Key Points
SpaceX has a lot of events over the next year that could affect the stock price.
It took several years before Tesla delivered explosive performance.
Space Exploration Technologies (NASDAQ: SPCX) is one of the hottest companies in the market. It went public two months ago with a lot of fanfare and rising stock prices, but has since sold off and is now below pre-IPO levels.
The company also recently announced second-quarter earnings, where investors got a first look at fresh finances and could better understand the company's direction without any IPO marketing fluff.
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But is the stock worth buying under $125 per share? Let's take a look at some history.
Image source: The Motley Fool.
Letting the initial dust settle is a good idea for investors
A lot happens in the first year after a company goes public. Investors start to get a feel for how a company does from quarter to quarter, as some companies consistently beat expectations while others just meet them. This can cause some wild post-earnings movements as investors begin to understand how management behaves.
Another event that happens during the first year is insider investor lockup periods. After SpaceX's first earnings report, some investors are allowed to sell their shares, which could create a supply-and-demand imbalance and crater the stock price even further. SpaceX's lockup periods end at different times in 2026 and 2027, so waiting a year to invest could also be a smart idea from this standpoint.
However, investors do have one familiar management team member to deal with: CEO Elon Musk. Musk is also the CEO of Tesla (NASDAQ: TSLA), and he took that company public years ago. How did the stock do in the first year of trading? Well, it rose just less than 16%.
That's not too bad of a one-year return, but what about over the next five?
Tesla really didn't take off as an investment until mid-2013, and went through a few years of just OK returns. But is this comparable to SpaceX? I don't think so.
Tesla went public at a completely different stage of its business than SpaceX. In 2010, Tesla had sold just over 1,000 vehicles when it went public. That would be equivalent to SpaceX going public not long after it delivered its first payload.SpaceX is a far more mature business now than Tesla was when it went public, so comparing the two isn't perfect, besides looking at what Elon Musk's companies tend to do.
So, should you buy the stock below $125 per share? I'd say investors need to be patient. History shows there's no need to rush and buy the stock during the first year. There are a lot of questions to be answered and various lockup periods that could affect demand for the stock, and investors aren't going to miss out on huge gains by waiting for the first year to complete. In mid-2027, investors can reassess, but I think exercising patience is a smart move.
Keithen Drury has positions in Tesla. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.