Hundreds of IPO bankers, wealth managers, customer service agents, and other staff have been put on notice. Halls of Manhattan bank lobbies are decked with rocket videos. JPMorgan Chase (JPM), the country’s biggest bank, is planning to throw a party on Friday afternoon.
It’s all fanfare over SpaceX’s (SPCX) public debut on June 12. It comes amid some stock turbulence, with the S&P 500 (^GSPC) falling 3% over the past five days.
Bankers have closed their order books for the deal and are set to finalize the company’s $75 billion raise later Thursday.
Meanwhile, one gauge for demand, pre-IPO perpetual futures contracts for SpaceX on the 24/7 crypto exchange protocol Hyperliquid is pricing the stock 20% above its listing price of $135.
“Anything less than a 10% return on day one would probably tell the market that the deal is not quite as hot as they’re expecting,” said Matthew Kennedy, a senior IPO market strategist for Renaissance Capital.
Here are three things regular investors should know ahead of what’s set to be the largest IPO in history.
The IPO has a big retail allocation, but some investors may get less than they expect
SpaceX’s IPO stands out for its big allocation to retail investors. But that group is far wider than many might think.
Last week, JPMorgan CEO Jamie Dimon applauded Elon Musk for “democratizing finance” by “treating individual investors the same way institutions are treated.”
But for JPMorgan Chase and other banks, individual investors span from private bank clients to everyday “mom and pop” investors. Think everyone from your next-door neighbor to millionaires with financial advisers to ultra-high-net-worth individuals with family offices.
Those distinctions matter because the average investor may have far less opportunity to jump in than it seems. Requesting IPO shares doesn’t guarantee investors will get any.
On the other hand, SpaceX is breaking ground in how it’s reserving space for brokerages like Charles Schwab, E-Trade, Fidelity, Robinhood, and SoFi, which cater more to everyday investors.
Robinhood, in particular, is looking to take advantage of this shift. Earlier this week, the company announced that it received approval to act as an underwriter in future IPOs, meaning it can win IPO deals to work directly with an issuer company.
Wall Street rations shares when demand surpasses supply
Demand for SpaceX shares is expected to exceed the supply available in the pre-IPO allocation, according to sources familiar with the deal. All else equal, that means many investors won’t get what they ask for, and that’s exactly the kind of tension bankers want.
