SpaceX has officially filed for what could be the largest initial public offering (IPO) in American history, targeting a valuation of $2 trillion — making it larger than Elon Musk’s Tesla. That kind of number gets investors excited, but before you set aside $1,000 for opening day, it’s worth looking at what the data actually says about buying into IPOs at these kinds of valuations.

What the historical data tells us about IPO performance

Jay Ritter, a finance professor at the University of Florida who’s spent decades studying IPOs — his nickname is “Mr. IPO” — has built one of the most comprehensive data sets on IPO performance around. Ritter’s research shows that, on average, IPOs underperform comparable public companies, and in the first three years, lose to the broader market by nearly 20%.

Of course, this is just an average, and different kinds of companies tend to perform very differently — SpaceX belongs to a few of these subcategories. SpaceX has massive revenue, and these companies barely underperform, off by just 2.3%. On the other hand, as a (mostly) non-tech company, it’s part of another cohort that underperforms by nearly 25%.

What if we get more specific? Let’s consider some recent IPOs that are comparable — large scale, high retail interest, high valuation. What would $1,000 invested at IPO be worth today?

The good: Meta’s blockbuster IPO success story

Meta Platforms (May 2012 — IPO at $38): Meta (then Facebook) went public at a $104 billion valuation with roughly $1 billion in revenue. While there was an initial dip that took years to recover from, Meta IPO investors went on to experience absolutely fantastic gains. Your $1,000 invested at IPO would be worth about $16,600 today.

META data by YCharts

The bad: Uber’s underwhelming returns

Uber Technologies (May 2019 — IPO at $45): Uber went public at an $82 billion valuation. Seven years later, shares trade around $72. Your $1,000 would be worth roughly $1,740 today — about a 60% total return over seven years. That’s not terrible by any means, but it failed to keep up with the market. The same investment in, say, the State Street SPDR S&P 500 ETF Trust would be worth $2,380 today.

UBER data by YCharts

The ugly: Rivian’s cautionary tale

Rivian Automotive (November 2021 — IPO at $78): Rivian went public at a $66.5 billion valuation with virtually no revenue, but a whole lot of hype. The stock briefly rocketed above $170 in the post-IPO frenzy, but shares sit around $15.50 today. Your $1,000 would have turned into about $198 — an 80% loss.

RIVN data by YCharts

Why big IPOs often disappoint retail investors

IPOs often underperform for a few structural reasons that apply directly to SpaceX.

First, the easy money has already been made. By the time SpaceX goes public at a $2 trillion valuation, the venture capitalists, early employees, and private-market investors have already captured the exponential growth phase.

Second, IPOs, especially those with massive retail interest, tend to go public during windows of maximum optimism. Companies and bankers aren’t stupid — they choose to sell when enthusiasm — and often hype — is highest. That means retail investors are often buying at inflated valuations.

The bottom line on the SpaceX IPO

I’m not saying SpaceX is a bad company — far from it. I mean, it builds reusable rockets — that’s incredible. It’s one of the most impressive private companies in a generation. But being a great company and being a great IPO investment are two very different things.

Between Ritter’s data and a slew of examples of recent mega-IPOs underperforming, I would suggest you wait before putting $1,000 into the SpaceX IPO. I think it’s likely the price will pop quickly, then reverse course and trade well under its IPO price. That would be a smarter time to jump in.