
Space Exploration Technologies (SpaceX) (NASDAQ: SPCX) has made its historic market debut, and it was more fantastic than expected. Since the initial public offering (IPO) had many more requests than shares available, the underwriting banks likely exercised their overall 15% allotment, and SpaceX raised $86 billion.
While SpaceX stock jumped more than 50% in the days following its IPO, it hasn't been able to hold on to all of its gains. As of this writing, SpaceX stock is up 17% from its IPO price. Interest in the stock remains high, for many reasons, including Elon Musk fandom and a desire to be part of the future of space travel.
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Image source: Getty Images.
But for the retail investor, the end goal is putting your money to work for you. Over the long term, SpaceX may become the consequential company investors are hoping for. But even then, this may not be the best time to invest. Consider where the stock might be three months from now.
The historical precedent
IPOs can offer exciting incentives for investors. Getting in at the beginning gives you the greatest opportunities for gains -- or does it?
With today's mega-IPOs, that's not necessarily the case. Many large tech companies land on the markets as expensive, highly valued companies, and that doesn't create the conditions for strong gains, at least initially.
Consider some of the largest U.S. IPOs and how they did after three months:
Data source: Kiplinger, YCharts.
Some went up, and some went down, but the average is a 13% increase.
So far, SpaceX is unlike any other IPO in several ways and might prove different in three months. But markets move in specific ways, and no stock can outrun its fundamentals over time. If SpaceX stock mimics the average performance of these other top IPOs, then you would see a moderate gain in its stock price over the next three months, and $1,000 would be worth around $1,130.
However, in three months, part of the lockup period will have ended. SpaceX has an unusual, staggered lockup structure, with 20% of insider shares allowed to be sold after the first earnings report, expected in late July or early August. There are some other conditions, and other lockups ending at different times between 70 and 135 days,with most of the remainder coming to market at 180 days.
Based on averages, SpaceX stock is likely to be slightly higher than its IPO price in three months, but it's volatile, so investors should probably avoid it right now.
Should you buy stock in Space Exploration Technologies right now?
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Jennifer Saibil has positions in Rivian Automotive. The Motley Fool has positions in and recommends Uber Technologies. The Motley Fool recommends Alibaba Group and General Motors. 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.