SpaceX and OpenAI are reportedly preparing for what could be the two largest initial public offerings (IPOs) in U.S. history as measured by initial market values. While the listings are likely to be blockbuster events, investors should be cautious about diving in immediately.
SpaceX and OpenAI have very expensive valuations based on the financial data currently available, and stocks that go public with large market values have historically been poor long-term investments for investors who buy on day one. Here are the important details.
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SpaceX and OpenAI will go public with historic market values and expensive valuations
SpaceX has already filed IPO paperwork and is on pace to list shares in Q3 2026. Earlier this year, the rocket and satellite company merged with xAI, forming a combined entity worth $1.25 trillion. SpaceX reportedly posted a $5 billion loss on $18 billion in revenue in 2025, according to technology news site The Information. That gives the stock a very expensive price-to-sales (PS) ratio of 69.
OpenAI has not filed IPO paperwork, but the artificial intelligence start-up could go public as soon as Q4 2026. The company closed its latest funding round with a post-money valuation of $852 billion. Sales soared 225% to $13 billion in 2025, and OpenAI says revenue will more than double in 2026. Nevertheless, the company currently has a very rich PS multiple of 65 and does not expect to turn a profit until 2030.
For context, only one stock in the S&P 500 (^GSPC +0.80%) currently trades at a more expensive valuation than SpaceX and OpenAI. That would be Palantir Technologies at 75 times sales. So not only are SpaceX and OpenAI going public with monster market values, but the stocks will also likely have extraordinarily high valuation ratios when they start trading.
History says SpaceX and OpenAI could soar initially, then drop sharply
Since 2000, nearly 4,000 companies listed on U.S. stock exchanges (NYSE and Nasdaq) have held initial public offerings, according to Jay Ritter, director of the IPO initiative at the University of Florida. Those stocks gained an average of 30% on their first trading day.
However, the initial excitement generally fades quickly as investors take profits after early price appreciation. Companies that go public with larger market values are particularly vulnerable to swift reversals. The chart below shows the 10 largest U.S. IPOs (as measured by the initial market value), and it gives the three-month and one-year returns after each stock was listed.
|
Company |
3-Month Return (Post-IPO) |
12-Month Return (Post-IPO) |
|---|---|---|
|
Alibaba Group |
18% |
(30%) |
|
Meta Platforms |
(50%) |
(31%) |
|
Uber Technologies |
(4%) |
(21%) |
|
AT&T Wireless |
(1%) |
(3%) |
|
Rivian Automotive |
(36%) |
(67%) |
|
DiDi Global |
(45%) |
(79%) |
|
United Parcel Service |
(16%) |
(15%) |
|
Coupang |
(22%) |
(65%) |
|
Enel |
(5%) |
1% |
|
Arm Holdings |
29% |
189% |
|
Median |
(11%) |
(26%) |
Data sources: Stansberry Research, YCharts.
As shown above, the 10 largest IPO stocks dropped by a median of 11% during the three-month period following their public debut, and they declined by a median of 26% during their first year as public companies.
What does that mean for SpaceX and OpenAI? Alibaba went public with a market value of $169 billion. That means SpaceX and OpenAI would easily be the largest IPOs in U.S. history at their current market values. So at whatever price shares close on day one, the chart says there is a 50-50 chance the stocks will drop at least 26% from that level over the next year.
SpaceX and OpenAI are likely to underperform the S&P 500 from their initial valuations
There is more bad news for investors eager to own shares of SpaceX and OpenAI. Most of the stocks listed in the last section have actually underperformed the S&P 500 since going public. That means investors would have been better off purchasing shares of an S&P 500 index fund.
- Alibaba is up 44% since its 2014 IPO, trailing the S&P 500 by 212 percentage points.
- Uber is up 79% since its 2019 IPO, trailing the S&P 500 by 70 percentage points.
- Rivian is down 84% since its 2021 IPO, trailing the S&P 500 by 138 percentage points.
- DiDi is down 73% since its 2021 IPO, trailing the S&P 500 by 139 percentage points.
- UPS is up 57% since its 1999 IPO, trailing the S&P 500 by 365 percentage points.
- Coupang is down 59% since its 2021 IPO, trailing the S&P 500 by 141 percentage points.
What about the others? Meta Platforms, Arm Holdings, and Enel have beat the S&P 500 since their IPOs, and the long-term performance of AT&T Wireless cannot be determined because it was acquired by Cingular (a company that later changed its name to AT&T Mobility, which is now a wholly owned subsidiary of AT&T).
Here’s the big picture: SpaceX and OpenAI are two of the most anticipated IPOs in recent memory. The buzz could lead to tremendous price increases during their first few trading days, but investors should think twice before diving into the fray. In general, large IPOs have been poor long-term investments for investors who buy right away.
The most prudent course of action would be to stay on the sidelines until a more reasonable entry point presents itself. For instance, while Uber has significantly underperformed the S&P 500 since its IPO, the stock is up 143% over the last three years, essentially doubling the S&P 500’s return. Investors who waited for a reasonable entry point have been well rewarded.