SouthernWorldwide.com – SpaceX is poised to become a publicly traded entity this week, offering individual investors an unprecedented opportunity to participate in what is anticipated to be the most significant initial public offering (IPO) in history.
While CEO Elon Musk, company employees, and private investors will hold the majority of SpaceX shares, the Texas-based company is making a substantial portion available to retail investors, a move deemed unusual by experts. Earlier this year, Reuters reported that up to 30% of the rocket and AI company’s shares will be allocated to individual investors, which is three times the typical allocation.
SpaceX’s shares are slated to be priced on Thursday and commence trading the following day on the Nasdaq Composite Index under the ticker symbol “SPCX,” according to the company’s IPO website.
In a recent regulatory filing, SpaceX indicated its expectation to price its shares at $135 each. However, Matthew Kennedy, a senior market strategist at Renaissance Capital, which specializes in tracking IPOs, noted that the company retains the flexibility to adjust this price before trading begins.
The offering is projected to raise $75 billion for SpaceX, a sum nearly three times greater than that raised during Saudi Aramco’s 2019 public debut, which currently holds the record for the largest IPO ever.
This IPO would value SpaceX at an astounding $1.77 trillion, surpassing the market capitalization of many long-established major U.S. corporations. This valuation exceeds that of Musk’s own electric car manufacturer, Tesla, which has a market value of $1.5 trillion, as well as Meta Platforms ($1.4 trillion) and Warren Buffett’s conglomerate, Berkshire Hathaway ($1.04 trillion).
How do I buy SpaceX stock?
SpaceX’s website clarifies that retail investors will require a brokerage account or a participating digital investing application to engage in the IPO. Your chosen brokerage or investing app will confirm your eligibility when you submit your request to participate.
SpaceX is facilitating access to its shares for retail investors through prominent platforms such as Charles Schwab, E*TRADE by Morgan Stanley, Fidelity Investments, Robinhood, and SoFi.
Kennedy of Renaissance Capital suggests that these five platforms will likely be the primary choices for most retail investors. He also pointed out that high-net-worth individuals might have access to the IPO through their own banking institutions, indicating that some accredited investors could potentially participate via firms like JPMorgan.
Once SpaceX shares begin public trading, they will be available for purchase by anyone on the open market. Furthermore, investors holding index-based exchange-traded funds may soon find SpaceX stock integrated into their investment portfolios, potentially offering Americans exposure to SpaceX through their 401(k) plans.
Typically, investors can gain access to a company’s shares before an IPO through private-market transactions, which involve acquiring stock from existing shareholders, such as company employees. Karthik Krishnan, an associate professor of finance at Northeastern University, explained that participation in these transactions is generally restricted to accredited investors who meet specific asset thresholds.
However, it has been reported that at least two platforms for such secondary trades, Forge Global and Rainmaker Securities, are no longer offering access to SpaceX shares.
Glen Anderson, CEO of Rainmaker Securities, communicated to CBS News via email that opportunities for new private secondary transactions in SpaceX shares have become increasingly scarce as market participants tend to hold onto their shares and shift their focus to the company’s performance in the public markets.
Ritter, however, cautioned that such private transactions can be complex and amplify the associated risks. He advised that for individuals who are not already experienced investors on these platforms, now is not the opportune moment to begin engaging in them.
How do I buy SpaceX shares through a brokerage account?
Each brokerage platform provides its unique set of instructions for retail investors looking to participate in SpaceX’s IPO. This process typically involves establishing an investor profile, verifying your eligibility, and submitting a request for the desired number of shares.
Kennedy elaborated on this, explaining that an investor might indicate a desire to purchase up to 100 shares. A confirmation would then be received the day before the company begins trading. The investor would need to reconfirm their intent to purchase up to 100 shares, and on the morning of the listing, they would receive either the full 100 shares or a lesser amount.
As several brokerage websites have noted, requesting shares does not guarantee their allotment; availability is contingent upon supply.
Jay Ritter, a professor and Director of The IPO Initiative at the University of Florida, stated that while one might request 100 shares and potentially receive that amount, it is more probable that only a fraction of the requested shares will be allocated. He further commented that investors will likely only get a fraction of the shares they asked for.
Here are the requirements for purchasing SpaceX shares after it goes public, as outlined by leading brokerage firms:
- Charles Schwab: According to The Motley Fool, an investing advice company, the financial service firm’s IPO platform mandates a “minimum liquid net worth” of $100,000 for investors.
- E*TRADE: The Motley Fool reports that there is no account minimum required to participate.
- Fidelity: The company has stated that individuals with a retail brokerage account holding $2,000 or more are eligible to participate.
- Robinhood: The Motley Fool indicates there is no minimum account balance required.
- SoFi: The digital finance company has confirmed that any individual with an active investing account is eligible to participate in the IPO, with no minimum account balance necessary.
How many SpaceX shares will be available for average investors?
According to a recent SEC filing, SpaceX is offering 555,555,555 class A common shares as part of its “public float,” which represents the number of shares a company makes available for public trading. This constitutes approximately 4.25% of the company’s total stock.
Reuters, citing a source familiar with the matter, reported in late May that up to 30% of SpaceX’s IPO could be earmarked for retail investors. Kennedy explained that the remaining 70% would be allocated to large institutional money managers, such as hedge funds or mutual fund managers.
Is hopping on the bandwagon a good idea?
According to Ritter’s research, which analyzed over 9,200 IPOs from 1980 to 2024, investing in SpaceX shares early on could potentially lead to higher returns. He found that the average return for a newly public company on its first day of trading is approximately 19%.
However, such investments carry significantly higher risks in the long term. Ritter’s research indicates that the average three-year market-adjusted return for investors who purchase shares at the closing price on a company’s first day of trading is -21%.
Kennedy suggested that it might be more prudent for investors to observe how SpaceX’s stock performs before making an investment decision, noting that share prices can be highly volatile in the immediate days following an IPO.
Morningstar also shares the view that investors might benefit from a more patient approach. The global investment research firm stated in a recent research note that it believes SpaceX has been “significantly overvalued” and that investors will have the opportunity to acquire stock at “more attractive levels” after the IPO.
