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SpaceX, Elon Musk\u2019s rocket ship company, plans to sell shares publicly for the first time ever this week. It\u2019s an unusual event in several ways.<\/p>\n
The company\u2019s initial public offering would earn it the title of the world\u2019s largest I.P.O. SpaceX is also giving everyday investors a much larger slice of its shares than is typical for a public offering. And the I.P.O. could create the world\u2019s first trillionaire by increasing the net worth of the company\u2019s chief executive, Mr. Musk.<\/p>\n
Here\u2019s what you need to know ahead of SpaceX\u2019s first day of trading on Friday.<\/p>\n
An initial public offering, or I.P.O., is a company\u2019s debut in the stock market. It\u2019s the first time the general public can buy a piece of the company. Firms do this to tap into a bigger pool of capital to help them expand their business.<\/p>\n
When a company decides to go public, it works with an investment bank to figure out how much the company is worth and the price at which it should sell its shares.<\/p>\n<\/div>\n<\/div>\n
SpaceX has set its price<\/a> at $135 a share, which would value the company at $1.77 trillion. Since last week, SpaceX\u2019s bankers have been discussing with prospective investors how many shares they are willing to buy at that price. On Thursday night, all orders for shares will become final, and the offering process will close.<\/p>\n On Friday, the shares will start trading publicly on Nasdaq. After trading starts, the stock price is likely to fluctuate as the shares change hands on the open market. Bankers generally try to price an I.P.O. so that it has room to rise once its shares are public. Some analysts question how much more the value of SpaceX may rise, given its already lofty valuation.<\/p>\n Hundreds of companies introduce their stock on the market every year. But what makes SpaceX stand out is its size.<\/p>\n At a $1.77 trillion valuation, it would dethrone Saudi Aramco \u2014 Saudi Arabia\u2019s state-owned oil company, which debuted in 2019 with a valuation of $1.7 trillion \u2014 as the largest I.P.O. ever.<\/p>\n \u201cIt\u2019s a big deal because it\u2019s literally a big deal,\u201d said Matt Kennedy, senior strategist at Renaissance Capital.<\/p>\n<\/div>\n<\/div>\n If SpaceX\u2019s I.P.O. flops, it could send a shudder through a market that has been riding a wave of optimism related to artificial intelligence and other technology. The outcomes could include a chilled I.P.O. market or a broader market sell-off.<\/p>\n \u201cIf SpaceX does poorly and the rest of the market goes down with it, we\u2019ll all be pointing to that as the sign that the market peaked,\u201d Mr. Kennedy said.<\/p>\n Still, it\u2019s possible investors will stick with the company for reasons beyond the \u201cElon Musk factor\u201d or A.I.-related exposure, he added.<\/p>\n The immediate beneficiaries of the I.P.O. are those who already own private shares of SpaceX. They include Mr. Musk, who owns a majority of the company\u2019s shares and could see his net worth rise to over $1 trillion.<\/p>\n Others include SpaceX employees who have been compensated in company stock, and investors, including venture capital funds. The banks helping SpaceX go public will make money, too, earning a fee of more than $500 million, the largest payout ever.<\/p>\n<\/div>\n<\/div>\n The banks are also using the I.P.O as an opportunity to woo clients<\/a> in their wealth management businesses, giving them access to SpaceX\u2019s initial offering shares.<\/p>\n If shares of the company pop, investors who buy on Thursday evening can sell those shares and make a profit.<\/p>\n Over the long term, SpaceX\u2019s stock performance may depend on whether Mr. Musk can deliver on his promises to install tens of thousands of new satellites in orbit and develop a viable A.I. model.<\/p>\n It\u2019s possible for everyday investors to buy shares of the company at its $135 price, though not guaranteed.<\/p>\n When firms go public, they usually reserve a small sliver of their stock for individuals, with the bulk going to giant investors like asset managers and hedge funds.<\/p>\n<\/div>\n<\/div>\n SpaceX, however, is seeking commitments from individuals for up to 30 percent of its shares, much larger than a typical offering.<\/p>\n Some of those shares set aside for individual investors will be available under the SPCX ticker on online brokerage platforms like Robinhood, Fidelity, Charles Schwab and SoFi.<\/p>\n For anyone looking to buy SpaceX shares, the brokerages have said investors may not<\/a> get the total<\/a> number that they request, given a limited supply of stock at the initial offering price.<\/p>\n \u201cHere, you ask for 1,000 shares \u2014 maybe you\u2019ll get 300; maybe you\u2019ll get 50,\u201d said Jay Ritter, an I.P.O. expert at the University of Florida.<\/p>\n Individuals may find themselves owning SpaceX shares even if they didn\u2019t actively choose to invest.<\/p>\nWhy does the SpaceX I.P.O. matter?<\/h2>\n
Who makes money from the I.P.O.?<\/h2>\n
How can I buy SpaceX stock?<\/h2>\n