This has turned into one of the top FOMO trades of the year, with immense investor interest ahead of the IPO, leading bankers to receive two times the number of orders compared to available shares.
SpaceX has reportedly allocated up to 30%, or $22.5 billion, of its shares for retail investors, an uncommon strategy for a major IPO that usually favors institutional buyers.
Here’s what investors should understand about acquiring shares in the IPO, who will have access, and the risks associated with purchasing the stock once it starts trading.
HOW CAN YOU BUY SHARES?
Trading under the ticker SPCX, SpaceX has selected a limited number of brokerage firms to distribute shares in the IPO to retail customers across the US.
Investors must generally possess an eligible brokerage account, meet minimum funding criteria, and submit an indication of interest before the IPO is finalized. These requirements can differ by brokerage and there’s no assurance that your order will be fulfilled.
Fidelity has lowered its eligibility threshold from $500,000 to just $2,000 ahead of the SpaceX IPO.
• Fidelity Investments: $2,000 account minimum
• Robinhood Markets: $0 account minimum
• SoFi: $0 account minimum
• E*Trade: $0 account minimum
• Charles Schwab: $100,000 account minimum
Brokerages caution against “flipping,” or selling IPO shares shortly after trading begins. Investors that sell their stocks within two to four weeks post-offering may be barred from participating in future IPOs.
CAN INTERNATIONAL INVESTORS BUY SHARES?
While SpaceX’s IPO is open to investors in various countries, access can differ significantly based on the market.
International investors may face additional eligibility requirements, limits on share allocations, or regulatory constraints compared to US investors, depending on their location. Qualified investors in Germany, Denmark, France, the Netherlands, Norway, Spain, and Sweden will be able to purchase shares once SpaceX’s European prospectus receives regulatory approval.
Here are the countries where SpaceX indicates that qualified investors might be able to acquire shares, subject to the regulations in each location. Each of these countries imposes restrictions on who can invest and some may limit investment methods. It’s important to check with local authorities regarding specific regulations.
• Argentina
• Australia
• Brazil
• Colombia
• Denmark
• European Economic Area
• France
• Germany
• India
• Israel
• Malaysia
• Mexico
• The Netherlands
• New Zealand
• Norway
• Peru
• Philippines
• Qatar
• Saudi Arabia
• Singapore
• South Africa
• South Korea
• Spain
• Sweden
• Switzerland
• Taiwan
• Thailand
• United Arab Emirates
• United Kingdom
WHAT HAPPENS IF YOU DON’T GET AN IPO ALLOCATION?
If investors are unable to obtain shares in the IPO, they still have the option to buy SpaceX stock once it starts trading on the public market on Friday. However, share prices may fluctuate significantly as trading commences, especially if demand surpasses the available shares.
In high-demand IPOs, stocks often experience a “pop,” increasing above their offering price on the first day, as investors who missed out on desired allocations pursue a limited supply of shares.
Investors can also gain exposure to SpaceX through index funds like the Nasdaq 100, which has granted the company rapid entry into the index tracking the largest companies on the tech-oriented exchange.
WHAT RISKS SHOULD INVESTORS CONSIDER?
With a valuation about 110 times trailing sales, SpaceX’s outlook anticipates years of substantial growth, raising concerns for investors if the company doesn’t meet expectations.
Some analysts have warned that SpaceX’s valuation reflects high hopes for future growth, offering little room for error. Furthermore, it operates in a capital-intensive sector where launches, satellite setups, and regulatory changes can impact financial outcomes.
In its IPO prospectus, SpaceX stated it doesn’t foresee profitability in the near future. Additionally, the stock is unlikely to meet the criteria for inclusion in the S&P 500 shortly, as the index requires firms to achieve profitability along with other standards.
SpaceX’s high valuation might face pressure as Anthropic and other notable AI firms prepare for public offerings and as shares held by early investors and employees gradually become available in the market following their lockup periods ending.
