Did Musk break IPO conventions? SpaceX plans to allocate 30% of new shares to retail investors

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On March 27, according to informed sources, Elon Musk’s SpaceX is preparing for its initial public offering (IPO) process and plans to break the long-standing convention of the U.S. stock IPO market by allocating up to 30% of new shares to individual investors, a figure that far exceeds the industry standard. It is reported that online brokerage Robinhood is actively competing for the retail allocation in this IPO.

In conventional U.S. stock IPO operations, retail investors typically only receive 5% to 10% of new shares without lock-up restrictions, with the vast majority of shares allocated to institutional investors, including hedge funds, mutual funds, pensions, and core clients of major investment banks. This practice has persisted on Wall Street for decades, becoming the “unwritten rule” of the U.S. IPO market.

The allocation of new shares in U.S. stock IPOs is determined by the underwriters, and retail participation is not only limited in amount but also faces issues such as low hit rates and delayed allocations, making it difficult to truly share in the dividends of quality company IPOs. This time, SpaceX plans to reserve 30% of new shares for retail investors, equivalent to increasing the retail allocation ratio to 3 to 6 times the conventional level. If the plan is successfully implemented, it means that the “power of retail investors” will participate in this top-tier IPO like never before.

Informed sources revealed that SpaceX’s aggressive plan has been communicated by its CFO, Brett Johnston, to the Wall Street investment banks involved in underwriting. In addition to significantly increasing the retail quota, SpaceX may also eliminate the traditional 6-month lock-up period for retail investors, allowing shares subscribed by retail investors to be freely traded on the first day of listing, further lowering the participation threshold.

Currently, SpaceX has entered a critical stage of IPO preparation. According to previous reports, SpaceX plans to submit a confidential filing to the U.S. Securities and Exchange Commission (SEC) as early as this week, with a goal of completing the listing in June, expecting to raise between $70 billion and $75 billion, and aiming for a valuation of up to $1.75 trillion. If successful, it would greatly surpass the $29 billion global IPO financing record set by Saudi Aramco in 2019, becoming the largest stock issuance in history.

SpaceX has not adopted the traditional lead underwriter structure but has allocated exclusive “lanes” to various investment banks based on personal relationships and past connections, requiring each institution to focus on specific aspects of the stock issuance.

Currently, it has been confirmed that several Wall Street investment banks, including Goldman Sachs, Morgan Stanley, Bank of America, JPMorgan Chase, and Citigroup, will participate in the underwriting process. Among them, Morgan Stanley serves small retail investors through the E*Trade platform, Bank of America is responsible for U.S. high-net-worth clients and family offices, Citigroup coordinates international retail and institutional investor distribution, while regional banks like UBS manage their domestic markets.

The market generally expects that SpaceX’s IPO will see very strong demand from retail investors. Rowan Taylor, managing partner of private equity firm Liberty Hall Capital Partners, which focuses on the aerospace and defense sector, stated, “Such moments are once in a lifetime; people may feel they must participate.”

He compares the current market enthusiasm for SpaceX’s IPO to the fervor surrounding Google’s IPO two decades ago, believing it essentially reflects global investors’ strong confidence in Elon Musk personally and in the technological vision he portrays.

Despite the high market enthusiasm, SpaceX’s IPO process still faces many challenges. SpaceX’s public market target valuation is $1.75 trillion, but just last December, the transfer price for internal employee shares corresponded to a valuation of only about $800 billion. Whether such a large premium can be fully absorbed by the public market remains to be seen.

Additionally, the high retail allocation of 30% is a double-edged sword. Retail enthusiasm can support stock prices, but it may also exacerbate sell-offs during emotional reversals. Especially with SpaceX’s lack of a lock-up period, while it increases liquidity, it also means that if the stock price rises significantly after listing, many retail investors may choose to “take profits,” creating concentrated selling pressure and leading to sharp price fluctuations.

Previously, Gemini and Bullish, which similarly allocated a high proportion of shares to retail investors in their 2025 cryptocurrency exchange listings, both experienced stock price declines of over 50% after going public, which serves as a warning for SpaceX.

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Editor: Gao Jia