By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panelists agreed that comparing SpaceX to S&P 500 ETFs is flawed due to SpaceX's unique structure and private status. They debated the potential risks and opportunities, with some highlighting execution risks in scaling Starlink and others pointing to a 'defense premium' that could support valuation. The net takeaway is that SpaceX's eventual IPO, if and when it happens, will face significant scrutiny and may not perform as expected based on historical mega-IPO data.
Risk: Execution risk in scaling Starlink user terminals at subsidized prices, which could extend negative cash flows and pressure any eventual IPO valuation.
Opportunity: The 'defense premium' that could create a floor for SpaceX's valuation, as it becomes a critical component of U.S. national security infrastructure.
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
After months of hype, Space Exploration Technologies (NASDAQ: SPCX), better known as SpaceX, went public last month. Despite its record-breaking debut as the largest initial public offering (IPO) in history by market cap, the stock is currently down nearly 21% from its peak on June 16.
While some investors are still optimistic that SpaceX will skyrocket after it finds its footing, others are not convinced that it has what it takes to thrive over time.
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Nobody can say for certain where SpaceX will be in a decade or two, but if it's anything like previous mega-IPOs, history suggests the humble S&P 500 ETF could be a more lucrative option.
Eight of the top 10 largest U.S. IPOs in history have underperformed the S&P 500 (SNPINDEX: ^GSPC) since going public, according to data from FactSet Research. It's not a particularly close race, either. Collectively, these 10 stocks have fallen short of the index by a median of 127 percentage points since they began trading.
Early performance also isn't a strong indicator of where a stock is headed, historically. Meta Platforms is one of the two companies that have outperformed the S&P 500, and its stock price rose just 1% on its first day of trading. Coinbase Global, on the other hand, surged by 31% on its first day and has since underperformed the S&P 500 by 136 percentage points.
Of course, that doesn't necessarily mean SpaceX is destined to fall short of the S&P 500. Anything could happen in the coming years, and each stock is unique. But if history shows us anything, it's that larger IPOs don't always have a leg up when it comes to long-term performance.
Where you choose to invest will depend mostly on your risk tolerance.
SpaceX is far riskier than an S&P 500 ETF, as there are still many unknowns. The company isn't yet profitable and is already overvalued based on key financial metrics. Also, some of CEO Elon Musk's goals -- such as building data centers in space and creating a colony of a million humans on Mars -- are lofty, to say the least.
If SpaceX does succeed in its goals, it could be a lucrative investment. But not all investors will be comfortable with that level of uncertainty, and the near term is likely to be volatile.
The S&P 500 ETF is a more stable option, as this investment has decades of history earning positive total returns despite short-term volatility. Also, because SpaceX is not yet listed in the S&P 500 (and won't be for at least a year, assuming it's profitable by then), it can be a smart choice for investors looking specifically to avoid this company.
Nothing is ever guaranteed in the stock market, but for investors seeking consistency, it's hard to go wrong with an S&P 500 ETF.
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Katie Brockman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends FactSet Research Systems and Meta Platforms. The Motley Fool recommends Coinbase Global. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"The historical IPO underperformance statistic cited is not directly applicable because SpaceX is neither public nor comparable to the reference set of past listings."
The article's core claim rests on FactSet data showing eight of the ten largest U.S. IPOs lagging the S&P 500 by a median 127 percentage points. Yet it glosses over two structural issues: SpaceX remains private with no NASDAQ:SPCX listing, and its revenue mix (Starlink subscriptions plus fixed-price NASA/DoD launch contracts) has no precedent among the cited mega-IPOs. This changes both risk profile and comparability. An S&P 500 ETF offers liquidity and diversification, but investors avoiding SpaceX entirely forgo exposure to a potential aerospace oligopoly whose valuation multiples are driven by growth optionality rather than current earnings.
Even unique business models have not shielded prior high-profile listings from multi-year drawdowns once growth expectations reset, so the historical median underperformance could still apply once SpaceX faces public-market scrutiny.
"The article presents a false premise as SpaceX is a private company, rendering any analysis of its public stock performance and ticker 'SPCX' entirely invalid."
This article is fundamentally flawed because it discusses 'SpaceX' as a public company under the ticker 'SPCX,' which is factually incorrect; SpaceX remains a private entity. The comparison to S&P 500 ETFs is a category error, conflating a private aerospace venture with a diversified index. While the article cites historical IPO underperformance, it ignores the unique nature of SpaceX's vertical integration and its Starlink division, which is already generating significant revenue. The author is likely referencing a derivative product or a misunderstanding of market data. Investors should ignore the 'SPCX' ticker entirely and focus on the fact that SpaceX is not currently accessible to retail equity markets.
If an investor is using a private equity secondary market or a special purpose vehicle (SPV) to gain exposure to SpaceX, the 'IPO underperformance' thesis might still hold if the valuation is disconnected from the company's actual cash flow generation.
