The public market debut of SpaceX on June 12, following two decades as a private enterprise, immediately captured significant attention, with over 500 million shares trading hands on its first day. This volume marked the second-heaviest initial public offering day in Nasdaq history, surpassed only by Facebook’s 2012 launch. For some, the opportunity to invest, even a small amount, in such a high-profile company felt akin to purchasing a lottery ticket for a massive jackpot, a chance to participate in the excitement of a potentially transformative venture without overcommitting capital. This immediate enthusiasm underscores a broader investor sentiment this summer: a palpable fear of missing out on the next generation of companies poised to reshape industries, particularly for those who watched Nvidia’s meteoric rise, where a $10,000 investment a decade ago would now be worth approximately $1.8 million.
This intense focus now shifts to other anticipated public offerings, specifically Anthropic and OpenAI, which market watchers are already referring to as the “new Magnificent Three” alongside SpaceX. Yet, the initial surge of an IPO often does not represent the optimal entry point for long-term investors. Historical data indicates that the median IPO typically sees a decline of about 26% three years after its closing price on day one. Jay Ritter, an expert in IPOs, points to examples like the biotechs Abgenix and Enzo Biochem, which experienced stellar initial gains of over 2,000%, only to cool significantly. Conversely, patient investors in Moderna, despite a less dramatic debut, ultimately realized some of the highest returns among life-science IPOs between 1980 and 2024.
Jeff Barnett, a financial advisor, cautions against the immediate rush, noting that if shares are readily available to the general public, it often means more established, privileged investors have already passed on them. SpaceX, for instance, had early investors holding 12.5 billion shares at an average cost of $6.48. When the company went public, shares were priced at $135, opened at $150, and closed its first day at $160.95, a 19% surge. Even at the $135 IPO price, this represented a valuation of roughly 95 times its trailing annual sales, based on projected 2025 revenues of $18.7 billion and an IPO valuation of $1.77 trillion. Such figures suggest a substantial premium, even for a company with SpaceX’s ambitions. 
However, the increasing trend of value creation occurring during a company’s private phase does not negate opportunities in the public markets. Matt Witheiler of Wellington Management, an investor in pre-public companies, observes that while SpaceX grew into a $2 trillion entity before its IPO, raising $85.7 billion in gross proceeds, significant growth can still happen post-listing. He points to the emergence of numerous trillion-dollar public companies since Apple first crossed that threshold in 2018, with Nvidia now approaching $5 trillion, illustrating that public markets remain fertile ground for value creation.
The period immediately following an IPO is characterized by volatility. Avery Marquez, director of investment strategies at Renaissance Capital, explains that a newly public stock remains “unseasoned” for about three years, a time of significant transformation. Often, more favorable entry points emerge months after the initial hype subsides. SpaceX, for example, briefly spiked to $225 within days of its IPO before settling back to $160. Missing the first day of trading, therefore, does not necessarily mean missing the entire opportunity. Witheiler emphasizes the importance of scrutinizing financial fundamentals, stating that “the numbers” ultimately reveal a company’s true substance. He highlights the robust revenue figures of anticipated IPOs like OpenAI, with an annualized run rate exceeding $25 billion by early 2026, and Anthropic, which reached approximately $47 billion by May and projected over $50 billion. These figures stand in stark contrast to the dot-com era, where many companies with little to no sales were valued on mere conceptual appeal.
A key indicator for sustained success, according to Witheiler, is an “absolutely unbounded” addressable market, such as the potential for orbital data centers envisioned by SpaceX. Investors should critically assess what a company sells, who is paying for it, and whether the scope of the business justifies its valuation. Furthermore, reading the S-1 disclosure document, which every company files with the Securities and Exchange Commission before going public, is crucial. This document, freely available, provides a detailed financial and operational overview that often goes beyond headline narratives. For instance, while public narratives might highlight Elon Musk’s ambitious plans for a Martian colony, the SpaceX prospectus details a more conservative financial outlook, acknowledging that the company has not allocated funds for such a venture. The S-1 also reveals the concentration of control, such as Musk’s significant voting power through Class B super-voting shares. Finally, Bryan Wong, a portfolio manager at Osterweis Capital Management, suggests looking towards “picks and shovels” companies—those providing infrastructure and tools to burgeoning industries—as these often offer a broader field for identifying the next major success story, akin to finding the next Nvidia rather than another Enzo Biochem.
