Hundreds of IPO bankers, wealth managers, customer service agents and other staff have been notified. The hallways of Manhattan bank lobbies are adorned with videos of rockets. JPMorgan Chase (JPM), the nation’s largest bank, plans to host a party Friday afternoon.
It’s all fanfare for the public debut of SpaceX (SPCX) on June 12. It comes amid some stock market 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, an indicator of demand, the pre-IPO perpetual futures contracts for SpaceX on the 24/7 Hyperliquid crypto exchange protocol, is pricing the stock 20% above its listing price of $135.
“Any return less than 10% on the first day would probably signal to the market that the deal is not as attractive as they expect,” said Matthew Kennedy, senior IPO market strategist at Renaissance Capital.
Here are three things regular investors should know ahead of what will be the largest initial public offering in history.
IPO Has Big Retail Allocation, But Some Investors May Get Less Than They Expect
SpaceX’s IPO stands out for its large allocation to retail investors. But that group is much broader 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 range from private bank customers to everyday “mom” investors. Think about everyone from your next-door neighbor to millionaires with financial advisors to ultra-high net worth individuals with family offices.
The public debut of Elon Musk’s rocket and artificial intelligence company is expected to make history.
Those distinctions are important because the average investor may have far fewer opportunities to participate than they might think. Applying for IPO shares does not guarantee that investors will get them.
On the other hand, SpaceX is leading the way in booking space for brokerages like Charles Schwab, E-Trade, Fidelity, Robinhood and SoFi, which are aimed more at 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 on future IPOs, meaning it can win IPO deals to work directly with an issuing company.
Wall Street rations stocks when demand exceeds 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 things being equal, that means many investors won’t get what they ask for, and that’s exactly the kind of tension bankers want.
