The historic public listing of Elon Musk’s SpaceX has completely rewritten the Wall Street playbook. In June 2026, the rocket and satellite giant pulled off the largest initial public offering (IPO) in human history, raising $75 billion, hitting a staggering $2.1 trillion valuation on day one and minting Musk as the world's first trillionaire.

Brokers reserved a chunk of shares specifically for everyday retail investors to buy the hype. On day one, the stock did exactly what the hype demanded: it jumped 19% from its initial price.

But beneath the euphoria lies a sobering reality. SpaceX is currently trading at a mind-boggling 92 times its revenue—and internal filings show the company still loses billions of dollars a year outside of its Starlink internet business. Independent analysts at Morningstar have already flagged that the company's realistic fair value is closer to $780 billion, meaning investors are paying a massive premium based on a promise of that it’ll reap massive profits in the future.

SpaceX is the ultimate example of the modern IPO irrationality where simply owning a piece of a “cool company” seems to outweigh traditional analysis like checking its fundamentals and potential for profit.

How a company goes public

An IPO is basically an exit strategy for early investors. It is the process where a private company lists its shares on a public stock exchange to raise new cash and allow its founders, employees, and venture capitalists to finally sell their shares for real money.

Going public changes a company overnight:

• Under the microscope: The company must publish regular quarterly financial reports and open its books to the public.

• Non-stop price changes: In exchange for being able to buy and sell easily, the company is now at the mercy of the stock market's daily mood swings.

• The behind-the-scenes price: Wall Street investment banks set the initial launch price based on what large institutional investors (like hedge funds) are willing to pay.

• Because this price is negotiated behind closed doors rather than on the open market, it often has very little to do with the stock's actual long-term value.

Why new stocks jump on day one (and why it doesn't last)

That famous "first-day pop,” where a hot new stock spikes 20% or 50% the morning it launches, is usually driven by supply and demand tricks, not because the company suddenly became more valuable.

This initial jump happens because of three things:

• Artificial scarcity: Investment banks usually release only a tiny fraction of the company's total shares on day one.

• The hype train: Regular investors who couldn't buy in early rush to grab shares the second the market opens.

• The roadshow hype: The company spends months promoting itself to the media and big investors, building up massive excitement.

The turnaround risk: The forces that push a stock up on day one can disappear fast. Most IPOs have a 90-to-180-day "lock-up period" where company insiders are banned from selling. The moment that window opens, insiders often flood the market with shares to cash out. When that happens, the artificial scarcity vanishes, and reality sets in.

What the data shows in the long-term

Decades of stock market data reveal a clear, repeating pattern: intense short-term excitement followed by disappointing long-term returns. While every market cycle is a bit different, the typical roadmap for an IPO cohort over three to five years looks like this:

The data shows that IPO investing is not always a sound strategy. Only a small handful of companies (like Amazon or Apple) go on to generate massive, life-changing wealth. But the vast majority of IPOs end up underperforming the broader market or trailing index funds.

Tech IPOs: High expectations vs. real-world execution

Nowhere is the gap between a great story and financial reality wider than in the tech sector. Tech companies routinely launch at valuations that assume they will perform flawlessly for the next ten years. This creates a huge risk: you are paying a future price today for a company that still has to survive real-world challenges tomorrow.

Let's look at how some famous tech stocks actually performed after their big debuts.

Trajectory of major tech IPOs

The lesson here is that even companies that eventually become massive successes rarely reward the people who bought them during the IPO week. Early prices are driven by excitement; long-term survival is driven by actual profits.

The Spanish IPO market: boring may be better

Spain's stock market (IBEX 35) offers a completely different vibe than tech-heavy US exchanges. The Spanish market is built on mature, traditional businesses: fashion retail, construction, banking, and utilities.

Because Spanish IPOs rarely feature flashy tech startups, they don't usually see triple-digit gains on day one—but they also don't suffer the catastrophic collapses common in Silicon Valley.

A look at Spain’s major market debuts

Spain’s experience proves a fundamental rule of investing: how a company joins the stock market doesn't matter. What matters is the quality of the business and how smart management is with its money.

The playing field is tilted against retail investors

Wall Street loves to market IPOs to regular investors as exclusive, ground-floor opportunities. In reality, the game is heavily weighted in favor of the insiders.

1. Information advantage: Founders and venture capitalists have been running the company for years. When they decide it’s time to go public, they are choosing the exact moment to sell—usually when they think the price is as high as it will ever get.

   
   

2. Holding the bag: Regular investors buying on day one are providing "exit liquidity" for early backers. Once the media hype cools down and Wall Street analysts move on to the next hot thing, everyday investors are left holding a highly volatile stock.

   
   

A simple checklist before you buy an IPO stock

Before you buy shares in a brand-new stock, ignore the media headlines and look for these four things:

• Real profits vs. hype: Is the company actually making money, or is it burning cash just to look like it's growing?

• Room for mistakes: Is the stock price assuming the company will execute perfectly? If a company is priced to perfection, even a tiny mistake can crash the stock.

• Insider action: Are the founders keeping their shares after the lock-up period expires, or are they rushing to sell the moment they are allowed to?

• Stomach for volatility: Can your portfolio handle a 40% drop if the company runs into a rough patch during its first year or two?

IPOs rarely tell the full story

An IPO is neither an automatically good nor bad investment. It is simply a highly unpredictable entry point into a company whose real financial health is hidden behind a wall of marketing.

While a few legendary outliers prove that long-term investing can pay off massively, the broader data gives us a reality check: most IPOs do not turn into instant winners. For regular investors, building wealth means looking past a catchy corporate story and taking a hard look at the company's actual earnings engine.