BlackRock Bets $5 Billion on SpaceX IPO

A Multibillion-Dollar Order

BlackRock is looking to purchase at least $5 billion in its initial public offering of Elon Musk's SpaceX, according to The Wall Street Journal, which cited people familiar with the matter on Thursday.

The company would be the same size as other Middle Eastern investment funds that have signed contracts of $1 billion or more, according to the report by Bloomberg, which said that anchor orders are running around $10 billion each.

For comparison, BlackRock's order was about as big as AI chipmaker Cerebras Systems' entire $5.55 billion IPO earlier this month, which was the largest of the year.

Overwhelming Demand

The order book for the offering was closed on Wednesday, while the banks worked out which shares to allocate before the planned listing on the Nasdaq on Friday. The total demand for the offering was close to $250 billion, which represents almost four times the amount of oversubscription.

Individual and retail buyers have been the ones who have been driving the requests into bankers, for more than $70 billion. A sizable deviation from the norm is that SpaceX has reportedly been mulling over giving up to 30 percent of the offering to individual investors.

Fidelity cut the minimum account balance required to buy IPO stocks to $2,000, from $100,000, and Schwab kept the amount at $100,000, while Robinhood, SoFi and E Trade had no minimum amount.

Strategies for offering and accepting this spiritual gift

It is thought that SpaceX will sell approximately $1.8 trillion in what would be the world's largest IPO yet. Musk has been called the IPO playbook's rewriter: He has changed the IPO rules and increased the allocation of retail investors and promoted early index inclusion and strong founder control of governance.

Not Without Skeptics

Not all are pleased with the size of the listing. Senator Elizabeth Warren wrote a 12-page letter to SEC commissioner Paul Atkins, requesting that the IPO be delayed on the basis that the offering alone is "enough to warrant careful SEC review" and that SpaceX's governance structure concerns her.

Morningstar has independently recommended that the stock trade at about half the $135 offering price. Even with those concerns, the influx of institutional money into the offering—from companies like BlackRock—is an indicator that Wall Street's most powerful firms are getting ready to stake their futures on what has the potential to be a pivotal moment in stock market history.