Psyched about the SpaceX IPO? Don't forget the brutal lesson from Facebook's IPO.

The excitement is gathering astir the SpaceX (SPCX) IPO, which is acceptable to debut connected the Nasdaq Composite (^IXIC) connected Friday.

But earlier you suffer your caput trying to bargain SpaceX banal connected its opening day, support successful caput what happened erstwhile Mark Zuckerberg brought Facebook to nationalist markets.

The speedy insight: After its IPO connected May 18, 2012, Facebook (now Meta (META)) banal fell 54% from highest to trough and finished its archetypal twelvemonth down 32%. The S&P 500 (^GSPC) was up 10% implicit the aforesaid period.

The main contented for Facebook was valuation, fixed its concern model. Facebook was priced for perfection astatine a infinitesimal erstwhile its halfway advertizing concern exemplary was mostly unproven, and Wall Street simply got up of the fundamentals.

The Facebook IPO was a bust. · Yahoo Finance

The analysis: Truist main concern serviceman Keith Lerner studied 30 of the past large IPOs, which showed guardant returns skew antagonistic astatine the six- and 12-month horizons. The bulk look important drawdowns successful the archetypal year.

Two callouts from Lerner's caller analysis:

• The mean six- and twelve-month returns for 30 of the past large IPOs some amusement a diminution of 9%.

• The biggest 12-month declines see Lyft (LYFT) astatine 65%, Coinbase (COIN) astatine 55%, Robinhood (HOOD) astatine 74%, and Rivian (RIVN) astatine 67%.

Lerner said, "The projected size and retail information are apt to thrust important volatility alongside excitement astir the SpaceX IPO."

Bottom line: SpaceX is poised to beryllium the largest archetypal nationalist offering connected record. Current expectations are for the institution to rise $75 cardinal astatine a $1.75 trillion valuation.

According to the prospectus, gross past twelvemonth skyrocketed 33% twelvemonth implicit twelvemonth to $18.7 billion, fueled by a 32% surge successful Starlink outer net sales. Starlink is simply a proven concern that's apt to enactment beardown good into the future.

But SpaceX did station a monolithic $4.94 cardinal GAAP nett nonaccomplishment for full-year 2025 and a brutal $4.28 cardinal nett nonaccomplishment successful the archetypal 4th of this year.

The superior culprit for the losses is Musk's capital-intensive pivot into artificial quality infrastructure, with SpaceX throwing $40 cardinal annually into AI superior expenditures.

It's improbable the concern volition crook a nett for the foreseeable future.

At the extremity of the day, investors would beryllium buying a speculative, future-forward ecosystem priced astatine an exorbitant 100 times trailing sales.

The SpaceX IPO won't beryllium for the faint of heart. Even for the brave investors, the near-term trajectory for the banal whitethorn not instrumentality disconnected similar a rocket.

Brian Sozzi is Yahoo Finance's Executive Editor and a subordinate of Yahoo Finance's editorial enactment team. Follow Sozzi connected X @BrianSozzi, Instagram, and LinkedIn. Tips connected stories? Email [email protected].

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