One of financial advisor Jeff Barnett’s clients called him when SpaceX went public on June 12. Had Barnett bought any shares for the portfolio? He had not—SpaceX came nowhere close to the client’s preset criteria on valuation and governance.
The client listened, then asked Barnett, “Can we just buy 10 shares?” Barnett got it done. He likens it to buying a lottery ticket when the jackpot hits $1 billion. You know the odds are slim, but a small bet buys a share of the buzz—and scratches that deep down what-if itch—without jeopardizing your portfolio.
The fear of missing an on-ramp to the next generation of world-changing companies is the most expensive force in the market this summer. Investors call this trio the new Magnificent Three. SpaceX, Anthropic, and eventually OpenAI are the IPOs people are dreaming about, especially if they feel the ache of missing out on Nvidia: $10,000 in Nvidia a decade ago would be worth roughly $1.8 million today. When SpaceX went public, more than 500 million shares traded—marking the second-heaviest first-day IPO volume in Nasdaq history, behind only Facebook’s 580 million in 2012.
But here’s the thing. If you missed day one, all is not lost. And in fact, history shows you may have better opportunities to buy in the future.
The typical (median) IPO is down about 26% three years after its first-day closing price, and some of the initial winners aren’t the ones that become household names. Familiar with the biotechs Abgenix or Enzo Biochem? They had stellar debuts, up 2,071% and 2,445% from their first-day close, data from IPO expert Jay Ritter shows. However, they eventually cooled while it was the patient investors that backed Moderna who saw the fifth-highest return among the 1,020 life-science IPOs from 1980 to 2024.
Here are three top rules investing pros use to evaluate the biggest IPOs.
Rule No. 1: Don’t buy the first day.
Barnett has some cold water to pour on the hot IPO summer. If the shares are easy to get, it’s probably because more privileged buyers already passed. SpaceX spent more than two decades as a private company, and its early investors hold 12.5 billion shares at an average cost of $6.48. Elon Musk’s space company then priced its shares at $135; the stock opened at $150; and it ended its first day on a 19% surge at $160.95.
Even if you got in at $135, that’s a hefty markup for a company trading at about 95 times its trailing annual sales, based on SpaceX’s $18.7 billion in 2025 revenue and $1.77 trillion IPO valuation.
That doesn’t mean public markets are a dead end—far from it, argues Matt Witheiler of Wellington Management, who invests in companies before they go public. Yes, more and more value is being created while a company is private. For instance, SpaceX grew from a startup into a $2 trillion company before it raised gross proceeds of $85.7 billion in its IPO.
“But that does not mean there is not value creation in the public market as well,” notes Witheiler. Look at the scoreboard, he says. The world had never seen a trillion-dollar public company until Apple crossed the line in 2018. Eight years later there are 16, with Nvidia pushing toward $5 trillion.
Just like at a job, the first day is just that and usually isn’t the standout. A newly public stock stays “unseasoned” for about three years, explains Avery Marquez, director of investment strategies at Renaissance Capital, and those years are usually its most volatile and transformative period. Better entry points often open up months after the IPO, when all the hype has died down. SpaceX spiked to $225 within days of the IPO, then fell back to $160. Missing the IPO does not mean you’ve missed out on anything.
Rule No. 2: Follow the revenue.
Witheiler has a blunt instrument for telling a lasting company from a good story.
“You show me the numbers, and it’s obviously real or not,” the Wellington private-company money manager says.
By early 2026, OpenAI’s annualized run rate figures had crossed $25 billion. By May, Anthropic’s had reached roughly $47 billion and publicly guided to more than $50 billion. That’s a far cry from the dotcom bust, when investors bought companies that looked cheap on an “eyeball basis” but had no sales underneath.
“We have companies whose customers are opening their wallets and spending gigantic amounts of money,” Witheiler says. It’s a meaningful tell.
Still, the addressable market has to be “absolutely unbounded,” he notes—like the orbital data centers from SpaceX that could perhaps be among the largest data centers ever. The takeaway is to ask what the company sells, who’s paying for it, and whether it all seems big enough to be worth the hype.
Rule No. 3: Read the prospectus.
Every fund manager who bought SpaceX read its S-1—the disclosure document every company files with the Securities and Exchange Commission before going public. It’s free and easy to read, and you can read it, too, says Marquez of Renaissance Capital.
When it comes to retail investors, “a lot of people don’t,” she notes. “They read the headlines, and that’s pretty much it.”
Case in point: The headlines will tell you Musk aims to build a human colony on Mars with 1 million inhabitants, and that if he ever does, it’ll help him make $1 trillion. The prospectus will tell you that SpaceX doesn’t think he’ll ever do it and hasn’t set aside a penny of that $1 trillion, but it’s giving him the shares underlying the pay package before he sends a speck of dust to Mars anyway. You’ll also see that control of SpaceX resides firmly with Musk via billions of Class B super-voting shares that convert to Class A if he ever sells.
The prospectus is also where a company priced on a five- or 10-year growth story details how it plans to achieve this, because what matters most is whether it can execute. All that happens post-IPO.
One final tip: Look for the picks and shovels, says Bryan Wong, a portfolio manager at Osterweis Capital Management who manages its small-cap growth strategy. All the infrastructure and tooling companies (some already public) offer a much bigger field to pick a winner from—giving you a much better shot at owning the next Nvidia, rather than the next Enzo Biochem.
This article appears in the August/September 2026 issue of Fortune with the headline “The insider’s guide to betting on trillion-dollar IPOs.”
