Price is set, but retail still up in the air

Nothing about SpaceX‘s IPO is ordinary. The rocket maker is aiming to raise a record sum, by a wide margin, at a historic valuation, and will be controlled by Elon Musk, who’s also CEO of Tesla, another trillion-dollar company. 

When it comes to the mechanics of the share sale, SpaceX is offering a take-it-or-leave-it price of $135, rather than providing a range and then pricing the deal based on demand, as is customary in IPOs. 

But as the stock offering gets underway on Thursday, certain customs will be familiar to Wall Street. At some point, all of the IPO shares — roughly $75 billion worth — have to get allocated to the underwriters and asset managers so they can reach their clients before trading begins on Friday.

“Elon has dictated the price, and, assuming investors go for it, you can check that box,” said Lise Buyer, founder of IPO consultancy Class V Group. “But somebody still has to determine where the shares are going.”

In a typical offering, the pricing takes place the evening before the market debut. In the weeks leading up to that point, the issuer, in tandem with the underwriters, provides a price range and then lifts it if investors are showing signs of enthusiasm. 

For example, when artificial intelligence chipmaker Cerebras was gearing up for its IPO last month, the company first said it would sell shares at between $115 and $125 a piece. The next week, it upped the range to between $150 and $160. 

The IPO price should reflect how investors feel about the final range, with companies generally preferring to price at or above the high end. Cerebras ultimately priced its offering at $185, a sign of Wall Street’s bubbling excitement for a pure-play AI IPO. The stock popped when it opened the next day, closing up 68% at over $311. 

SpaceX is skirting the whole buildup process.

Heading into its abbreviated roadshow last week, the company said $135 is the share price and $1.77 trillion is the anticipated market cap. That’s for a company that generated $18.7 billion in revenue last year and recorded an operating loss of $4.2 billion. 

Among the nine public trillion-dollar companies, the smallest by revenue is Micron at $58 billion over the past year, and the least profitable is Musk’s other company, Tesla, at $3.8 billion in 2025 net income. 

“It’s not like investors are home doing math,” Buyer said. “There’s zero math that makes any sense whatsoever.” 

Because the price is set, Buyer said, SpaceX could start working to allocate the shares earlier than normal and not have to wait until the actual pricing takes place. That could be particularly useful because of how many shares need to be distributed. 

SpaceX has told investors that it plans to stop taking orders on Wednesday, a day early, according to people familiar with the matter who asked not to be named because the details are private. That allows the company and its underwriters to take all of Thursday to map out allocations for the record-breaking IPO, one of the people said. That process would usually be more truncated, with allocations occurring after the official pricing is decided, closer to the market open.

SpaceX didn’t immediately respond to a request for comment.

It’s all the more important for SpaceX to get out early because the company wants retail investors to receive roughly 30% of the shares being sold, which would amount to about $22.5 billion. According to Fidelity, the retail slice is usually between 5% and 10%.

In its prospectus, SpaceX names Charles Schwab, Fidelity, Robinhood, SoFi and Morgan Stanley’s E-Trade as some of the brokerage platforms that will make shares available. The final retail allocation can’t be determined until the book is closed.

In Robinhood’s own IPO in 2021, the trading site indicated it wanted to sell between 20% and 35% of shares to retail investors. The allocation ended up coming in at the lower end of that range, CNBC reported at the time. The stock fell 8% in its debut. 

WATCH: Why Robinhood struggled to allocate shares to investors