Retail investors build big dreams on small slices of SpaceX

Individual investors eager for a piece of SpaceX’s mega IPO ​on Friday scrutinized their e-mail inboxes and brokerage accounts to see just how big a slice of the pie they received, while ‌others went straight to the open market to scoop them up on day one.

From the start, SpaceX and its underwriters had determined to set aside as much as 30% of the shares sold to the public in the IPO for retail investors. That meant that whipping up interest and buying orders from this group was crucial. Getting an allocation to the stock was competitive, ​and some retail investors just dived into the market to buy.

“I’m very happy with what I managed to get,” said Joseph Gutheinz, who retired from ​NASA as an investigator to practice law. Gutheinz did not think of trying to submit an IPO allocation request but ⁠managed to buy $100,000 of shares at $161 on Friday.

“It’s a great investment,” he said. “Win or lose, I’m happy to be invested at all.”

Retail buying was one of the ​factors responsible for the pop in the price of SpaceX shares, which surged 19% on their first day of trading, said Art Hogan, investment strategist at B. Riley ​Wealth in Boston.

“This allocation to retail is far and away the highest I’ve ever seen in my decades on Wall Street,” Hogan said. “It’s the latest, greatest shiny object for retail investors to get into right now.”

The deal became “the largest and most subscribed offering on our platform to date,” said a spokesman for SoFi, one of the retail brokerages involved in the selling group. ​The spokesman added that all individuals who met SoFi’s criteria received an allocation of the deal.

Net buying of SpaceX shares accounted for about 4% of all ​single-stock retail turnover on Friday, totaling $453 million and running at 3.5 times the pace of runner-up Nvidia.

“Retail investors have shown up for SpaceX in a big way,” said Vanda Research, a ‌firm that ⁠tracks the activity of self-directed individual investors and that spent much of Friday monitoring trading in the high-profile IPO. In the first 20 minutes of trading, SpaceX shares had vaulted to second place in the ranks of most actively purchased stocks by retail investors and by mid-afternoon was in first place, dwarfing its rivals, Vanda reported.

ALLOCATIONS FALL SHORT

Allocations, however, for some retail investors fell short of what they sought.

“Requested 250, received nothing,” one of the rare disgruntled would-be investors reported on a ​Reddit chat devoted to figuring out who ​had received allocations. “Requested 555, got 10” ⁠and “requested 1,000, got 85,” other Reddit posters noted.

SpaceX founder Elon Musk, whom the IPO has made the world’s first trillionaire, pledged in 2024 that if any of his still-private companies went public in the future, he intended to make sure that retail investors, ​especially holders of his other public company, Tesla, would have priority in accessing the new deal.

“Loyalty deserves loyalty,” he said ​in a post ⁠on X at the time.

Already, some fans of Musk and SpaceX are providing further signs of their commitment and conviction.

Clint Sorenson, chief investment officer of Ascentis Asset Management, told Reuters he offered all of his firm’s clients who had invested in SpaceX via private investment vehicles before the IPO the opportunity to hedge their exposure to the stock now ⁠that it ​is publicly traded. No one took him up on the idea, he said.

“Everyone wants to keep holding ​and celebrating right now; no one wants to even think of hedging their risk because they believe in the story so much,” Sorenson said.

Reporting by Suzanne McGee in Providence, Rhode Island, Manya Saini, ​Akash Sriram and Laura Matthews in New York; Additional reporting by Manya Saini in Bengaluru and Tatiana Bautzer in New York; Editing by Megan Davies and William Mallard.