SpaceX IPO Valued at $1.75 Trillion as Retail Demand Outstrips Supply

SpaceX has completed the largest initial public offering in history, raising $75 billion and establishing a valuation of $1.75 trillion. The company listed on the NASDAQ on June 12 with an IPO price of $135 per share, marking its transition from a private entity to a public company. This debut makes SpaceX the first of the major US artificial intelligence startups to go public, following its recent acquisition of xAI, with competitors Anthropic and OpenAI expected to follow.

In a departure from typical market norms, SpaceX allocated 30 per cent of its public float to retail investors, a significantly higher proportion than the usual 5 to 10 per cent seen in major listings. To facilitate this access, major brokers including Fidelity reduced minimum household asset requirements to $2,000, down from the standard $100,000 to $500,000 threshold. This move was designed to broaden participation in the offering for individual investors who are typically excluded from such exclusive institutional events.

However, demand for the shares far exceeded the available supply. Bloomberg reported that retail investors submitted orders worth $100 billion, vastly outstripping the $22.5 billion worth of shares set aside for individual participants. Institutional demand was equally robust, with asset manager BlackRock reportedly submitting a $5 billion order. Consequently, SpaceX’s bankers are likely to allocate only minimal share counts to individual applicants, with some experts suggesting retail investors may receive only one or two shares if they request ten.

Campbell Harvey, a finance professor at Duke University, noted that the 30 per cent figure is misleading because it represents only 4 per cent of the company’s available shares. He argued that retail investors will own just over 1 per cent of the company post-IPO, effectively receiving the "leftovers" of the offering. Harvey described the allocation as "a few crumbs," emphasising that the system remains skewed towards those who already hold shares, including employees and large institutional asset managers.

Financial analysts caution that the $135 share price reflects significant prior value growth for existing shareholders, suggesting limited immediate returns for new retail participants. Matthew Kennedy, an IPO market analyst at Renaissance Capital, stated that much of the company's value has already been "baked in" for existing stakeholders, describing the $1.75 trillion valuation as appearing high at first glance. He advised that investors should consider the stock a long-term investment rather than a vehicle for quick gains.

Jay Ritter, director of the IPO Initiative at the University of Florida, warned that retail investors buying on the open market after the IPO will likely face prices higher than the $135 offer price. This means individual participants will miss out on any initial price "pop" that often occurs during the first hours of trading. Ritter noted that by the time a retail investor has a chance to buy the stock on the open market, it is often fully priced, removing the pricing advantage typically associated with IPO participation.

The company, founded in 2002, has raised capital multiple times previously, distributing equity to large banks and institutional investors prior to this public debut. As the leading private space firm responsible for shuttling astronauts to the International Space Station and operating Starlink satellites, SpaceX’s public listing marks a significant milestone. However, the mechanics of the offering suggest that stratospheric wealth from this debut will likely remain reserved for those who held shares before the company went public.