SpaceX is set to begin trading today in the largest IPO in world history.
With demand expected to be intense and volatility likely, here are the key things investors should know before trading begins.
When Will SpaceX’s IPO Trade?
Although SpaceX execs are expected to ring the Nasdaq opening bell, shares may not begin trading immediately.
Unlike established stocks, IPOs require underwriters to match buy and sell orders before trading can commence. For a deal of this size being the largest ever. that process may take hours.
Investors should not be surprised if trading begins around midday rather than immediately after markets open.
Why Could The Stock Be Volatile?
SpaceX allocated an unusually large portion of the offering to retail investors.
While this broadens participation, it can also increase volatility. If individual investors rush into the stock, prices could surge. If investor sentiment weakens fast, selling pressure could have equally dramatic impact on prices.
Large swings may trigger circuit breakers, temporarily pausing trading to prevent disorderly markets.
What Is The ‘Green Shoe’ Option?
One of the least understood features of IPOs is the green shoe option.
Underwriters typically sell more shares than the official offering size. If the stock begins to dip, they can buy shares in the open market to help stabilise prices. If demand remains strong, they can instead acquire the additional shares directly from the SpaceX.
In SpaceX’s case, Morgan Stanley will play a key role in managing this process.
Why Are Investors Watching So Closely?
SpaceX’s IPO is about more than SpaceX.
OpenAI, Anthropic and several other highly valued private tech companies are exploring the idea of going public. Recently OpenAI quietly filed for IPO.
The success or failure of today’s offering could influence how those companies approach public markets and whether they go public in the months ahead.
Many investors view SpaceX as a test case for a new generation of trillion-dollar tech companies.
Could The IPO Affect The Broader Market?
Some analysts expect investors to sell existing technology holdings to fund purchases of SpaceX’s IPO. Others are watching for the company’s eventual inclusion in major US indices, which could force passive funds and investors to participate indirectly.
The effects of the IPO may therefore extend beyond SpaceX itself and ripple through broader markets over the coming days and weeks.
