--- title: "What History Says About Buying Broken IPOs" type: "News" locale: "en" url: "https://longbridge.com/en/news/293387438.md" description: "SpaceX is a 'broken IPO,' trading below its $135 offering price. Historical analysis of similar cases indicates high volatility: while short-term average returns exceed 7%, median six-month returns are -13%, with fewer than one-third beating the S&P 500. Although winners can gain over 60%, buying broken IPOs is generally riskier than investing in the index, which offers better consistency and lower volatility." datetime: "2026-07-21T21:11:54.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/293387438.md) - [en](https://longbridge.com/en/news/293387438.md) - [zh-HK](https://longbridge.com/zh-HK/news/293387438.md) generator: "portal-rs" --- # What History Says About Buying Broken IPOs Space Exploration Technologies Corp (SPCX) -- or **SpaceX** -- is now what Wall Street calls a “broken IPO,” meaning a stock trading below its IPO price. The company was valued at $135 in the largest IPO in history. The stock’s first trade on June 12 was $150, and it closed just above $200 on that day. Since then, however, it has fallen back to Earth and even investors who got in at the IPO price are now at a loss. The IPO price is a psychological benchmark that traders anchor to as a fair valuation. Falling below this level can cause the belief that the stock was overhyped causing selling pressure and a reluctance to purchase the stock until it settles. Additionally, institutions who got in at the IPO price are now in a losing position and may look to sell shares on any rally back toward that level. This week I’ll look at **other broken IPOs** and see if we can determine the chance of further losses compared to overtaking that important IPO price. ## Looking at Broken IPOs We’ve been tracking the major IPOs for some time now. Our list is by no means a comprehensive list and consists mainly of more popular IPOs. Survivorship bias is also prevalent in the list since it includes only stocks currently trading. Despite that caveat, I think this is an insightful study. Using the list of IPOs, I identified instances in which a stock closed at least 25% above its IPO price and then, at some point within the next six months, closed below its IPO price. The table below summarizes the stock returns after a signal was generated. The second table shows what returns would have been achieved by purchasing the S&P 500 Index instead. Based on the table below, expect a lot of volatility. These stocks performed well in the short term based on the average return. Purchasing the stocks led to an average return of more than 7% in the first month. However, only about half of the returns were positive and fewer than half beat the S&P 500 Index. The average return was bullish due to the large upside in the winners. The positive stocks gained 28% on average over the next month and losing stocks fell 15% on average. The longer-term returns are still very volatile but less bullish as far as average return. Purchasing these broken IPOs in these situations would have averaged a six-month return barely above breakeven. The median return was -13%. Not even a third of the returns were positive or beat the S&P 500. The only bright side over the six-month timeframe is that if did land on a winner, it averaged a return of over 60%. Purchasing the S&P 500 Index instead would have returned 7.4% on average with 74% of the returns positive. The one-year returns were still unlikely to beat the index (37%) but the average return of 8.85% was in line with S&P 500 returns. Finally, the table below lists broken IPO signals since 2022. These have been bullish as far as average returns go despite a small percentage of positive returns. ## Lasting Implications Based on the analysis above, buying SPCX here could be a risky play. Broken IPOs within the first six months after being up by a large amount have led to bearish returns over the next six months. Buying the S&P 500 Index would have yielded better returns with a lot less volatility. However, in cases where the stock did gain, returns were huge, averaging a return above 60% over the next six months. ### Related Stocks - [SPCX.US](https://longbridge.com/en/quote/SPCX.US.md) - [SPCH.US](https://longbridge.com/en/quote/SPCH.US.md) - [SPCF.US](https://longbridge.com/en/quote/SPCF.US.md) - [SPAL.US](https://longbridge.com/en/quote/SPAL.US.md) - [SNK.US](https://longbridge.com/en/quote/SNK.US.md) - [SSPC.US](https://longbridge.com/en/quote/SSPC.US.md) - [SPCU.US](https://longbridge.com/en/quote/SPCU.US.md) - [LOFF.US](https://longbridge.com/en/quote/LOFF.US.md) - [.SPX.US](https://longbridge.com/en/quote/.SPX.US.md) ## Related News & Research - [OpenAI Cuts Access for SpaceX-Owned Cursor After Takeover, Musk Dismisses Concerns](https://longbridge.com/en/news/297409372.md) - [OpenAI to end partnership with SpaceX's Cursor](https://longbridge.com/en/news/297379027.md) - ['It's Deceiving,' Says Top Investor About SpaceX Stock](https://longbridge.com/en/news/297357151.md) - [‘It’s a Waiting Game,’ Says Top Investor About SpaceX Stock](https://longbridge.com/en/news/297524999.md) - [OpenAI Cuts Off SpaceX-Owned Cursor, Musk Fires Back 'I Couldn't Care Less'](https://longbridge.com/en/news/297508785.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**