The kids in Encinitas finish school next week which means that our unofficial start to summer has begun. We hope you all are enjoying the nice weather.
Based on the amount of questions we’re getting from clients, we’re putting an early note out this quarter to address your questions about SpaceX and their upcoming IPO. Should you buy at the open next week?
The IPO
SpaceX filed its prospectus with the SEC on May 20th and is set to begin trading on the Nasdaq under the ticker SPCX on June 12th. The company is targeting a valuation between $1.75 and $2 trillion and aims to raise up to $75 billion — which would shatter the previous record for the largest IPO in history, held by Saudi Aramco. Interestingly, SpaceX is not the only massive capital raise hitting the market. It’s just the first.
Alphabet (Google) just priced an $84.75 billion equity capital raise to fund AI infrastructure. Meta is now reportedly exploring a raise of tens of billions in a stock offering of its own, following Alphabet’s move. And further down the pipeline: Anthropic has filed confidentially with the SEC, targeting a potential debut as early as fall 2026, following its recent $65 billion private raise at a $965 billion valuation. OpenAI is laying groundwork for a fourth-quarter listing, having recently raised $122 billion at an $852 billion valuation. SpaceX, Anthropic, and OpenAI alone could raise more capital than all U.S. IPO listings combined since 2022. The entire U.S. IPO market raised approximately $45 billion in all of 2025.
Why does this matter if you’re just thinking about buying SpaceX? Because all of that capital has to come from somewhere. Some will come from cash – but much will come from rotation, with investors selling existing holdings to fund allocations to the new listings. You have to wonder if top AI and semiconductor names will be liquidated as institutions sell appreciated shares to fund IPO allocations. If you own a diversified index fund or a 401(k) with tech exposure, which most of you do, you are already affected by this environment whether you buy SpaceX or not.
What History Actually Says
Truist’s Chief Market Strategist Keith Lerner studied 30 major tech IPOs over the past decade. The findings are instructive — and sobering.
Source: Truist, via Josh Schafer / X
The average maximum first-year drawdown across those 30 IPOs was -55%. The best case in the study was still -20%. The worst was -90%. The 12-month average return was +14% — which sounds encouraging until you look at the median: a typical major IPO lost 9% in its first year. The positive average was driven by a small number of outsized winners.
Every single one of those 30 companies experienced a significant drawdown at some point in the first year, even those that showed strength out of the gate. Even ARM Holdings, now one of the biggest long-term winners in the study, fell 41% peak-to-trough in just the first three months after listing.
For longer-term context, University of Florida professor Jay Ritter, who has tracked every U.S. IPO since 1975, has issued his own warning on SpaceX, noting that most of the time, things don’t go according to plan in the first years of public trading.
The pattern tends to look like this: a rush of enthusiasm on opening day, a period of volatility as the hype fades, and then a long grinding process of price discovery as the company faces the quarterly accountability of public markets for the first time. Great companies survive it. But even great companies can test your patience on the way there.
A Note on the IPO and What Happens After
One thing worth understanding about how this IPO is structured: the amount of stock actually available for trading on day one is a small fraction of the company’s total shares. Most of SpaceX’s equity, held by Elon Musk, early employees, and institutional investors, is locked up and cannot be sold for months after listing.
That constrained supply, meeting an enormous wave of demand, can push the price up sharply in the early days and weeks. But here’s the other side of that coin: those lockup periods eventually expire. When they do, a wave of supply hits the market. Insiders and early investors who’ve been sitting on enormous gains finally get to sell. That transition from artificial scarcity to abundant supply has historically been one of the most reliable sources of post-IPO pain for investors who bought at or near the opening price.
The initial pop, if it comes, is largely a product of the structure. The lockup expiration is when the market gets honest and when patient investors have historically found better entry points.
What This Means Practically
If you want to participate, treat it like speculation. Nobody knows where this stock is going in the first six to twelve months. The honest answer is that the short-term price action on something this hyped, this large, and this retail-driven is essentially unknowable. Google went public in 2004 at $85 a share, widely criticized at the time as overpriced, and spent the next several months doing very little before eventually becoming one of the greatest investments of the century. Meta listed in 2012 at $38, fell to $17 within a few months as investors panicked about mobile monetization, and anyone who bought at IPO had to sit through a 55% drawdown before being proven right. Two amazing companies, yet two very different short-term experiences. SpaceX could be an amazing long-term investment. Still, I would go into any investment in the company with the mentality that it could follow either of those outcomes in the short-term.
You will eventually own a piece of it anyway. Once SPCX is added to the Nasdaq-100 and (eventually) S&P 500 indexes your index funds are required to buy it proportional to its weighting. Nasdaq fast-entry rules can make a very large newly public company eligible for Nasdaq-100 inclusion after just 15 trading days, creating automatic buying pressure from passive funds. Some of you that own 401(k)’s and other ETF’s will get SpaceX exposure without taking on the concentrated risk of buying at IPO price.
Patience has historically been rewarded. Even Arm Holdings — one of the great long-term winners in the Truist study — fell 41% in three months before eventually delivering a multi-year gain of over 500%. Investors who waited for the post-IPO volatility to settle have historically gotten better entry points than those who bought on day one.
The bigger picture matters. Between SpaceX, Alphabet’s $85 billion raise, Meta’s rumored offering, Anthropic, and OpenAI, the financial markets are absorbing an extraordinary amount of new equity supply over the next 12 months. That doesn’t mean the market has to crash, it means the environment calls for more discipline, not less, around speculative positions.
SpaceX may be a generational company. It may also be a generational opportunity at a lower price, later. Those aren’t mutually exclusive.
As always, if you want to talk through how any of this applies to your specific situation, your financial plan, or retiremement, please schedule a call with us.
