SpaceX IPO May Allocate 30% to Retail Investors, 3x the Usual Amount
Key Points
Reports suggest SpaceX could file its IPO prospectus as soon as this week.
Various media outlets suggest the company could raise $50 billion at a valuation of up to $1.8 trillion.
Reuters reported that Musk is considering giving retail investors larger access than normal to the IPO.
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Companies owned by Elon Musk, such as Tesla, have been incredibly popular among retail investors. Now, Musk is reportedly ready to return the favor.
In an exclusive report, Reuters, citing anonymous sources, said Musk and his team at SpaceX are considering allowing retail investors to purchase up to 30% of the initial public offering, an unprecedented break from the norm. Companies going public typically allocate only 5% to 10% of an IPO to retail investors, according to Reuters.
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The news comes as media reports indicate that SpaceX could file its IPO prospectus as soon as this week. Barrons recently reported that the company could look to raise $50 billion at a valuation upwards of $1.8 trillion.
That would make it the largest IPO of all time, ahead of Saudi Arabia's state oil company Aramco, which raised over $29 billion in its IPO in 2020.
This kind of valuation would also immediately put SpaceX in an elite group of stocks with market caps exceeding $1 trillion.
Despite not being public, SpaceX is already a household name due to its ties to Musk and as a pioneer in the space sector. The company uses reusable rockets to deploy low-orbit satellites, with the potential to provide high-speed internet to all parts of Earth. SpaceX also conducts launches with astronauts.
What retail investors need to know
Given the hype around SpaceX and that Tesla is consistently one of the most purchased stocks on the popular retail brokerage Robinhood, it is somewhat understandable that Musk would pursue such a strategy.
According to Reuters, SpaceX plans to use different banks to raise money among different investor bases.
The company will use Bank of America to distribute shares to domestic retail investors, and Citigroup for international retail and institutional distribution. Other foreign-based investment banks have reportedly been selected to focus on their home markets.
Finally, Morgan Stanley will supposedly handle smaller-ticker retail investors through E*TRADE, the retail brokerage it purchased in 2020.
In another exclusive report from January, Reuters reported that SpaceX generated revenue of about $15 billion to $16 billion in 2025. If it hits a $1.8 trillion valuation and this revenue figure is correct, the stock would trade at over 112 times revenue.
Obviously, this isn't going to be a stock valued on fundamentals right now, but it's also something retail investors should keep in mind as the hype around SpaceX grows.
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Citigroup is an advertising partner of Motley Fool Money. Bank of America is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
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