There is extraordinary interest in the public debut of Elon Musk’s rocket-and-AI company, and with good reason. SpaceX was already the world’s leading private space company, with its rockets carrying astronauts to the International Space Station and its Starlink satellites providing internet connectivity to millions of people around the world. XAI’s recent acquisition means it is the first of the Big Three AI startups to go public in the US, with Anthropic and OpenAI also following behind. The company raised $75 billion, valuing it at $1.75 trillion, which would make it the largest IPO ever by a wide margin.
However, like all IPOs, the stratospheric wealth will likely be reserved for those who already own SpaceX shares, which means employees, large institutional asset managers, and Elon Musk. Even though so-called retail investors — individuals who don’t buy stocks professionally — will have more access to SpaceX shares than after the IPO, most won’t be in a position to see serious profits.
To be absolutely clear, this is not investment advice, or any prediction about the long-term financial health of SpaceX or its stock price. It’s simple mechanics.
“This system is unfair,” says Campbell Harvey, a professor of finance at Duke University’s Fuqua School of Business. Here’s how it works—and who it works for.
inside track
Generally, most retail investors will not be able to participate in IPOs. These offerings are like exclusive clubs, with strictly curated guest lists composed of institutional investors such as mutual funds and asset managers.
However, the SpaceX IPO is different in a few key ways. SpaceX has indicated that it wants to set aside an average of 30 percent of its “float” (the number of shares made available for public trading) for Joe, which equates to about $22.5 billion worth of shares. (Typically a company will set aside a very small amount for retail investors in an IPO; Fidelity puts it at 5 to 10 percent.)
Depending on your broker, you may even need very little money to get involved. Take Fidelity, one of the world’s largest asset managers. For a typical IPO, Fidelity requires at least $100,000 (or sometimes $500,000) in domestic assets to participate; For SpaceX, this has been brought down to a minimum of two grand.
So yes, it’s easy to get on the guest list for the club. But there are still only so many tables inside. Remember that time SpaceX raised $75 billion in stock? Bloomberg reported Thursday that SpaceX has received $100 billion worth of orders from optimistic retail investors. And that’s before you even get to the property managers trying to meddle; BlackRock alone has reportedly collected orders worth $5 billion.
SpaceX’s bankers ultimately decide who gets the right to buy stock at the IPO price of $135 per share and for how much. The chances that you’ll make it through the velvet rope, even with loose standards, are very slim. And even if you do, the number of shares you get will probably be very small. Tell your brokerage firm you want 10, and you might be lucky to get one or two. It’s not really preparing you for generational wealth.
“The average investor gets the leftovers,” Harvey says. He argues that the 30 percent figure is also misleading, because SpaceX is only selling 4 percent of its available shares, meaning retail investors will lose ownership of a little more than 1 percent of the company after the IPO. “It’s a few pieces.”
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