Retail Investors Pour $70Bn Into SpaceX IPO

One of the biggest IPOs in the world has been driven by individual investors.

In the weeks leading up to SpaceX's debut on the stock market, retail and individual investors have swarmed bankers with orders totaling more than $70 billion, according to a Bloomberg report that was cited on Thursday. The individual investors would be expected to have at least 20 percent of the shares offered to them for this offering.

Participation from retail investors has played a key role in the listing's structure, as SpaceX had previously been reported to potentially sell up to 30 per cent of the offering to retail investors.

A Historic Valuation

SpaceX announced a $135 price tag on its IPO stock each of the 555.6 million Class A shares, valuing the company at approximately $1.77 trillion and raising approximately $75 billion. The shares were anticipated to open for trading on the Nasdaq Global Select Market and Nasdaq Texas under the ticker symbol "SPCX.

Despite earning much less in revenue than either company, at this valuation, SpaceX is one of the most valuable companies listed in the United States of America, behind only Tesla and Meta.

The total demand surpasses $250 billion

The total demand for the offering came in at about $250 billion, which was almost four times oversubscribed. Larger orders have been placed by institutional players, such as anchor orders from the large investors that valued at approximately $10 billion each, and a $5 billion order from BlackRock.

Access for Smaller Investors

To meet the retail demand, Fidelity reduced its $100,000 requirement for IPO access to just $2,000, while Charles Schwab kept the same requirement of $100,000. Smaller investors have access to Robinhood, SoFi and E*Trade, which have no stated minimum.

Caution Amid the Enthusiasm

But some observers aren't as optimistic as others. Morningstar has estimated the stock could be worth about half the $135 price it was offered at and Senator Elizabeth Warren sent a letter to the SEC requesting a delay, citing two reasons: the size of the offering alone "should warrant careful SEC review," and she has governance concerns with the company.

Why It Matters

It is not usual practice for an IPO to this extent to provide for retail participation, as the majority of the allocations are normally made to institutional investors. In several ways, Musk has been rewriting the IPO playbook; for starters, he has been focused on securing retail allocations, which is usually the last thing that's of interest to founders.

For example, Musk has been talking about the need to focus on retail allocations — something rarely seen on the IPO radar — as well as quickly getting the stock listed on indexes and structuring the governance to allow him to maintain founder control.

The dynamics between the institutional giants and a surge of individual investors will be closely scrutinized as the first sign of how future mega-listings may be designed.