SpaceX’s expected public debut is drawing heavy investor attention, but a new Reuters analysis suggests caution: many of the highest-valued IPOs of recent years have failed to outperform the S&P 500 after listing.
TL;DR
- SpaceX is reportedly targeting a $1.75 trillion valuation for its expected IPO.
- Reuters analyzed 50 high-valuation IPOs from the past five years and found the S&P 500 beat them around three-quarters of the time.
- The analyzed IPOs gained an average 27%, compared with 53% for the S&P 500 over the same periods.
- SpaceX’s high price-to-sales ratio and recent losses could become key investor concerns.
The SpaceX IPO is shaping up to be one of the most closely watched market debuts in recent history.
According to Reuters, Wall Street is already focused on the expected listing of Elon Musk’s rocket and satellite company next month. However, the bigger question may not be whether investors want SpaceX shares, but whether the IPO’s lofty valuation leaves room for long-term gains.
Reuters analyzed the 50 IPOs with the highest valuations over the past five years and found that investors would have been better off buying an S&P 500 index fund about three-quarters of the time. The analysis showed that a buyer who purchased each of those IPOs at the offer price would be up an average of 27% through May 21, compared with an average S&P 500 gain of 53% over the same periods.
The comparison is important because retail investors often cannot buy shares at the IPO price. In many cases, they enter only after first-day trading begins, when excitement can push prices higher. Reuters noted that historical returns for investors buying during the first day’s trading frenzy were even weaker.
For SpaceX, the valuation is the biggest talking point.
Reuters reported that the company is targeting a $1.75 trillion valuation. At that level, its price-to-sales ratio would be nearly 100, compared with Nvidia’s price-to-sales ratio of 24. The report also noted that SpaceX lost nearly $5 billion last year.
University of Florida finance professor Jay Ritter, who studies IPOs, told Reuters that companies with very high valuations measured by price-to-sales ratios often face the toughest post-listing performance. “Every one of these companies where investors are willing to pay a very high price-to-sales ratio has a compelling story for why the future potentially can be really bright,” Ritter said. “But, you know, stuff could go wrong.”
That does not mean all hot IPOs disappoint.
Reuters pointed to AI-linked chip designers Astera Labs and Arm Holdings as standout winners. Astera Labs has climbed more than 700% since its 2024 IPO, while Arm has gained about 400% since its 2023 debut. Both have beaten the broader market.
Still, the broader lesson from recent listings is that strong narratives do not always convert into stronger returns. Some investors may be drawn to SpaceX’s leadership in reusable rockets, satellite internet, and future-facing projects around Mars, Starlink, and AI infrastructure.
SpaceX’s own public materials describe the company as one that “designs, manufactures and launches advanced rockets and spacecraft,” with its founding mission centered on revolutionizing space technology.
The IPO may also stand out for retail access. Business Insider reported that SpaceX’s filing lists Charles Schwab, Fidelity, Robinhood, SoFi, and E-Trade by Morgan Stanley among platforms through which retail investors could buy Class A shares at the IPO price and timing.
However, the Reuters analysis suggests investors may need to separate SpaceX’s popularity from its market math.
If SpaceX delivers on its long-term ambitions, the IPO could become a defining moment for public-market interest in space, AI, and satellite infrastructure. If not, it may join the long list of high-profile IPOs that generated massive early attention but struggled to beat a simple index fund.
