Market AnalysisMay 26, 20262 Min
SpaceX Market Debut Turns Heads, But Recent Star IPOs Have Struggled To Outperform Wider Indices
Wall Street is gearing up for what is expected to be a blockbuster listing of Elon Musk’s rocket and satellite company SpaceX next month. But, a closer look shows that several marquee IPOs launched in recent years have struggled to deliver strong returns for investors.
A Reuters analysis of recent marquee IPOs found that investors would have outperformed most of them by simply investing in the S&P 500. Over the past five years, the 50 biggest listings by valuation failed to beat the benchmark index about three-quarters of the time.
The S&P 500 Outperforms The Hype
The Reuters analysis showed that investors buying into each of the IPOs reviewed would have seen average gains of 27% by May 21, compared with a 53% rise in the S&P 500 in the same period. The calculation assumes investors were able to obtain shares at the offering price or invest in the broader market benchmark.
The analysis found that investors who rushed to buy shares during the often chaotic first day of trading typically saw even weaker returns over time.
"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.
Dwarfing Wall Street: The $1.75 Trillion Gamble
SpaceX filed its prospectus earlier this month (May 20) and is set to make its stock market debut under the ticker ‘SPCX’. The potential share sale date is June 11, as per a Reuters report. Apart from SpaceX, AI giants such as OpenAI and Anthropic are also likely to announce their IPO details soon. This comes amid surging investor enthusiasm for artificial intelligence stocks that has pushed US equities to fresh records.
Musk is also offering retail investors access to shares through platforms including Robinhood and SoFi.
The company’s anticipated $1.75 trillion valuation would place it comfortably above all previous US stock market listings. But, as the Reuters analysis shows, blockbuster valuations are not a guarantee of returns. IPO expert Jay Ritter said firms entering the market with elevated price-to-sales ratios often struggle most against the S&P 500 over time.
A $1.75 trillion valuation puts SpaceX’s price-to-sales ratio at nearly 100. This sharply contrasts with Nvidia’s price-to-sales ratio of around 24.
From 700% Surges To Delisting Disasters
Within the IPOs analysed by Reuters, AI chip designers Astera Labs and Arm Holdings have delivered the strongest returns. Astera Labs has surged over 700% since going public in 2024, while Arm Holdings has risen around 400% following its 2023 debut, beating the broader market by a wide margin.
Likewise, Cerebras Systems has risen 52% since its debut on May 14 this year, although the AI chip designer remains around 27% below its first intraday high.
By contrast, Didi Global is one of the weakest-performing IPOs in recent years. It was delisted from the NYSE in 2022, just a year after listing. It now trades over-the-counter with shares down roughly 74% from their $14 offering price.
Shares of the design software firm, Figma, surged almost fourfold on their first day of trading last year. However, the stock has since fallen 35% below its IPO price amid fears over AI-driven competition.
Meanwhile, Rivian Automotive has shed around 82% of its value since its 2021 market debut, despite briefly becoming the second-largest US automaker by market capitalisation shortly after listing. The EV maker continues to post losses on every car it manufactures while burning approximately $1 billion in cash every quarter.
Disclaimer: This content is for educational purposes only and does not constitute investment advice, personal recommendations, or a solicitation to buy or sell financial instruments. All investments involve risk, including potential loss of capital. Investors should consult professional financial advisors and consider their personal circumstances before making any investment decision.
