SpaceX, IPOs, and the Cost of Chasing Excitement

Every market cycle seems to produce a handful of companies that capture the imagination of investors.

In the late 1990s it was internet companies. In the 2010s it was social media and electric vehicles. Today, investors are captivated by artificial intelligence, space exploration, robotics, and next-generation technology platforms.

The latest example is SpaceX, whose public debut has generated tremendous excitement among investors and quickly became one of the largest IPOs ever brought to market.

As investors watch SpaceX and speculate about future offerings from companies such as OpenAI, Anthropic, and other high-profile innovators, an important question emerges:

Should investors rush into an IPO on day one, or is patience often rewarded?

A Brief History of IPO Excitement

The allure of IPOs is understandable.

An initial public offering gives investors access to companies that may have spent years—or even decades—building their businesses as private enterprises. By the time they reach the public markets, many have become household names.

Some of the most anticipated IPOs in history include Google, Visa, Meta (formerly Facebook), Tesla, Alibaba, Uber, Airbnb, Reddit, and now SpaceX.

What makes IPO investing fascinating is that the long-term winners are often not the same as the short-term winners.

In many cases, the strongest companies experienced significant volatility immediately after going public before eventually rewarding patient investors.

What Typically Happens After an IPO?

Historically, IPO performance tends to follow three distinct phases.

Phase One: The Excitement Phase

The first few days or weeks often bring intense media attention and investor enthusiasm.

Demand can overwhelm supply, creating sharp price increases regardless of valuation.

This is often the phase that receives the most headlines.

Phase Two: The Reality Check

Once the initial excitement fades, investors begin focusing on fundamentals.

Questions emerge:

• Can revenue growth continue?
• Is the company profitable?
• Was the IPO valuation justified?
• Are expectations too optimistic?

This phase frequently produces meaningful pullbacks.

Many highly anticipated IPOs have experienced declines of 20%, 30%, or even 50% from their initial post-IPO highs before establishing a more sustainable valuation.

One reason is the expiration of lock-up periods, when early investors and employees gain the ability to sell shares. As additional shares enter the market, supply increases and prices can come under pressure.

Phase Three: Business Fundamentals Take Over

Eventually, the stock's performance becomes driven less by hype and more by execution.

Can management deliver?

Can earnings grow?

Can the company maintain its competitive advantage?

Over the long term, these factors matter far more than what happened during the first week of trading.

Lessons From Facebook and Tesla

Meta's 2012 IPO was widely viewed as disappointing.

Shares struggled after the offering and fell significantly below the IPO price. Many investors concluded the company was overvalued.

Yet investors who focused on the long-term business rather than the short-term headlines witnessed one of the most successful technology investments of the past decade.

Tesla followed a similar path.

Its early years as a public company were filled with volatility, skepticism, production concerns, and repeated questions about profitability.

Investors who purchased during periods of uncertainty were ultimately rewarded far more than those who focused solely on the excitement of the IPO itself.

The lesson?

The biggest winners are often identified not by what happens on IPO day, but by what the business accomplishes during the following decade.

What History Teaches Us About IPO Investing

While every company is unique, many of the most anticipated IPOs in modern history followed a surprisingly similar path.

The common theme is that investors often become captivated by the idea before the underlying business has fully demonstrated its earning power as a public company.

The irony is that some of the best long-term opportunities were not created during the excitement phase. They emerged during the reality-check phase, when expectations became more reasonable and investors could focus on fundamentals rather than headlines.

In other words, the greatest returns often came not when investors were buying the story, but when they were buying the business.

This is why we believe IPO investing requires patience and discipline. The first few days or weeks following an offering often tell us very little about the eventual success of the company. What matters far more is whether management can execute, whether earnings can grow, whether competitive advantages can be sustained, and whether the valuation ultimately aligns with the long-term opportunity.

History suggests that investors who focus on those factors tend to be rewarded more consistently than those who simply chase the excitement of the newest public company.

Why Buying Immediately Can Be Risky

There are several reasons investors should approach IPOs with caution.

Limited Trading History

Newly public companies have no established public-market track record.

Investors are often making decisions based on expectations rather than observed execution.

Elevated Valuations

The most anticipated IPOs frequently come to market with extremely high expectations already reflected in the stock price.

When expectations are elevated, even strong results can disappoint investors.

Lock-Up Expirations

Additional shares frequently enter the market months after the IPO, increasing supply and potentially creating volatility.

Emotional Decision Making

Investors often fear missing out on "the next big thing."

Historically, emotional decisions driven by excitement rarely produce the best long-term outcomes.

Why Waiting Can Be Beneficial

Many successful investors choose to wait.

Allowing six to twelve months to pass can provide:

• Multiple earnings reports
• Greater price discovery
• More information about management execution
• A clearer understanding of valuation
• Reduced emotional influence

Waiting does not eliminate risk, but it can help investors make decisions based on evidence rather than enthusiasm.

The SpaceX Question

SpaceX is unquestionably one of the most fascinating companies ever to enter the public markets.

The company has transformed commercial space launches, built the Starlink satellite network, and established itself as a leader in aerospace innovation.

Its IPO has already become one of the largest and most heavily anticipated public offerings in history.

What makes the SpaceX story particularly interesting is that, so far, it has followed the script of many highly anticipated IPOs before it.

