Financial markets are generating significant excitement over the anticipated June launch of Elon Musk’s space exploration company SpaceX on public exchanges, though a comprehensive review reveals that most major stock debuts in recent years have disappointed investors who purchased shares at launch.
A comprehensive review of the 50 largest public offerings by valuation over the past five years demonstrates that investors would have achieved better results purchasing an S&P 500 index fund approximately 75% of the time. This data highlights the challenge of identifying good deals among companies whose market values have frequently skyrocketed well before their public trading begins.
An investor purchasing each of the public offerings examined would have gained an average of 27% through May 21. This performance falls short of the S&P 500’s average 53% increase over the same timeframes. The review assumes buyers could acquire shares at the initial offering price — frequently impossible for individual investors — or alternatively purchase the broad-market index.
Past performance for investors purchasing during the chaotic first trading day shows even poorer results, the review demonstrated.
“It’s difficult to make money unless you’re in the early stages of these things and buying these things before the IPO,” said Dennis Dick, a proprietary trader at Triple D Trading.
The rocket manufacturer’s market debut is anticipated to precede offerings from OpenAI and Anthropic, capitalizing on investor appetite for artificial intelligence companies that has pushed U.S. markets to new records.
Planning to trade under the symbol ‘SPCX’, the space company submitted its prospectus Wednesday, with potential share sales beginning as soon as June 11. Company founder Elon Musk is offering some shares to individual investors through Robinhood, SoFi and additional trading platforms that would provide access at reduced prices.
The aerospace firm is reportedly seeking a $1.75 trillion market value that would surpass all previous Wall Street public listings, though the analysis demonstrates that such records provide no assurance investors will profit.
University of Florida professor Jay Ritter, who researches public offerings, explained that while most stock debuts underperform the S&P 500 long-term, companies with exceptionally high valuations measured by price-to-sales ratios typically perform worst.
At a $1.75 trillion valuation, the space company’s price-to-sales ratio would reach nearly 100, compared to artificial intelligence leader Nvidia’s price-to-sales ratio of 24. The rocket manufacturer reported losses of nearly $5 billion last year.
“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.”
Among the public offerings studied, artificial intelligence chip designers Astera Labs and Arm Holdings have delivered the strongest performance. Astera has climbed over 700% since its 2024 debut, while Arm has risen approximately 400% since its 2023 launch. Both performances exceeded the S&P 500.
Cerebras Systems, another AI chip designer, jumped 52% from its May 14 offering price; it has declined around 27% from its first trading day peak.
Among the most significant letdowns recently, Chinese ride-sharing company Didi Global was removed from the New York Stock Exchange in 2022 following its heavily demanded offering the previous year. Currently trading over-the-counter, Didi Global shares have fallen approximately 74% from their $14 offering price.
Electric vehicle manufacturer Rivian Automotive has dropped 82% since its 2021 debut that temporarily made it the second-most valuable U.S. automaker. The company continues losing money on every vehicle produced and burns roughly $1 billion in cash quarterly.
Design software company Figma’s shares nearly quadrupled during their first trading session last July. However, with investors concerned that generative AI could make Figma’s technology commonplace, its stock has declined 35% from the $33 offering price.
Even the most popular offerings can disappoint. Chinese e-commerce giant Alibaba, excluded from this analysis, maintains the record for largest U.S. public offering by valuation. Promoted as the “Amazon of China,” its shares have doubled since its 2014 Wall Street debut, while the S&P 500 has returned over 300% during the same period.
