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The initial public offering (IPO) market has spent the last three years stuck in neutral. Rising interest rates, weak post-IPO performance, and a long list of overhyped debuts have kept companies private for longer and investors cautious. But now comes SpaceX — and suddenly Wall Street is acting like the drought never happened.

SpaceX plans to begin trading on the Nasdaq Exchange on June 12 under the ticker SPCX after filing its S-1 registration statement. The offering could value the company at as much as $2 trillion, making it the largest IPO in history.

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The excitement is understandable. The problem is that excitement and good investment returns rarely arrive together.

Most mega IPOs reserve the best allocations for institutions, hedge funds, and wealthy clients. Surprisingly, Elon Musk appears to want something different this time.

SpaceX disclosed in its S-1 filing that, “Certain of the shares of Class A common stock offered hereby will, at our request, be offered to retail investors.” Shares are expected to be available through Charles Schwab (SCHW), Fidelity Investments, Robinhood (HOOD), SoFi (SOFI), and Morgan Stanley's (MS) E*TRADE.

That means everyday investors will finally get access to one of tech’s most coveted private companies. The demand for the space stock could be enormous.

SpaceX generated $18.7 billion in revenue last year, according to its filing, while continuing to dominate commercial launches and expand Starlink globally. Yet the company also posted a $4.9 billion net loss as spending surged on AI infrastructure, Starship, and satellite deployment.

Regardless, enthusiasm is likely to overpower caution when trading opens. And that’s exactly the problem.

SpaceX isn’t entering the market under normal conditions. Nasdaq recently changed its rules to allow mega-cap IPOs to enter major indexes far faster than before. Reuters reports that the exchange’s new “fast entry” rules were designed for giant offerings like SpaceX, OpenAI, and Anthropic.

If SpaceX debuts near a $2 trillion valuation, index funds could be forced to buy billions of dollars worth of shares almost immediately.

That may push the stock sharply higher in the short term. It also creates dangerous expectations. History shows mega IPOs often disappoint after the initial hype fades. Meta Platforms (META) fell 47% in the first six months after its IPO, while Alibaba (BABA) dropped 26%. Coinbase (COIN) lost 75% within a year of its public debut. Rivian (RIVN) fell 80% from its peak.

According to Nasdaq data, nearly 64% of IPOs underperform the broader market by more than 10 percentage points over their first three years.

Let's be clear: none of that means SpaceX is a bad company. In fact, the opposite. But it does mean investors can still lose money buying a great company at the wrong price.

In short, SpaceX may eventually become one of the most important publicly traded companies on Earth. Its leadership in launch services, satellite internet, and defense infrastructure is real.

But the IPO setup looks designed for maximum hype — massive retail participation, forced index buying, meme-stock enthusiasm, and one of the richest valuations ever attached to a newly public company.

When all is said and done, smart investors don’t need to buy a stock on day one to profit from it long term. There may come a time when SpaceX shares deserve a place in your portfolio. June 12 probably isn’t it.

On the date of publication, Rich Duprey did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com