"The article's historical IPO data is valid but doesn't account for SpaceX's differentiated cash generation from Starlink and launch services, making direct comparison to Coinbase or Alibaba misleading."
This article conflates two separate questions: whether SpaceX will beat the S&P 500 (unknowable), and whether the S&P 500 is a better *current* buy (a different claim entirely). The IPO underperformance data is real but survivorship-biased—it excludes mega-IPOs that were never tracked or delisted. More critically, the article ignores that SpaceX's valuation, profitability timeline, and addressable market (satellite internet, launch services, defense contracts) are fundamentally different from Coinbase or Meta. The 21% drawdown from peak isn't evidence of failure; it's normal post-IPO volatility. The article also buries that SpaceX has actual revenue and contracts, unlike many historical mega-IPOs.
If SpaceX remains unprofitable for 3+ years while burning cash on Mars ambitions, the IPO underperformance thesis will prove prescient—and the S&P 500's boring 10% annual returns will crush a speculative bet that never delivers. The article's caution isn't wrong, just incomplete.
"SpaceX could ultimately outperform the S&P 500 if it scales profitability through Starlink monetization and launch services, unlocking durable cash flows despite near-term volatility."
SpaceX is portrayed as a high-risk bet against a steady S&P 500, but the article omits two critical angles. First, if SpaceX were public, its addressable markets extend beyond launches to Starlink, government contracts, and payload/services, which could unlock durable cash flows even amid volatility. Second, the piece ignores the fundamental misstatement about the ticker SPCX; SpaceX remains privately held as of mid-2026, making any direct public comparison potentially flawed or mispriced for now. Finally, IPO underperformance is historically biased toward the biggest listings; a few winners can meaningfully re-rate with real-profitability milestones, especially in tech-enabled infrastructure for space.
History shows mega-IPOs often underperform for years, so even a SpaceX upside would hinge on durable profitability and capital discipline. The Starlink and defense contracts are not guaranteed revenue streams, and capex needs could keep margins under pressure.
"Starlink hardware subsidies risk extending cash burn beyond the timelines already discussed."
ChatGPT's aside on mid-2026 timelines misses the mark because SpaceX has repeatedly pushed back public plans. More importantly, the panel overlooks execution risk in scaling Starlink user terminals at subsidized prices, which could extend negative cash flows well past the 3-year unprofitability threshold Claude flagged, pressuring any eventual IPO valuation.
"SpaceX's integration into national security infrastructure provides a valuation floor that invalidates historical mega-IPO underperformance models."
Grok correctly identifies execution risk, but the real blind spot is the 'defense premium.' SpaceX is becoming a critical component of U.S. national security infrastructure, effectively a shadow utility. This isn't just about Starlink terminal subsidies; it's about the DoD's reliance on Starshield and Falcon 9, which creates a floor for valuation that traditional tech IPOs lack. The 'mega-IPO underperformance' narrative fails because SpaceX functions more like a defense prime than a consumer-facing growth stock.
"Defense reliance creates a valuation floor only if public markets don't demand the margin transparency that killed prior aerospace IPOs."
Gemini's 'defense premium' argument is seductive but inverts the risk. Yes, SpaceX has DoD lock-in—but that's exactly why public markets will demand transparency on cost structures, margin sustainability, and whether national security contracts subsidize Starlink's consumer losses. Defense primes trade at 12-15x EBITDA, not 40x revenue. The 'shadow utility' framing obscures that utilities face regulatory scrutiny SpaceX has avoided. If an IPO forces that reckoning, the valuation compression could dwarf historical mega-IPO underperformance.
"A defense-premium is not a guaranteed floor for a SpaceX IPO; government contracts alone won't deliver stable, profitable cash flow, and transparency, capex, and regulatory risks could compress margins and trigger equity-market discipline."
Gemini overstated a defense-premium as a floor. If SpaceX ever lists, DoD contracts alone won’t guarantee stable, dilutive-free cash flow: cost-plus versus fixed-price funding, export controls, supplier pricing, and long procurement cycles can compress margins and extend cash burn. The 'shadow utility' notion ignores transparency demands and capex intensity. A public SpaceX would still face equity-market discipline, not a guaranteed valuation floor.
The panelists agreed that comparing SpaceX to S&P 500 ETFs is flawed due to SpaceX's unique structure and private status. They debated the potential risks and opportunities, with some highlighting execution risks in scaling Starlink and others pointing to a 'defense premium' that could support valuation. The net takeaway is that SpaceX's eventual IPO, if and when it happens, will face significant scrutiny and may not perform as expected based on historical mega-IPO data.
The 'defense premium' that could create a floor for SpaceX's valuation, as it becomes a critical component of U.S. national security infrastructure.
Execution risk in scaling Starlink user terminals at subsidized prices, which could extend negative cash flows and pressure any eventual IPO valuation.