Key Points
Elon Musk's SpaceX rewrote the record books on June 12 with an initial public offering (IPO) that ended up raising $85.7 billion, including the underwriters' overallotment.
Historically, large-scale IPOs have struggled during their first year as public companies.
Additionally, SpaceX's unique share lockup period and its otherworldly valuation pose problems.
It's turning out to be another banner year for U.S. equities, with the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite launching to new highs. Though the rise of artificial intelligence (AI) often gets most of the glory, initial public offering (IPO) euphoria also deserves some credit.
On June 12, Elon Musk's AI and space infrastructure conglomerate, Space Exploration Technologies (SpaceX) (NASDAQ: SPCX), cemented itself in Wall Street's record books. SpaceX's debut raised $85.7 billion, including the overallotment for underwriters, which nearly tripled Saudi Aramco's previous IPO capital raise record of $29.4 billion.
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For a few days following SpaceX's IPO, it fully lived up to the investor hype and neared a $3 trillion valuation. But as of the closing bell on July 2, Musk's company had "retraced" to a $2.13 trillion market cap. Nevertheless, its $162 share price is a cool 20% above its $135 IPO list price.
Image source: Getty Images.
The million-dollar question is: Can SpaceX sustain this momentum for the remainder of 2026?
While nothing can ever be guaranteed on Wall Street, history has a way of accurately forecasting the future.
Will SpaceX stock plummet below $100? History weighs in.
Although several newly signed compute deals for AI start-up xAI and fast entry into the Nasdaq-100 (effective today, July 7) are positives for SpaceX, historical precedent is definitely not its friend.
To begin with, large-scale IPOs have a terrible early stage track record on Wall Street. Before SpaceX went public, researchers at Truist Financial compared the performance of 30 of the largest tech-driven IPOs of the last 14 years (starting with Facebook, now Meta Platforms). Though 43% of the 30 were higher at the six-month mark, the average year-one maximum drawdown was a whopping 55%.
Moral of the story-do NOT chase hot IPOs
-- Puru Saxena (@saxena_puru) June 3, 2026
Year-1 average drawdown = 55%
Year-1 median drawdown = 54%
Table: Truist pic.twitter.com/xt864JD4Xh
The magnitude of this average drawdown indicates that investors' emotions play a big role in early trading for newly public companies. If SpaceX were to conform to the average year-one max drawdown, it would plunge to around $101.50.
What complicates matters for SpaceX is its staggered and accelerated lockup schedule.
Typically, companies going public sell between 10% and 25% of their outstanding shares. Though SpaceX sold approximately 555.6 million shares, this represents less than 5% of its outstanding shares. Musk's company has a relatively low float that's going to expand rapidly once insiders are free to sell their shares.
Starting two trading days after the company's first quarterly report as a public company (estimated for Aug. 6), early release-eligible shares can be sold. There are several performance- and time-based markers that enable insiders to dump their shares on retail investors. This can easily weigh on SpaceX's stock.
SpaceX IPO float unlock timeline:
-- Wall St Engine (@wallstengine) June 19, 2026
Initial free float: ~4.9%
Potential float available:
Aug 8: ~11.8%
Aug 20: ~15.2%
Sep 9: ~17.7%
Sep 24: ~20.1%
Oct 9: ~22.6%
Oct 24: ~25.1%
Dec 8: ~40%
Mar 18, 2027: ~44.1%
May 17, 2027: ~46.7%
Jun 12, 2027: ~50.8%
Musk's 46.1%... https://t.co/NBcYDs8caFpic.twitter.com/uORObGn042
Lastly, no company at the forefront of a game-changing technological innovation (let alone two, AI and the space economy) has ever sustained a trailing 12-month price-to-sales (P/S) ratio above 30 for any significant length of time. As of July 2, SpaceX was commanding a P/S ratio of 114, based on its 2025 full-year sales.
The cards are absolutely stacked against SpaceX's early success. More importantly, all of these factors decisively point to SpaceX's stock plunging below $100 per share before 2026 comes to a close.
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Sean Williams has positions in Meta Platforms. The Motley Fool has positions in and recommends Meta Platforms and Truist Financial. The Motley Fool has a disclosure policy.
