Beware SpaceX buyers: Major IPOs are typically a rough ride in the first year

§ 01 Executive Snapshot

• What: SpaceX is preparing for a record-breaking IPO, but investors should be cautious about potential volatility in the first year.
• Who: SpaceX, Truist Wealth, Fidelity, Keith Lerner.
• Why it matters: The anticipated IPO could set a precedent for future megacap listings, highlighting the risks associated with high-profile public offerings.

§ 02 Key Developments

• A review of 30 major IPOs over the past 15 years shows that on a median basis, stocks dropped 9% 12 months post-debut.
• The average stock gain one year after launch was 14%, indicating significant volatility.
• All 30 companies experienced a median stock price plunge of 54% within their first year.

§ 03 Strategic Context

• Historical data indicates that major IPOs often face severe drawdowns and volatility in their inaugural year, setting a precedent for future offerings.
• SpaceX's IPO is expected to be particularly volatile due to high retail interest and significant share availability, diverging from the traditional institutional-heavy approach.

§ 04 Strategic Implications

• Immediate market consequences may include heightened volatility and potential drawdowns for SpaceX's stock, mirroring past IPO performances.
• Long-term adoption implications could affect investor sentiment towards future megacap IPOs and influence how companies approach their public offerings.

§ 05 Risks & Constraints

• Potential risks include regulatory scrutiny and market reactions to SpaceX's current unprofitability, which could impact stock performance.
• Competition for investor attention and market share from other high-profile IPOs could also create additional volatility.

§ 06 Watchlist / Forward Signals

• SpaceX is expected to debut on the Nasdaq on June 12, which will be a critical moment for gauging market reception.
• Future developments, such as post-IPO stock performance and retail investor engagement, will signal the success or failure of this offering.