on you to make it count the third time so that it may better position you for the long term. We've seen this play out with IBM $(IBM)$, Apple $(AAPL)$, Microsoft $(MSFT)$, Amazon, Google and Nvidia. Will SpaceX join them?
Before you answer that, there's another list:
Sun Microsystems powered the internet's backbone and gave the world Java. At its peak the company was worth $200 billion. In the end, Oracle $(ORCL)$ bought what was left of Sun for $7.4 billion. Lucent was the crown jewel of Bell Labs, one of the most admired technology companies in America. Its stock fell 99% when the dot-com bubble burst. These were not obscure companies. They were the SpaceX, Anthropic and OpenAI of their moment. Everyone knew their names. Everyone wanted in.
Hype and quality are not the same thing, and public markets have a way of separating them.
The lesson is not that great companies fail. The lesson is that hype and quality are not the same thing, and public markets have a way of separating them.
It's worth noting that a significant portion of wealth creation for major category-defining companies occurs before they even enter the public markets. Companies are now staying private longer. By the time they list, much of the early value creation may already have occurred. The IPO is no longer the starting line. Sometimes it is the scoreboard lighting up after years of private-market compounding.
Now Anthropic and OpenAI are expected to go public. And the excitement is just as intense. History gives us reason for humility. The data indicate many IPOs lag the broader market for up to 21/2 years, as early enthusiasm fades and insider selling increases supply. Governance complexity, lofty valuations and the gap between narrative and profitability are worth reading carefully before the road-show hype takes over.
That doesn't mean these companies aren't potentially exceptional businesses that could, over time, achieve success comparable to an Alphabet or an Amazon. The AI opportunity is meaningful. But FOMO has a way of making investors skip the part where they read the prospectus.
Another consideration is the possibility of missing out on what could be an exceptional business if you wait for a perfect entry point.
Behavioral finance has a name for this: loss aversion. We fear making a mistake more than we fear missing an opportunity. We remember buying something that later declined. We rarely calculate the cost of never buying Amazon, Alphabet or Apple at all.
If you believe the company has the potential to be many times larger, your entry price may matter far less than your willingness to become an owner.
Trained as a long-term investor, I don't chase headlines or hot IPOs. I'm more focused on building diversified portfolios designed to compound wealth over decades. People can make wealth by concentrating and can keep their wealth by diversifying. But when clients become convinced that a company belongs in their long-term portfolio, I often come back to a surprisingly simple thought: If you believe the company has the potential to be many times larger, your entry price may matter far less than your willingness to become an owner.
The irony is that investors desperately tried to accumulate SpaceX stock before the IPO. Now it's public, and there's volatility to bear as index funds buy in and lockups expire, bringing additional shares to market. Those same dynamics await Anthropic and OpenAI, amplified by governance questions and valuations that demand extraordinary execution.
None of this means you avoid these stocks. It means you go in with open eyes. Long-term investing has never been about predicting the perfect price. It's about owning exceptional businesses for long periods and allowing time, not market timing, to do the heavy lifting.
Matthew Fleissig is co-founder and chief executive officer of Pathstone, an investment and wealth advisory firm serving ultrawealthy families, family offices and institutions.
-Matthew Fleissig
This content was created by MarketWatch, which is operated by Dow Jones & Co. MarketWatch is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
July 20, 2026 10:21 ET (14:21 GMT)
Copyright (c) 2026 Dow Jones & Company, Inc.
Comments