Names like SpaceX, Anthropic, and OpenAI are dominating financial headlines, and a lot of investors are asking the same question: should I get in? Our CIO Matt Dmytryszyn has reservations about whether these companies can justify their current spending rates. But before you can answer the investment question, it helps to understand how these deals work.
Worth the Hype?
IPOs have become less common since the dot-com era. The rate stabilized at roughly 200–400 per year over the past two decades, meaning many investors aren't as familiar with how they work.
Goldman Sachs’ research1 shows the average IPO stock is up 19% on its first day of trading, but that number drops to around 2% within two weeks. By six months, most IPOs are trading flat. A year out, the average return goes negative.
Why the Early Gains Don't Last
Companies typically sell only 10–30% of shares to the public at launch, with two goals in mind: give the market time to get comfortable, and preserve value. For the first six months, there's a "lock-up period" where early investors can't trade their shares. Once that window closes, those original holders (including private equity firms) often use the opportunity to sell, increasing supply and putting downward pressure on the price.
These New IPOs Are a Different Animal
The historical averages above are based on typical IPOs. The deals being discussed now, with SpaceX reportedly targeting a June 12 launch, are something we haven't seen before. We're talking about a potential trillion-dollar IPO.
A typical software company trades at roughly 10x revenue. SpaceX is rumored to be pricing at 100x revenue, a valuation that assumes extraordinary, sustained growth. For the average investor, that means the bar for due diligence is extremely high. Furthermore, much of the relevant research has to happen at an institutional level because accurate information on these privately held companies is genuinely hard to come by.
What Should You Actually Do?
Talk to your advisor. That's not a hedge; it's the honest answer, given what's at stake.
If you're an outside investor, understand that you're buying into extremely high expectations. The launch-day price is not a ceiling; it's a starting point that may not hold.
If you're an employee with the opportunity to participate: don't assume holding all your shares is the conservative move. Based on the patterns above, it may not be. And don't sell everything at once either, since the tax implications alone make that a costly mistake. For employees, an IPO can be genuinely life-changing, not just for you but for your family (and maybe even your family’s family). That kind of event deserves a financial plan, with estate planning built in.
We've Been Here Before
Our CIO Matt Dmytryszyn shared his thinking in depth on our recent ITAP webinar. Composition Wealth advisors have worked with employees of companies going through IPOs and know the questions to ask and the pitfalls to avoid. If you want to talk through what this means for your situation, we're happy to have that conversation.
Sources:
According to a Goldman Sachs analysis reported by Investing.com (April 25, 2026), the average IPO in 2026 jumped 19% on its first trading day, in line with the median historical return — though the trend has been for strong first-day rallies followed by below-average returns in subsequent months.
1 Rajan, Rachael. "Goldman Expects 100 IPOs Totalling $160 Billion Will Come to Market in 2026." Investing.com, published via Yahoo Finance, April 25, 2026. https://finance.yahoo.com/markets/stocks/articles/goldman-expects-100-ipos-totalling-133016278.html
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