SpaceX IPO Demand Hits $250 Billion. Here’s What That Means for Day-One Trading

When SpaceX first announced it would go public, there was no doubt that hype would be off the charts.

However, the company has been attempting to do something no other initial public offering has ever done: raise at least $75 billion.

That’s more than twice the roughly $29.4 billion raised by Saudi Arabian Oil Co., the largest IPO before SpaceX. SpaceX Founder Elon Musk and the many investment bankers working on the IPO appear to have done their job.

Citing anonymous sources, Reuters reported that the IPO has attracted over $250 billion in investor demand. The sources also said the IPO is running three-and-a-half to four times oversubscribed.

The IPO is expected to price on Thursday, June 11, with SpaceX expected to begin trading on public markets on Friday, June 12. Here’s what this all means for day-one trading.

The stock may pop, but it may not be as spectacular as some imagine

The investment bankers working on the IPO have been marketing SpaceX to prospective investors for about a week now.

Demand during this period will help determine the initial IPO price. SpaceX had been aiming for $135 per share, which would value the company at about $1.77 trillion.

Image source: Getty Images.

The underwriters will have the option to purchase an additional $11.2 billion in shares, known as the greenshoe, at their discretion if they see demand, so SpaceX could end up raising over $86 billion.

Once the IPO price is set, an auction will be held on the morning of SpaceX’s first day of trading to take orders from investors to determine the opening share price. Live trading will likely commence in the early afternoon.

With IPO potentially up to four times oversubscribed, the stock should pop on day one, but that doesn’t necessarily mean it will moon.

According to SpaceX perpetual futures contracts on Binance, SpaceX is trading around $162.50 per share, up roughly 20% from the $135 IPO price it is seeking.

Perpetual futures are futures contracts in which investors can bet on the price of an asset without actually owning that asset.

“Perpetuals on Hyperliquid suggest there’s interest in the SpaceX IPO, but it’s far from euphoric,” Injective Labs Co-Founder Eric Chen said, according to CNBC. “These markets are dominated by very active, risk‑tolerant traders, and they aren’t pricing in a massive premium versus other pre‑IPO names. It’s a useful signal, but not a guarantee of how the broader market will react once SpaceX actually lists.”

Anything can happen

While the perpetuals offer some clues, investors shouldn’t read too much into them, as anything can happen once the stock officially starts trading.

Everyone who requested shares but didn’t get them in the IPO may try to get into the stock as soon as possible, leading to heightened demand and potentially prompting other investors to jump in for fear of missing out (FOMO).

In another scenario, perhaps everyone in the IPO just got in for the initial pop and tries to dump shares at the opening.

This is why betting on near-term trading events is so difficult. You never know what the majority of the market is thinking and how that could change suddenly.

Ultimately, I suspect the first day of trading for SpaceX will be incredibly volatile. If you requested shares in the IPO and get them, it’s likely best to hold in the near term.

SpaceX is expected to join a bunch of market indexes within its first few weeks of trading, prompting funds tracking those indexes to buy shares and absorb the float.

If you didn’t get shares in the IPO, I think you are best off remaining on the sidelines. I suspect there will be opportunities to buy the stock at a lower price down the line.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.