Musk successfully ignited retail investor frenzy through grand narratives such as 'Mars colonization' and 'the AI-driven future.' He not only significantly increased the allocation ratio for retail investors and lowered subscription thresholds, but also leveraged the Nasdaq’s expedited inclusion mechanism to extend this 'faith-based trade' to ordinary investors across the United States.
The largest IPO in history is about to debut. Elon Musk plans to raise nearly $75 billion through SpaceX’s listing, pushing the valuation of this persistently loss-making company to approximately $1.77 trillion and positioning himself to become the world’s first trillionaire. Underpinning this spectacle is a faith among retail investors carefully cultivated by Musk—rather than traditional financial fundamentals.
According to The Wall Street Journal on the 10th, SpaceX shares are expected to officially list on Friday at a target offering price of $135 per share. Musk has reserved approximately 20% or more of the IPO allocation for retail investors—far exceeding the industry norm of 5% to 7%. Major brokerages widely anticipate that subscription demand will significantly outstrip supply. Nasdaq has agreed to grant SpaceX fast-track access, allowing its inclusion in the Nasdaq-100 Index just 15 trading days after listing; however, the S&P 500 declined a similar request on Thursday, citing profitability requirements.
The core contradiction of this IPO lies in the fact that SpaceX reported a net loss of $4.9 billion last year, with losses widening further in the first quarter of this year. Yet, based on the target offering price, the company’s price-to-sales ratio stands at an extraordinary 93.6 times—dwarfing the S&P 500’s aggregate level of approximately 3.3 times. This sky-high valuation rests not on current financial metrics but on Musk’s grand narrative of interplanetary colonization and artificial intelligence.
Nasdaq-100’s fast-track mechanism means SpaceX shares will almost immediately enter index funds held by tens of millions of ordinary U.S. households. Meanwhile, a staged lock-up release schedule will allow more shares to flow into the market earlier than usual, potentially exerting downward pressure on the stock price. Professional investors warn that unprecedented enthusiasm from retail investors is setting the stage for an extremely volatile post-listing performance.
The Rise of Retail Investors: A New Pricing Force in Markets
Over the past five years, retail investors have evolved from market outsiders into a pricing force that can no longer be ignored. According to Citadel Securities, total retail trading volume in both equities and options reached record highs in May this year.
This shift has deep historical roots. In 2013, Robinhood launched its commission-free trading app, giving ordinary investors unprecedented low-barrier access to the stock market for the first time. During the pandemic, stay-at-home orders combined with government stimulus payments fueled a new generation of day traders, culminating in the meme-stock frenzy that stunned Wall Street—where retail investors banded together to drive shares like GameStop to astonishing heights. This movement also drew significant attention from Elon Musk.
Today, retail influence has spread to the IPO market. Robinhood CEO Vlad Tenev stated this spring that whereas the firm once had to “beg” underwriters for IPO allocations, “virtually every major large-cap IPO now appears on the Robinhood platform.” After SpaceX’s prospectus was made public on May 20, traffic to Charles Schwab’s IPO page immediately tripled. Mike Treacy, Chief Market Analyst at Apex Fintech Solutions, described the current situation as a “perfect storm of retail mania.”
Elon Musk’s Affinity for Retail Investors: From Promise to Delivery
Musk understands precisely how to mobilize retail enthusiasm. At Tesla, retail shareholders account for roughly one-third of the shareholder base—a conviction and fervor that has sustained Tesla’s market capitalization above the combined value of the world’s 30 largest automakers, despite Tesla ranking only 12th in U.S. vehicle sales.
In 2020, Musk tweeted:
"I’m a huge fan of small retail investors. (If SpaceX or Starlink goes public,) I’ll make sure they get top priority in the allocation. You can take my word for it."
With this IPO, Musk has at least partially fulfilled that promise. To further lower the barrier to entry, Robinhood imposed no minimum account balance requirement for participation in the SpaceX IPO; Fidelity, which typically requires account balances of $100,000 to $500,000 to participate in IPOs, lowered its threshold to just $2,000 for this offering.
Financial institutions have also sensed an opportunity. According to media reports citing informed sources, Merrill Lynch’s Houston branch held an informational session last week for clients on the SpaceX IPO, during which attendees received baseball caps emblazoned with the SpaceX logo.
The Valuation Enigma: A Sky-High Price Tag Propped Up by Belief
There is a striking disconnect between SpaceX’s financial profile and the valuation assigned by the market. The company reported revenue of $18.7 billion last year but posted a net loss of $4.9 billion, with losses widening further in the first quarter of this year. At the target offering price of $135 per share, the company would be valued at approximately $1.77 trillion, implying a price-to-sales ratio of roughly 93.6x—compared to just about 3.3x for the S&P 500 index as a whole.
The core rationale driving this valuation stems from visions of the future. As previously reported by The Wall Street Journal, Morgan Stanley analysts forecast that SpaceX’s annual revenue could reach $3.4 trillion by 2040.
Several seasoned Wall Street professionals noted that retail investors are unlikely to scrutinize metrics like price-to-earnings ratios or cash flow analyses before clicking 'buy.' Instead, they are more captivated by Elon Musk’s long-term vision—rockets, robotics, AI, and space-based data centers. Deen Noory, a 41-year-old fintech entrepreneur, has already decided to purchase shares on the listing day, stating plainly:
"This is an industry with limitless potential, led by Elon Musk—who wouldn’t want in?"
Fast-Track Nasdaq Listing: Risk Enters Every Household
Nasdaq has opened a fast-track pathway for SpaceX to join its index, compressing the typical waiting period—normally up to one year—to just 15 trading days. This means SpaceX shares will appear almost immediately in the various index funds held by ordinary American households.
The S&P 500 rejected a similar request on Thursday, maintaining its profitability requirement—a criterion SpaceX currently fails to meet due to its $4.9 billion net loss.
Additionally, SpaceX has implemented a staged lock-up release schedule, meaning more shares will enter the market earlier than is typical for newly listed companies, potentially exerting additional downward pressure on the stock price. The current market environment is also unsettled: semiconductor stocks experienced a sharp reversal last week, dragging the Nasdaq Composite Index down by 4.2% in a single day—the steepest one-day drop in over a year.
Institutions cash in, retail investors step in?
During its more than two decades as a privately held company, SpaceX has undergone multiple funding rounds, with institutional investors—including the world’s largest asset managers, mutual funds, and major endowment funds—already heavily invested. The company’s valuation has surged by over 2,000% in recent years, while retail investors have largely been absent from this wealth accumulation process. Critics argue that the easy gains are behind us and that institutional investors are now seeking buyers to take their place.
“I think most retail investors should avoid this stock like the plague,” said veteran fund analyst Dave Nadig, who expects extreme volatility in the weeks following the listing. Historical data compiled by Jay Ritter, emeritus professor at the University of Florida, shows that roughly one-quarter of IPO stocks lose at least half their value within three years of going public.
Jeff Judge, a financial planner based in Maryland, was blunt:
“Most of the interest is emotionally driven—that’s just the truth. People simply want to own a small piece of Elon Musk’s rocket company.”
The ambivalence among retail investors is reflected in two contrasting perspectives. Josh Hill, a sales manager from North Carolina, plans to be glued to Robinhood on listing day but admits, “Unless the price drops, I probably won’t buy.” Meanwhile, 70-year-old retired physician Randal Brown has made up his mind: “Musk is a superstar. Everything he touches turns to gold.”
Editor/Deng