Should You Buy an IPO on Launch Day?

SpaceX to the moooooon!

I’m 99% sure that you’ve heard of this massive IPO. Who hasn’t?

I get it. Afterall, this is the biggest IPO in history. The highest valuation ever at listing. And the name behind it is not other than Elon Musk, the same person who turned Tesla from a money-losing car company into a trillion-dollar juggernaut. If you believed in him early and bought Tesla, you made life-changing money.

So why would SpaceX be any different?

That is exactly the question I want to answer today.

Here is something the media rarely tells you plainly.

An IPO is not primarily a financial event. It is a marketing event.

When a company goes public, the goal of the bankers, the management team, and everyone involved is the same: generate enough excitement to sell shares at the highest possible price.

The roadshows, the press coverage, the Elon appearances, the record-breaking headlines. All of it is designed to do one thing. Get enough people excited to buy at a premium.

And it works. Every single time.

SpaceX priced its IPO at $135 on June 12, and on launch day it closed +20%.

Four days after that, it hit $225. In just less than a week, it briefly became one of the five most valuable companies in the world. Retail investors who got in at IPO and saw a 67% gain in four days told themselves they were geniuses.

Then the hype started fading. As it always does.

As of this post, SpaceX is trading at $153, -32% from its peak. Anyone who followed the hype train right after thinking it’s gonna rocket ship up is now sitting on a loss.

Let’s look back in history of past IPOs and I think you’ll start to see a pattern with IPO launches.

Looking at the data across major IPOs over the past decade, the average Year 1 maximum drawdown is -55%.

Some of the names on that list will surprise you. Robinhood dropped 90% in year one. Uber dropped 68%. Shopify dropped 52%. And many more. Even Facebook was not spared!

These are not obscure companies. They were some of the most talked-about, most hyped listings of their time.

2026 and 2025 are no different. Cerebras, one of the most anticipated AI chip companies, is currently down 42% from its IPO peak.

Figma, the design tool that people were so convinced will take over Adobe is down 90% from its IPO price.

Does that mean these are bad companies? Not really. Figma is a genuinely strong business. Cerebras is building real AI infrastructure.

So the problem was never the company. The problem was the price people paid to own it.

Being right about a company does not protect you if you were wrong about what you paid.

Look at Palantir. Year one max drawdown was -53%. Then it went up 164%. You had to survive the fall to get the gain. CrowdStrike dropped 67% at its worst before going on to become one of the best cybersecurity businesses in the world.

The pattern is not that IPO companies always fail. The pattern is that they almost always make you wait. And the price you pay at IPO is almost never the best price you will ever get.

Patience is not a passive choice here. It is an active edge.

I want to be fair to SpaceX as a business. It is genuinely impressive what they have built. Starlink generated $4.4 billion in operating profit in 2025. Revenue grew 33% year over year to $18 billion. The launch business has no real competitor at its scale.

But here’s what’s interesting.

Right now, both SpaceX and Amazon are sitting at a market cap around the $2T range.

Now look at what you are actually buying at that price.

Roughly the same valuation. But Amazon has 40x the revenue and $78B in profit. SpaceX is losing $5B a year.

If you’re buying SpaceX at this price, it’s not a business analysis. It is a bet on Elon Musk. Just like Tesla in its early days. Specifically, a bet that he will turn an $18B revenue company into something that justifies a $2T price tag.

Is there anything wrong with that? No, that might happen, because Elon has surprised everyone before.

But you gotta be honest with yourself.