SpaceX IPO forces retail Tranche on future $50B deals

The SpaceX IPO is already attracting interest from investors, regulators and business executives, following its use of the biggest-ever IPO allocation strategy aimed at the widest retail participation in the US since last Thursday’s public listing which saw the aerospace giant raise roughly $85.7B after exercising the over-allotment option, pushing the stock value to about $1.77T.

The Bloomberg report published that investors who use such famous online brokers as Fidelity, Charles Schwab, Robinhood, SoFi and E*Trade, were all able to buy portions of the offer, thus increasing the share participation among individual investors compared with previous big public listings.

They usually tend to fall mostly in institutional investors’ hands. Investors’ demand for shares of SpaceX was enormous, reaching over $250B for the listing, while for retail individual investors it topped $70B according to recent estimates.

This clearly reflects the ever-increasing role played by individual investors within capital markets, especially if direct access through famous online networks is provided. According to market sources SpaceX allotted about 20%-30% of its IPO shares to individual investors, a figure that far exceeds any allocation seen during typical large tech IPOs.

Vanda Research, for instance, calculated that last Friday retail investors bought $117.4M in SpaceX stock making the IPO one of the most popular individual stocks bought on the very first trading day. This large participation is a topic of discussion beyond the United States as individual investors can buy allocations of most of the IPOs in Australia, even though institutional investors often manage to win larger portions of them.

Other market places, like Hong Kong, Singapore and the United Kingdom have recently created systems for providing portion of listed companies' stock to the general public, none of them however, managing to achieve similar scale.

Business executives and investment bankers are keen to follow this deal as the latest reference for institutional versus broader participation while it remains to be seen if and when another public offering would copy this revolutionary model in order to gain more investor demand.

Source: Bloomberg

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