By Manya Saini and Suzanne McGee
June 7 (Reuters) – SpaceX’s long-awaited initial public offering, expected to fetch a $1.75 trillion valuation, has set off a frenzy among retail investors clamoring for a share of Elon Musk’s rocket, satellite and AI empire. It has become one of the biggest FOMO trades of the year, despite SpaceX’s lack of profits, drawing so much investor demand ahead of the IPO that bankers have already received twice as many orders as available shares. SpaceX has reportedly earmarked as much as 30% or $22.5 billion in shares for retail investors, a rare move for a blockbuster IPO that is typically dominated by institutional buyers.
Here’s what investors need to know about buying shares in the IPO, who may get access and the risks of purchasing the stock once it begins trading.
HOW CAN YOU BUY SHARES? Trading under the symbol SPCX, SpaceX has picked a handful of brokerage firms to distribute shares in the IPO to retail customers in the U.S.
Investors typically need to have an eligible brokerage account, meet minimum funding requirements and submit an indication of interest before the IPO is priced. Requirements vary by brokerage and there is no guarantee your order will be filled.
Fidelity lowered its eligibility requirements from holding $500,000 in a Fidelity account to $2,000 just in time for 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 warn 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.
CAN INTERNATIONAL INVESTORS BUY SHARES?
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.
Here are the countries where SpaceX said qualified investors might be able to buy its shares, depending on the eligibility requirements in each country. All of these nations impose restrictions on who can buy and some even restrict how they can invest in SpaceX. Check with local authorities on the specific rules.
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. In popular IPOs, stocks often have a “pop,” soaring above their offering price on the first day, as investors who missed out on getting all the shares they wanted allocated at the IPO price chase a limited number of shares.
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.
WHAT RISKS SHOULD INVESTORS 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 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. The stock is also unlikely to qualify for inclusion in the S&P 500 in the near future because the index requires companies to meet profitability and other eligibility criteria. SpaceX’s lofty valuation could come under pressure as Anthropic and other marquee AI companies prepare to go public and as shares held by early investors and employees gradually enter the market once their lockup periods expire. (Reporting by Manya Saini in Bengaluru and Suzanne McGee in Rhode Island. Editing by Dawn Kopecki and Sanjeev Miglani)
