Demand for shares in Elon Musk's rocket and satellite company has many on Wall Street waiting for what could be a blockbuster initial public offering, yet a broader look at the recent past suggests caution. An analysis of the 50 highest-valued IPOs in the last five years finds that investors who bought those offerings at their IPO prices generally would have fared worse than investors who simply purchased an S&P 500 index fund.
Specifically, an investor who purchased each of those 50 IPOs at the offering price would be up an average of 27% through May 21. By contrast, the same periods measured from each IPO to May 21 show an average gain of 53% in the S&P 500. Those figures assume the buyer was able to access shares at the IPO price - a condition often unavailable to many retail investors - or alternatively chose to buy the broad-market S&P 500 instead.
Returns look even less attractive for those entering during the first-day trading frenzy that typically accompanies hot listings. "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, highlighting how rapidly prices can move once stocks begin public trading.
SpaceX and the AI wave
SpaceX is expected to trade under the ticker 'SPCX' and filed a prospectus on Wednesday, with a share sale potentially as early as June 11. The company has signaled plans to make some shares available to retail customers via platforms such as Robinhood and SoFi, which could give a broader set of investors access to the IPO price rather than forcing them to chase the stock in aftermarket trading.
The company is reportedly targeting a $1.75 trillion valuation, a figure that would dwarf prior listings. That scale has intensified comparisons to other high-profile deals, and comes amid investor appetite for artificial intelligence-related companies, with OpenAI and Anthropic also expected to pursue public listings.
High headline valuations are not inherently a recipe for investor gains. Jay Ritter, a professor at the University of Florida who studies IPOs, observed that most public listings underperform the S&P 500 over the long run, and that companies carrying especially high price-to-sales ratios tend to perform the worst. At a $1.75 trillion valuation, SpaceX's price-to-sales ratio would be nearly 100, notably higher than AI chip heavyweight Nvidia's price-to-sales ratio of 24. The company reported a loss 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." Ritter's view underscores the tension between storytelling and measurable valuation metrics when investors decide how much to pay at an IPO.
Winners and losers among recent large IPOs
Not all recent large IPOs have disappointed; a subset of companies tied to AI and semiconductors have delivered strong gains. AI chip designers have been among the standouts. Astera Labs, which came to market in 2024, has surged over 700% since its IPO. Arm Holdings has also been a strong performer, rising roughly 400% since its 2023 debut. Both have significantly outpaced the S&P 500 over the relevant spans.
Cerebras Systems, another AI-focused chip designer, initially soared 52% from its May 14 IPO price, though it has since traded down and sits about 27% below its first intraday high.
By contrast, some of the largest disappointments have been dramatic. Chinese ride-hailing company Didi Global, after an oversubscribed IPO, was delisted from the New York Stock Exchange in 2022 and now trades over-the-counter, roughly 74% below its $14 IPO price. Electric vehicle maker Rivian Automotive has slumped about 82% since its 2021 IPO that briefly made it the second-most valuable U.S. automaker; the company continues to lose money on each vehicle manufactured and is burning about $1 billion in cash every quarter.
Design software firm Figma's shares nearly quadrupled during their first session last July, only to decline thereafter amid investor concerns that generative AI could commoditize its offerings. Figma's stock is down about 35% from its $33 IPO price.
Even historically large and successful listings can lag the broader market over long spans. Chinese e-commerce giant Alibaba - not included among the 50 IPOs in this analysis - remains the largest U.S. IPO by valuation. Its shares have approximately doubled since the 2014 Wall Street debut, while the S&P 500 has returned over 300% during the same interval, illustrating that headline appreciation does not automatically translate into outperformance versus a broad-market benchmark.
Takeaways
The data suggest that buying into the biggest recent IPOs at the time of their market debuts has been a challenging route to outperforming a simple S&P 500 investment. While a small number of companies tied to AI and semiconductors have produced exceptional returns, many high-valuation listings have not met investor expectations, and several have lost substantial value.
Investors evaluating upcoming, highly marketed listings - including those tied to space exploration and AI - should weigh the premium valuations being paid at IPO against historical tendencies for the largest new listings to lag broad-market performance.