Retail Investors to Participate in SpaceX's Upcoming IPO: A Guide to Accessing the Space Exploration Company's Shares

SpaceX's Highly Anticipated IPO Sets Off Frenzy Among Retail Investors

June 7, 2023 (Reuters) - SpaceX, the ambitious space exploration company founded by Elon Musk, is set to go public with an initial public offering (IPO) expected to fetch a valuation of $1.75 trillion. The highly anticipated IPO has sparked a frenzy among retail investors, who are clamoring to get a share of the company's rocket, satellite, and AI empire.

Despite SpaceX's lack of profits, the IPO has drawn significant investor demand, with bankers receiving twice as many orders as available shares. In a rare move, SpaceX has earmarked up to 30% or $22.5 billion in shares for retail investors, a move that is typically dominated by institutional buyers.

Who Can Buy Shares and How?

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Investors can buy shares in the IPO through a select group of brokerage firms, including Fidelity, Robinhood Markets, SoFi, E*Trade, and Charles Schwab. The requirements for buying shares vary by brokerage, with some, like Fidelity, lowering their eligibility requirements from $500,000 to $2,000 in a Fidelity account just in time for the SpaceX IPO.

Brokerages are warning investors against "flipping," or selling IPO shares shortly after a stock begins trading. Investors who sell their stock within two to four weeks of the offering could be restricted from future IPOs.

International Investors Face Additional Challenges

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While SpaceX's IPO is being offered to investors in several countries, access varies significantly by market. International investors also face additional eligibility requirements, limited share allocations, or regulatory restrictions compared with U.S. investors, depending on where they live. Qualified investors in Germany, Denmark, France, the Netherlands, Norway, Spain, and Sweden will be able to buy shares once SpaceX's European prospectus is approved by regulators.

What Happens If You Don't Get an IPO Allocation?

Investors who do not receive shares in the IPO can still buy SpaceX stock once it begins trading on the public market on Friday. However, the shares may move sharply when trading opens, particularly if demand exceeds the number of shares available.

Investors can also invest in SpaceX through index funds like the Nasdaq 100, which has granted the company fast-entry into the index that tracks the 100 biggest companies trading on the tech-heavy exchange.

Risks to Consider

At roughly 110 times trailing sales, SpaceX's valuation assumes years of rapid growth, raising the stakes for investors if the company falls short of expectations. Some analysts have cautioned that SpaceX's valuation reflects lofty expectations for future growth, leaving little room for disappointment. In addition, it operates in a capital-intensive industry where launches, satellite deployments, and regulatory developments can affect financial performance. SpaceX in its IPO prospectus said it does not expect to be profitable any time soon.