It is also worth noting that investors were not buying SpaceX at a discounted valuation on IPO day. The offering itself valued the company at approximately $1.77 trillion—a valuation that many analysts and market commentators already viewed as aggressive. Some observers pointed to valuation metrics that ranked among the highest ever seen for a company of its size, arguing that investors were already paying a substantial premium for future growth that had yet to occur.

Yet when trading began, investors immediately bid shares higher, pushing the company's valuation above $2 trillion and, within days, closer to $3 trillion.

In other words, investors were not simply paying for SpaceX as it exists today—they were paying for what they believe SpaceX could become years or even decades from now.

That may ultimately prove to be the correct assessment. SpaceX possesses extraordinary assets, market leadership, and long-term growth opportunities. However, history reminds us that when expectations become exceptionally high, even great companies can experience periods where fundamentals need time to catch up with investor enthusiasm.

This is why we believe SpaceX is currently experiencing what we described earlier as Phase One—the Excitement Phase. Investor demand has been extraordinary, media attention has been relentless, and the market is still determining what portion of today's valuation reflects current fundamentals versus future expectations.

The next chapters—Phase Two and Phase Three—have yet to be written.

The question for investors is not whether SpaceX is an extraordinary company.

The real question is whether today's stock price appropriately reflects tomorrow's opportunities.

History reminds us that these are not always the same thing.

Will SpaceX Eventually Earn a Place in Our Portfolios?

Very possibly.

In fact, we believe there will likely come a time when SpaceX becomes an investment we are willing to own within client portfolios. Given the company's size, innovation, and potential long-term influence across industries ranging from aerospace and communications to artificial intelligence and national security, it would not be surprising to see SpaceX eventually become a meaningful holding within many of the ETFs and investment strategies we utilize.

There may also come a time when we determine that SpaceX deserves consideration as a standalone position within certain client portfolios.

However, when that time comes, our decision will not be driven by excitement, anticipation, headlines, hype or fear of missing out.

It will be driven by the same factors that guide every investment decision we make: fundamentals, valuation, financial strength, competitive positioning, and long-term return potential.

We are not interested in owning SpaceX for a trade measured in days or weeks. If and when we invest, it will be because we believe the company has earned a meaningful place in a portfolio for years.

As investors, our objective is not to be first. Our objective is to be right.

We believe SpaceX may very well become one of the defining companies of the next several decades. The question is not whether the company is exceptional. The question is whether the investment opportunity is exceptional at today's price.

Those are not always the same thing.

Final Thoughts

As Chief Investment Officer at SHC Wealth Management, one of my responsibilities is evaluating opportunities, identifying risks, and helping ensure our clients remain focused on what matters most: achieving their long-term financial goals.

That responsibility extends well beyond any single company, sector, theme, or market headline.

While I lead our investment process as Chief Investment Officer, portfolio decisions are never made in isolation. They are shaped through ongoing collaboration among our investment committee, planning team, research partners, strategic asset managers, and the broader SHC leadership team.

I work closely with my partner, Jessica Geary, CFP®, Chief Planning Officer, as well as the rest of our wealth management team, including Bree Edgerly, FPQP®, and Jared Gerger. Together, we strive to ensure that investment decisions are aligned with the financial planning needs, objectives, time horizons, tax considerations, and risk tolerances of the families we serve.

Great investment ideas only matter when they support a well-designed financial place. That collaboration allows us to evaluate opportunities through multiple lenses—including investment merit, portfolio construction, tax efficiency, income needs, and long-term client outcomes. It also helps us determine when patience may be the better investment decision.

Whether the next great opportunity is SpaceX, OpenAI, Anthropic, or a company that has not yet been founded, our approach will remain unchanged. We will continue to evaluate businesses based on their fundamentals, competitive advantages, valuation, and ability to create long-term value for our clients.

Markets don't reward optimism.

Markets don't reward pessimism.

Over time, markets tend to reward preparation, discipline, opportunism and sound decision-making.

At SHC Wealth Management, we remain committed to that philosophy and to being by your side through every market cycle, every opportunity, and every challenge.

Have a Great Today and a Prosperous Tomorrow!

*The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual.

All performance referenced is historical and there is no guarantee of future results. 

The economic forecasts set forth in this material may not develop as predicted and there can be no guarantee that strategies promoted will be successful.

Sources & Additional Reading

The observations and commentary contained in this article are based on publicly available information, including company filings, market data, financial news reporting, and historical IPO performance.

Key sources referenced include:

• Reuters – Coverage of the SpaceX Initial Public Offering, valuation, trading activity, and investor demand.
• U.S. Securities and Exchange Commission (SEC) – IPO filings, registration statements, and public company disclosures.
• Nasdaq – Historical IPO pricing and trading data.
• New York Stock Exchange (NYSE) – Historical IPO and market performance data.
• Meta Platforms, Inc. Investor Relations – Historical information regarding Facebook's IPO and corporate performance.
• Tesla, Inc. Investor Relations – Historical financial and corporate information.
• Alphabet Inc. Investor Relations – Historical information regarding Google's public offering and subsequent performance.
• Visa Inc. Investor Relations – Historical IPO and corporate performance information.
• Airbnb, Inc. Investor Relations – IPO and corporate performance data.
• Uber Technologies, Inc. Investor Relations – IPO and corporate performance data.