Elon Musk’s rocket and satellite company SpaceX has secretly filed for an initial public offering with the Securities and Exchange Commission, a person familiar with the matter told CNBC’s David Faber on Wednesday. The company could seek a valuation of $1.75 trillion in an IPO around June, Bloomberg reported, citing people familiar with the matter.
The confidential filing means SpaceX files its financials with the SEC before making them available to the public, which must occur at least 15 days before the IPO roadshow, a series of presentations to attract potential investors.
There’s a reason investors are generally keen to get on the ground floor of proverbial newly public companies. From 1980 to 2025, stock prices rose an average of 19% from their public price on the first day of trading, according to data from Jay Ritter, director of the IPO Initiative at the University of Florida.
And there are probably few initial public offerings that attract as much attention as this one. SpaceX is reportedly aiming to raise up to $75 billion, which would be the highest ever for a U.S. debut, but the title is currently included in Alibaba’s $22 billion offering in 2014.
Experts say that under certain circumstances, short-term funds could be invested immediately after the IPO launches. However, given the potential for increased volatility, long-term investors should tread carefully and may wish to take more cautious action.
“We’ve always taken a wait-and-see approach to that market,” says Josef Schuster, founder of IPOX Schuster, an investment and research firm focused on IPOs.
If you want to get into SpaceX or any other IPO, it’s wise to do your homework on how these stocks tend to behave, Schuster and other experts say. Here’s what you need to know:
How to invest in an IPO
Ritter said that while IPO stocks tend to rise on their first day of trading, that’s not guaranteed and they can lose about 25% in value. Additionally, Ritter’s data uses a price that may not be available to the public: the public offering price, which is the price set by the IPO’s underwriter before the stock is listed on a public exchange.
Ritter said shares at the public offering price are typically not available to individual investors, but it is estimated that 95% of the shares go to institutional investors, especially in the case of “high-profile” IPOs. For all IPOs, Fidelity fixes the ratio of institutional to retail investors at 90/10.
According to a report from Bloomberg, SpaceX plans to counter this trend by making up to 30% of its offering available to retail investors. If you’re interested in acquiring SpaceX’s public offering price stock, it’s worth monitoring whether your brokerage firm has access to that public offering price, Ritter says.
If the stock is not available at the public price, you should buy it after it goes public. And once the stock hits the market, there’s no telling how a particular IPO stock will perform, Ritter said. “On average, the return from opening price to closing price is close to zero.”
Things to consider before investing in IPO stocks
If you’re interested in buying IPO stocks, experts say there are several factors worth considering. Here are three to keep an eye on.
1.Float
The percentage of a company’s stock that is available to the public, known as its stock float, is an important factor to pay attention to. Schuster says very low float is a “major red flag” when considering which companies have historically outperformed or underperformed.
Issuing a small number of shares can cause a company’s stock price to soar in early trading, he said, but if a company receives negative news, such as not making expected profits, volatility could continue and pose huge risks.
SpaceX is rumored to be coming to market with a free float of about 5%, and the stock price could be in historically difficult territory, Schuster said. “If it’s less than 7%, you need to be very careful.”
2. Sales
Ritter says look at a company’s revenue once it files a public filing with the SEC.
Companies that went public with at least $1 billion in revenue in the past 12 months have on average caught up with the market in the three years since going public, “while smaller companies have underperformed on average,” he said.
In other words, companies with a strong sales track record are less likely to underperform than those with a weaker track record.
Still, you need to decide whether it’s worth holding long-term based on a company’s fundamentals, Ritter says. IPO companies tend to underperform when their stock price significantly exceeds sales, but it may still be worth buying the stock if, for example, you believe the company can rapidly and continuously improve its financial performance in the coming years, Ritter says.
3. Role of portfolio
Experts say it’s important to consider what role you want specific IPO stocks to play in your portfolio. Schuster said he typically prefers to invest after a stock has been on the market for a while, and cautions against trying to take advantage of the short-term big swings that can occur immediately after an initial public offering.
“I think investors need to be really careful about jumping in at this point,” he says. “But in the future, once it starts trading, I’m going to trade it and see how it goes. Often the entry point for an IPO is much lower than the first trading day.[Some companies]weren’t winners on day one or when you bought them on the first trade, but they became winners over time.”
Both Ritter and Schuster caution against betting a large portion of your portfolio on a single IPO stock, recommending holding your investments as part of a larger, more diversified portfolio. It’s also wise to consult a financial advisor before making any changes to your portfolio.
And if you want early access to SpaceX and other pre-IPO names, they may already be available to you as part of a more diversified strategy.
Mutual funds are allowed to hold up to 15% of their portfolios in so-called illiquid assets, which may include private equity and private real estate holdings. Baron Opportunity, a mutual fund that seeks to invest in innovative and fast-growing businesses, holds 14.7% of SpaceX’s portfolio in its latest report.
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