Shares in Elon Musk’s SpaceX are set to list on the Nasdaq in New York on June 12, with a valuation of $135 per share. The company plans to sell 555.6 million shares, raising $75bn from the sale – making it the biggest stock market launch in history.
Up to a quarter of the shares could be reserved for individual investors, rather than funds and banks. This is a larger portion than is typical in a large initial public offering (IPO).
How can you buy SpaceX shares?
The shares will be listed on the Nasdaq. Even without buying directly, investors may find themselves holding SpaceX shares through index tracker funds, as changes by some markets including the Nasdaq mean the company could appear in such funds shortly after listing. Other fund managers may also choose to invest.
In the UK, some investment trusts already hold stakes in SpaceX, including Edinburgh Worldwide and Baillie Gifford US Growth. Those wishing to purchase individual shares will need to sign up to a platform acting as a broker. In the UK, AJ Bell and Hargreaves Lansdown are offering clients the chance to bid. In the US, shares will be available through Charles Schwab, Fidelity, Robinhood, SoFi Technologies, and Morgan Stanley’s E*Trade.
Minimum subscriptions are typically around £1,000, with applications closing on Wednesday, June 11. Investors should check with their platform or broker whether they are participating in the IPO and whether shares can be held in an ISA or investment account. SpaceX will set the official share price on June 11, based on investor interest.
Can UAE investors buy SpaceX shares?
Yes. People living in the UAE are generally able to invest in companies listed on American stock exchanges by opening accounts with international brokers that offer access to US markets. Once SpaceX starts trading, buying shares will be possible in much the same way as purchasing any other stock on the Nasdaq.
The harder part is getting shares at the listing price before trading opens. Allocations ahead of the IPO are generally only available through brokers that are taking part in the offering, and interest is expected to far outstrip the number of shares on offer. Those who miss out on an allocation can still buy shares once the market opens, though the price at that point may be higher or lower than the original listing price.
A number of brokers are expected to give their clients the opportunity to apply for shares in the SpaceX IPO. These include Fidelity, Charles Schwab, E-Trade, Robinhood and SoFi. UAE-based investors who already use platforms such as Interactive Brokers or Saxo Bank may also be able to apply through those, as both offer access to US markets and have taken part in major listings in the past.
Minimum account requirements to be aware of
Some US brokers set financial thresholds that clients must meet before they are permitted to apply for IPO shares. Based on information available so far, Fidelity requires a minimum portfolio balance of $500,000 (around AED2 million) in eligible accounts.
Charles Schwab sets a minimum liquid net worth of approximately $100,000 (AED367,250). E-Trade, Robinhood and SoFi have not been reported to require any minimum portfolio value for IPO participation.
Conditions may change, so it is worth checking directly with whichever platform you plan to use.
Will you get all the shares you apply for?
There is no guarantee. If more money is committed by investors than there are shares available, allocations will be scaled back. The method used to divide up the shares varies between brokers. E-Trade distributes shares in proportion to the size of each client’s request. Robinhood uses a process based on random selection.
SoFi takes into account a range of factors including account size, whether the client receives direct deposits, their history of taking part in previous offerings, and whether they have followed the platform’s rule against selling newly received IPO shares within 30 days of receiving them. Fidelity and Charles Schwab have not set out publicly how they decide who gets what.
How much of the IPO is set aside for individual investors?
Reports suggest that up to 30% of the total offering could be ring-fenced for retail investors – a larger portion than is typically the case in a listing of this size.
Even so, the level of demand is likely to be far higher than the number of shares available, so an allocation is far from certain. Once the shares start trading on the open market, they can be bought by anyone with access to the Nasdaq, at whatever price they are trading at that point.
Will shareholders have any influence over the company?
No. Musk is not selling any of his own shares and will hold on to 82.4% of the voting rights. Regardless of how many shares an investor holds, they will have no meaningful say in how the company is run.
Where could growth come from?
Two areas are seen as having the potential to drive the company forward. The first is the work SpaceX carries out for the US government on defence programmes.
The second is Starship, the company’s reusable rocket. If Starship becomes fully operational, it could open up new revenue streams by increasing the weight SpaceX can carry into space and extending the distances it can travel.
What should UAE investors do now?
Anyone hoping to take part in the IPO should contact their broker as soon as possible to confirm eligibility. Accounts should be funded and fully verified before the application window closes. Given the level of interest expected, demand is likely to exceed supply by a significant margin, and there is no certainty that any allocation will be received.
