In China, the initial public offering was watched as a benchmark for a younger industry eager to go public. But the frenzy masks a fundamental gap, with firms going public ahead of meaningful revenue and without the proven technology that underpins SpaceX's economics, a mismatch analysts say will cap valuations.

SpaceX's IPO attracted roughly $150 billion in orders, but the bigger story may be how few shares are available as investors compete for a limited public float.

SpaceX long-anticipated initial public offering, which could value the company at about $1.75 trillion, has triggered intense demand from retail investors eager to gain exposure…