① Elon Musk’s SpaceX is set to make its U.S. stock market debut this Friday, in what will be the largest initial public offering (IPO) in history and potentially the most closely watched capital markets event; ② Underwriters and traders expect SpaceX’s share price to experience significant volatility in early trading, partly due to the anticipated high proportion of shares held by retail investors.
Shanghai Securities News, June 12 (Editor: Xiaoxiang) — Elon Musk’s SpaceX is set to make its U.S. stock market debut this Friday, in what will be the largest initial public offering (IPO) in history and potentially the most closely watched capital markets event.
The company allocated a substantial portion of this offering to retail investors. And to some extent, $SpaceX (SPCX.US)$ Friday's market performance will also serve as a key barometer of investor interest in the highly anticipated mega-IPOs expected later this year, such as those of OpenAI and Anthropic.
Currently, the majority of SpaceX’s revenue comes from its satellite internet business, and it also operates an emerging artificial intelligence division. Following its listing, the company will trade under the ticker symbol “SPCX.” On Thursday, SpaceX finalized its IPO price at $135 per share, planning to issue 555.6 million shares to raise approximately $75 billion. This transaction values the company at around $1.77 trillion.
When will trading begin tonight?
Although SpaceX executives are prepared to ring the Nasdaq opening bell in New York, highly anticipated star IPOs like this often do not officially commence trading until later in the day.
Lead underwriters typically aim to match buyers and sellers for roughly 10% of the offering before initiating trading to mitigate price volatility. For SpaceX, this amounts to approximately 55 million shares—worth about $7.5 billion.
Because early investors are subject to lock-up periods restricting share sales immediately after the IPO, it may take some time to identify sellers willing to part with their holdings in a high-demand offering.
Alibaba, which held the record for the largest U.S. IPO prior to SpaceX, did not begin official trading until close to midday local time in 2014. Similarly, Figma, one of last year’s most anticipated IPOs—a software developer—did not start trading until shortly before 2 p.m.
However, according to informed sources, SpaceX’s underwriters might deviate from convention and initiate trading even before reaching the traditional matching threshold, to ensure the stock has several hours of active trading on its first listing day.
How volatile will the stock price be on its first day of trading?
Underwriters and traders expect SpaceX’s share price to experience significant volatility in early trading, partly because a large proportion of shares is expected to be held by retail investors. Some observers who anticipate a surge of buying from retail investors also worry that these same investors could quickly sell off their holdings in a panic.
In a typical large IPO, the portion of shares allocated to retail investors generally does not exceed 10%, meaning the vast majority of newly listed shares end up in the hands of large institutional investors. This practice helps protect small investors, as newly listed stocks may perform poorly initially or experience sharp price swings in the weeks or even months following listing. Large institutions typically have substantial capital reserves, enabling them to withstand market volatility and absorb potential losses.
But nothing about SpaceX is conventional—retail investors will receive approximately 30% of the offering. This means they are more exposed than usual to market volatility and weak pricing, both of which are highly likely to occur.
Any sharp movement in the share price could trigger so-called “circuit breakers,” leading to a temporary trading halt. For most newly listed companies, a 10% price swing in either direction within a single day triggers a mandatory five-minute pause in trading. Companies previously halted under this mechanism include Figma and chipmaker Cerebras Systems—the latter saw its share price surge dramatically on its May listing day.
How will Musk’s “take-it-or-leave-it” pricing strategy fare?
Just as Elon Musk is known for his unconventional approach, SpaceX’s IPO has similarly defied market norms.
Instead of following the standard practice of engaging potential investors with a preliminary price range to gauge market interest before listing, the company set a fixed price from the outset: $135 per share.
This move was intended to reduce the drama surrounding what is poised to be the largest IPO in history. However, it also bypassed what many consider a critical step: price discovery.
The success of this experiment will largely be judged by how SpaceX actually trades on Friday. If the share price surges, critics will argue that SpaceX priced too low, leaving money on the table; if the stock falls below its IPO price or performs tepidly, the market will inevitably accuse SpaceX and its underwriters of overestimating demand.
Of course, market predictions remain highly confident about SpaceX's debut performance. According to forecasts by Polymarket traders, there is an 84% probability that SpaceX’s market capitalization will exceed $1.8 trillion at the close of its first day of trading, and a 69% probability that it will surpass $2 trillion.
What is the so-called 'greenshoe option' often mentioned in connection with large IPOs?
If a stock exhibits unusual or highly volatile movements after opening, underwriters still hold a 'secret weapon' they can deploy to help stabilize the situation.
Underwriters typically sell more shares than the total number offered in the IPO—a practice commonly known in the industry as the 'greenshoe option.' In SpaceX’s case, they sold approximately 15% more shares than the stated offering size.
Because this means underwriters have technically allocated more shares than were originally issued, the 'stabilizing agent'—Morgan Stanley in this IPO—must repurchase these excess shares to fulfill delivery obligations. If the share price begins to fall, the underwriters will step in to buy these shares on the open market, thereby supporting and stabilizing the price. Conversely, if the share price performs strongly and does not weaken, the underwriters may exercise their right to request the issuer to issue additional shares.
The term 'greenshoe' originates from a footwear company—the first to use this mechanism years ago (a predecessor of what later became Stride Rite). In 2012, during Facebook’s IPO, its underwriters intervened to purchase additional shares after the stock price dropped sharply following its listing.
Can the Nasdaq trading system withstand the test?
The sheer scale of SpaceX’s IPO will also test Nasdaq’s trading infrastructure and could trigger ripple effects across broader markets.
Nasdaq has already conducted simulated opening drills to ensure its trading platform is fully prepared.
During Facebook’s IPO, technical system failures prevented some investors from receiving timely confirmations for order modifications or cancellations placed before trading began. This systemic chaos directly contributed to a sharp decline in Facebook’s stock on its first trading day, and it took the company over a year for its share price to finally recover above the IPO offering price.
Meanwhile, some market observers expect that on Friday, certain retail investors may concentrate on selling other holdings to raise cash for purchasing SpaceX shares, potentially boosting trading activity in the affected stocks.
According to data from Vanda Research, this wave of selling appears to have already quietly unfolded earlier this week, when retail investors recorded net sales of individual stocks for two consecutive days—a trend that coincided with a period of generally weak performance across the technology sector.
Moreover, since it will take several more days for SpaceX shares to be formally included in major benchmark index funds, the broader impact of this landmark IPO on the U.S. equity market is likely to unfold gradually over the coming weeks or even longer.
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Editor/joryn