Chances Are You Won’t Profit Significantly from the SpaceX IPO

One thing that appears clear about the SpaceX IPO is that it will create substantial wealth for many individuals. However, it’s likely that you won’t be among them—not anytime soon, at least.

There’s immense enthusiasm surrounding Elon Musk’s rocket and AI company’s public offering, and rightly so. SpaceX is already the premier private space firm globally, sending astronauts to the International Space Station and enabling internet access through its Starlink satellites for millions. Its recent purchase of xAI positions it as the first major AI startup in the U.S. to go public, with Anthropic and OpenAI not far behind. The company has raised $75 billion, setting its valuation at $1.75 trillion, potentially making it the largest IPO in history by a wide margin.

Like all IPOs, however, the massive wealth generated will likely be reserved for existing shareholders of SpaceX—namely, employees, major institutional investment managers, and Elon Musk himself. While retail investors—individuals who buy stocks independently—will have greater access to SpaceX shares compared to traditional IPOs, most individuals won’t find themselves in a position to benefit significantly.

To clarify, this is neither investment advice nor a forecast about the long-term financial prospects of SpaceX or its stock price. It’s merely the mechanics of the system.

“The system is unfair,” states Campbell Harvey, a finance professor at Duke University’s Fuqua School of Business. Here’s how it operates—and who it favors.

The Inside Track

Ordinarily, the vast majority of retail investors cannot participate in an IPO. These offerings typically consist of exclusive clubs with carefully selected attendees made up of institutional investors like mutual funds and asset managers.

However, the SpaceX IPO is unique in a few notable aspects. SpaceX has signaled its intention to reserve 30 percent of its “float” (the number of shares available for public trading) for everyday investors, amounting to approximately $22.5 billion worth of shares. (Usually, companies reserve much less for retail investors during an IPO; Fidelity estimates it at 5 to 10 percent.)

Depending on your brokerage, you might also need significantly less capital to participate. For instance, Fidelity, one of the world’s largest asset managers, typically requires a minimum of $100,000 (or sometimes $500,000) in household assets for IPO participation; for SpaceX, this minimum has been lowered to just two thousand dollars.

So, yes, it’s easier to join the guest list. Yet there are still limited spots available. Remember that $75 billion worth of stock SpaceX has raised? Bloomberg reported that SpaceX has seen $100 billion in orders from eager retail investors. This is before even considering institutional investors; BlackRock reportedly submitted an order for $5 billion alone.

Ultimately, SpaceX’s bankers will determine who gets the opportunity to purchase shares at the IPO price of $135 each, and how much they can buy. The chances of clearing the gate—even with more relaxed entry criteria—are exceedingly low. Even if you manage to get in, the number of shares you receive is likely to be very minimal. Requesting 10 shares from your brokerage might result in a lucky allocation of one or two. That hardly paves the way for generational wealth.

“The average investor gets the leftovers,” remarks Harvey. He explains that the purported 30 percent figure is misleading, as SpaceX is only putting 4 percent of its available shares on the market, meaning that retail investors will end up owning a little over 1 percent of the company post-IPO. “It’s just a few crumbs.”