Here’s the thing about IPO day: everyone’s watching the wrong number.
When SpaceX hits the Nasdaq tomorrow, financial media will lose its collective mind over the first-day pop. And yeah, it’ll probably be huge. But here’s what nobody tells you—that massive gain? It’s not for you.
Let me introduce you to Jay Ritter, a professor at the University of Florida who’s basically the IPO whisperer. His database covers 45 years and over 9,300 offerings. Goldman cites him. JPMorgan cites him. The SEC cites him. And his data is absolutely brutal for retail investors chasing IPO hype.
The First-Day Pop Is a Mirage
IPOs average a 19% first-day pop. Sounds great, right? Except you’re not getting that price. That’s reserved for institutional investors—the hedge funds and pension managers that underwriting banks actually care about. By the time you can buy SpaceX shares, the stock’s already jumped. You’re buying the peak, not the pop.
SpaceX tried to throw retail investors a bone by reserving 30% of shares for regular people. But the deadline passed yesterday. And even if you got in, the IPO is oversubscribed four times over, so brokerages can’t guarantee your full order anyway.
Translation: You’re not buying at $135. You’re buying at $200. And that 19% gain everyone’s celebrating? That was never yours. It went straight to the insiders and institutions who got there first.
Since 1980, $250 billion has flowed from retail buyers to institutional allocatees through first-day underpricing alone. It’s a wealth transfer dressed up as opportunity.
What Happens Next Is Worse
Forget day one. Ritter spent decades tracking what happens over the next three to five years, and the findings should terrify anyone thinking about buying this IPO wave.
IPO buyers—purchasing at the day-one closing price—underperform the market by an average of 20.5% over three years. That’s roughly 5.5% per year of underperformance versus just owning an index fund.
Think about that. After all the hype, all the media coverage, all the analyst upgrades, you’d have been better off buying the S&P 500.
It gets worse for unprofitable companies. SpaceX, OpenAI, and Anthropic are all going public while burning billions. Ritter’s data shows unprofitable IPOs return negative 30.7% on a market-adjusted basis over three years. That’s nearly two-and-a-half times worse than profitable ones.
Goldman’s Track Record Tells the Story
Goldman Sachs is leading the SpaceX IPO. From 2012 to 2021, Goldman-led IPOs averaged a 27.6% first-day pop. But investors who bought at that closing price and held for three years? They underperformed the market by 25.6%.
JPMorgan’s track record over the same period: negative 10.5%.
The Real Play
Here’s the truth: the AI and space revolutions are real. Money will be made. But historically, retail investors buying IPOs don’t make it.
The money goes to people who owned the ecosystem before Wall Street showed up to reprice it. The semiconductor supply chains. The power infrastructure. The data centers. The picks-and-shovels plays that win regardless of which company ultimately dominates.
While everyone’s staring at the castle in the air, the foundations go on sale.
So if you’re tempted by SpaceX tomorrow, go in with your eyes open. But the smarter play? Own the infrastructure, not the hype.
