You Probably Wonât Get Rich Off the SpaceX IPO
One thing that seems certain about the SpaceX IPO is that itâs going to make lots of people very, very rich. Another is that you
One thing that seems certain about the SpaceX IPO is that itâs going to make lots of people very, very rich. Another is that you probably wonât be one of them. At least not any time soon. Thereâs extraordinary interest in Elon Muskâs rocket-and-AI companyâs public debut, and for good reason. SpaceX was already the leading private space company in the world, its rockets shuttling astronauts to the International Space Station and its Starlink satellites providing internet connectivity to millions of people around the world. Its recent acquisition of xAI means it is also the first of the big three AI startups in the US to go public, with Anthropic and OpenAI following close behind. The company raised $75 billion, valuing it at $1.75 trillion, which would make it the biggest IPO ever by a sizable margin. Like all IPOs, though, stratospheric wealth will likely be reserved for those who already hold shares of SpaceX, which means employees, big institutional asset managers, and Elon Musk.
Even though so-called retail investorsâindividuals who donât buy stock professionallyâwill have more access to SpaceX shares than is typical for an IPO, most people wonât be in a position to see serious gains. To be absolutely clear, this isnât investment advice, or a prediction about the long-term financial health of SpaceX or its share price. Itâs simple mechanics. âThe system is unfair,â says Campbell Harvey, a professor of finance at Duke Universityâs Fuqua School of Business. Hereâs how it worksâand who it works for. The Inside Track Typically, the vast majority of retail investors wouldnât be able to get in on an IPO at all. These offerings tend to be exclusive clubs, with tightly curated guest lists made up of institutional investors like mutual funds and asset managers. The SpaceX IPO is different, though, in a few key ways. SpaceX has indicated that it wants to set aside 30 percent of its âfloatâ (the number of shares made available for public trading) for the Average Joe, which works out to about $22.5 billion worth of shares.
(Typically a company will set aside much less for retail investors in an IPO; Fidelity pegs it at 5 to 10 percent.) Depending on your broker, you may also need a lot less money to get involved. Take Fidelity, one of the largest asset managers in the world. For a typical IPO, Fidelity requires you to have at least $100,000 (or sometimes $500,000) in household assets to participate; for SpaceX, itâs brought that minimum down to two grand. So yes, itâs easier to get on the guest list for the club. But there are still only so many tables inside. Remember that $75 billion worth of stock SpaceX raised? Bloomberg reported Thursday that SpaceX had received $100 billion worth of orders from hopeful retail investors. And thatâs before you even get to the asset managers trying to muscle in; BlackRock alone reportedly submitted a $5 billion order. SpaceXâs bankers ultimately decide who gets the right to buy stock at the IPO price of $135 a share, and how much of it.
