SpaceX has set its IPO price at a firm $135 per share, opting for a direct approach rather than a traditional price range. The company is uniquely prioritizing retail investors, aiming to allocate them a substantial 30% of the shares, a significantly higher percentage than typically seen in IPOs.
With order taking potentially ending early on Wednesday, SpaceX is dedicating Thursday to the complex task of allocating shares, a process that will determine the final distribution to both institutional and individual investors.
SpaceX IPO Price Locked at $135, But Retail Investor Allocation Remains a Key Question
Key Points:
- SpaceX has set a non-negotiable IPO price of $135 per share, adopting a 'take-it-or-leave-it' approach.
- The company aims to conclude order taking on Wednesday to dedicate Thursday to share allocation, according to sources familiar with the matter.
- A significant 30% of the shares are earmarked for retail investors, substantially higher than the typical 5%-10% allocation.
SpaceX's foray into the public markets is anything but ordinary. The ambitious rocket maker is poised to raise a colossal sum, shattering records and achieving a historic valuation. The company will remain firmly under the control of Elon Musk, also at the helm of the trillion-dollar electric vehicle giant, Tesla.
In a departure from standard IPO practices, SpaceX has established a fixed price of $135 per share, eschewing the typical practice of offering a price range that is later adjusted based on investor demand. This 'take-it-or-leave-it' pricing strategy signals a unique approach to its market debut.
As the stock offering commences on Thursday, certain Wall Street traditions will undoubtedly be observed. A critical step involves the allocation of the IPO shares, valued at approximately $75 billion, to underwriters and asset managers for distribution to their clients before trading begins on Friday.
"Elon has dictated the price, and, assuming investors go for it, you can check that box," stated Lise Buyer, founder of IPO consultancy Class V Group. "But somebody still has to determine where the shares are going."
Traditionally, the pricing of an IPO occurs the evening before its market debut. In the preceding weeks, issuers and underwriters engage in a roadshow, presenting a price range that is often elevated if investor interest is strong. For instance, AI chipmaker Cerebras initially proposed a price range of $115 to $125 per share for its IPO last month, later revising it to $150 to $160 before ultimately pricing at $185, a testament to the market's enthusiasm for AI-focused companies. Cerebras shares surged 68% on their opening day, closing above $311.
SpaceX, however, is bypassing this customary buildup. Heading into its condensed roadshow last week, the company announced a fixed share price of $135 and an anticipated market capitalization of $1.77 trillion. This valuation comes for a company that generated $18.7 billion in revenue last year and reported an operating loss of $4.2 billion. Compared to other public trillion-dollar companies, SpaceX's revenue is lower than that of Micron ($58 billion) and its profitability is less than Tesla's 2025 net income ($3.8 billion).
"It's not like investors are home doing math," Buyer commented. "There's zero math that makes any sense whatsoever."
With the price predetermined, Buyer suggests that SpaceX might begin the allocation process earlier than usual. This flexibility is particularly advantageous given the substantial volume of shares to be distributed.
Sources indicate that SpaceX intends to cease accepting orders on Wednesday, a day earlier than customary. This allows the company and its underwriters to dedicate all of Thursday to meticulously planning the allocations for this record-breaking IPO. Typically, this allocation process is more compressed, occurring after the official pricing is determined and closer to the market open.
SpaceX has not yet provided an immediate comment on this matter.
The early commencement of the allocation process is crucial as SpaceX aims to allocate approximately 30% of the offered shares, totaling around $22.5 billion, to retail investors. This is a significantly higher proportion than the 5% to 10% typically reserved for retail investors in IPOs, according to Fidelity.
The prospectus lists Charles Schwab, Fidelity, Robinhood, SoFi, and Morgan Stanley's E-Trade as some of the platforms that will facilitate the sale of shares to retail investors. The final retail allocation will be confirmed once the order book is closed.
During its own IPO in 2021, Robinhood targeted a retail allocation of 20% to 35%, ultimately allocating shares at the lower end of that range, as reported by CNBC at the time. The stock experienced an 8% decline on its debut.
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