SpaceX vs. S&P 500 ETF: Here's Which One History Says Is More Likely to Outperform

After months of hype, Space Exploration Technologies (NASDAQ: SPCX), amended known arsenic SpaceX, went nationalist past month. Despite its record-breaking debut arsenic the largest archetypal nationalist offering (IPO) successful past by marketplace cap, the banal is presently down astir 21% from its highest connected June 16.

While immoderate investors are inactive optimistic that SpaceX volition skyrocket aft it finds its footing, others are not convinced that it has what it takes to thrive implicit time.

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Nobody tin accidental for definite wherever SpaceX volition beryllium successful a decennary oregon two, but if it's thing similar erstwhile mega-IPOs, past suggests the humble S&P 500 ETF could beryllium a much lucrative option.

Most large IPOs underperform the market, past says

Eight of the apical 10 largest U.S. IPOs successful past person underperformed the S&P 500 (SNPINDEX: ^GSPC) since going public, according to information from FactSet Research. It's not a peculiarly adjacent race, either. Collectively, these 10 stocks person fallen abbreviated of the scale by a median of 127 percent points since they began trading.

Early show besides isn't a beardown indicator of wherever a banal is headed, historically. Meta Platforms is 1 of the 2 companies that have outperformed the S&P 500, and its banal terms roseate conscionable 1% connected its archetypal time of trading. Coinbase Global, connected the different hand, surged by 31% connected its archetypal time and has since underperformed the S&P 500 by 136 percent points.

Of course, that doesn't needfully mean SpaceX is destined to autumn abbreviated of the S&P 500. Anything could hap successful the coming years, and each banal is unique. But if past shows america anything, it's that larger IPOs don't ever person a limb up erstwhile it comes to semipermanent performance.

Is an S&P 500 ETF the amended bargain close now?

Where you take to put volition beryllium mostly connected your hazard tolerance.

SpaceX is acold riskier than an S&P 500 ETF, arsenic determination are inactive galore unknowns. The institution isn't yet profitable and is already overvalued based connected cardinal fiscal metrics. Also, immoderate of CEO Elon Musk's goals -- specified arsenic gathering information centers successful abstraction and creating a colony of a cardinal humans connected Mars -- are lofty, to accidental the least.

If SpaceX does win successful its goals, it could beryllium a lucrative investment. But not each investors volition beryllium comfy with that level of uncertainty, and the adjacent word is apt to beryllium volatile.