One thing It seems certain that the SpaceX IPO will make many people very, very luxurious. The other thing is that you probably won’t be one of them. At least not anytime soon.
There is extraordinary interest Elon Musk the rocket and artificial intelligence company’s public debut, and for good reason. SpaceX was already the world’s leading private space company, its rockets carried astronauts to the International Space Station and its Starlink satellites provided internet connectivity to millions of people around the world. The recent acquisition of xAI means it is also the first of three major US artificial intelligence startups to go public, closely followed by Anthropic and OpenAI. The company raised $75 billion, valuing it at $1.75 trillion, which would make it the largest public offering in history by a significant margin.
But as with all IPOs, the stratospheric wealth will likely be reserved for those who already own SpaceX stock, which means employees, vast institutional asset managers and Elon Musk. While so-called retail investors – people who don’t buy shares professionally – will have more access to SpaceX stock than is typical for an IPO, most people won’t be able to see any grave gains.
To be absolutely clear, this is not investment advice or a forecast regarding SpaceX’s long-term financial health or its stock price. It’s a uncomplicated mechanic.
“The system is unfair,” says Campbell Harvey, a finance professor at Duke University’s Fuqua School of Business. Here’s how it works and for whom.
Inner track
Typically, the extensive majority of retail investors would not be able to proceed with an IPO at all. These offerings are typically exclusive clubs with a carefully selected guest list of institutional investors such as mutual funds and asset managers.
However, the SpaceX IPO differs in several key respects. SpaceX has indicated it wants to allocate 30 percent of its “float” (the number of shares available for public trading) to Average Joe, which would be worth about $22.5 billion in shares. (Typically, a company will allocate much less to retail investors in an IPO; Fidelity pegs it 5 to 10 percent).
Depending on the broker, you may need much less money to get involved. Take Fidelity, one of the largest asset managers in the world. For a typical IPO, Fidelity requires household assets of at least $100,000 (and sometimes $500,000); in the case of SpaceX, this minimum was reduced to two thousand.
So yes, it’s easier to get on the club’s guest list. But there are still only so many tables inside. Remember the $75 billion worth of stock that SpaceX raised? Bloomberg reported Thursday that SpaceX has received orders worth $100 billion from potential retail investors. And that’s before you even get to the asset managers trying to interfere; Only BlackRock apparently placed an order worth $5 billion.
SpaceX’s bankers ultimately decide who gets the right to buy shares at the IPO price of $135 per share and in what quantity. The chances of you getting through the velvet rope – even with relaxed standards – are vanishingly tiny. And even if you do, the number of shares you get will likely be paltry. Tell your brokerage firm you want 10 and you might be lucky to get one or two. That’s not exactly what prepares you for generational wealth.
“The average investor gets leftovers,” Harvey says. He argues that even the 30 percent figure is misleading because SpaceX is only selling 4 percent of its available shares, which means individual investors will own just over 1 percent of the company after the IPO. “It’s just a few crumbs.”