Although the benchmark S&P 500 (^GSPC +0.19%) and Nasdaq Composite (^IXIC +0.10%) vaulted to new highs on May 8, this wasn’t the only history made on Wall Street last week.

The stock market’s largest projected initial public offering (IPO), Elon Musk’s SpaceX, hit an all-time high on private market trading platform Forge Global, which was acquired in early March by Charles Schwab. The $634.05 closing price per share for SpaceX stock on Forge’s secondary marketplace represents a 215% increase over the trailing 12 months and values the company at $1.51 trillion.

A toy rocket readying for launch atop messy stacks of coins and paperwork displaying financial data.

Image source: Getty Images.

But the retail investor buzz surrounding SpaceX suggests Musk and underwriters could push for a $1.75 trillion to $2 trillion valuation and a $75 billion capital raise. For context, oil and gas giant Saudi Aramco currently holds the title of largest IPO, with a $29.4 billion capital raise in December 2019.

While it’s easy to get excited about a company at the forefront of two of the largest addressable markets on the planet, artificial intelligence (AI) and the space economy, history stands ready to inject a dose of reality.

Statistically speaking, some of the stock market’s biggest IPOs in history have been duds after crossing the starting line. Including Saudi Aramco, which isn’t traded in the U.S., investors have witnessed several brand-name companies go public since the late 1990s, including Facebook (now Meta Platforms), General Motors, Alibaba Group, Visa, and United Parcel Service.

Visa is the only stock listed above that delivered for its early investors, with its shares rallying 23% six months after its debut. Meanwhile, shares of Facebook (Meta) plummeted 38% over six months, with Saudi Aramco declining by 15% over the same timeline. The average six-month post-IPO swoon for brand-name companies is roughly 10%, signaling that investors’ expectations are consistently too high.

History hasn’t been particularly kind to companies with premium valuations, either.

Since the advent and proliferation of the internet in the mid-1990s, companies at the forefront of these innovations have often hit a ceiling at price-to-sales (P/S) ratios ranging from 30 to 45 (with some wiggle room at each end). For instance, Microsoft, Amazon, and Cisco Systems all peaked within or around this P/S ratio range during the dot-com bubble.

As of this writing on May 9, SpaceX has yet to make its registration statement (S-1 filing) public, so we don’t know precisely how much revenue the sum of its parts, including AI start-up xAI and social media platform X, has brought in. However, prior to merging with xAI earlier this year, Reuters reported that SpaceX generated $15 billion to $16 billion in sales last year.

Based on Forge’s secondary-market valuation, SpaceX is trading at roughly 100 times its sales in 2025. While this figure might come down a bit once xAI and X factor into the mix, it’s pretty clear that SpaceX’s P/S ratio will be well above the line in the sand of 30 that typically denotes a bubble.

Retail investors who chase the SpaceX IPO early are likely to be sorely disappointed.