By Abby Schultz
Individual investors allocated shares of SpaceX when it goes public Friday may be tempted to sell them if the price pops, as can happen with IPOs.
But, if you do, expect to be punished by most of the brokerages handling retail allocations of this highly anticipated offering. There's one exception: Charles Schwab. The broker doesn't have an anti-flipping policy for the SpaceX IPO, or for other IPOs, unless required by an issuer.
Fidelity Brokerage Services -- one of the five brokers allocated retail shares of the IPO -- will penalize investors who sell their SpaceX stock within 15 calendar days of the stock's debut, according to the firm's website. The firm has similar restrictions for all IPO shares it distributes.
Those who violate the rule can't participate in future IPO allocations through Fidelity for six months. A second violation results in a one-year suspension, while a third violation results in a permanent ban from future IPO allocations.
The penalties may not matter for an investor who rarely trades in IPOs, but there are other big offerings in the pipeline.
"SpaceX is happening on Friday, but we may be getting OpenAI and Anthropic later in the year," Sam Taube, NerdWallet's lead investing writer, said in an interview. "If someone is thinking about flipping SpaceX shares and eating the penalty, that is probably something they should keep in mind."
SpaceX is expected to sell about $75 billion worth of stock at $135 a share this week, with about 30%, or $22.5 billion, going to retail investors. That's a significant portion of the offering, and a departure from most IPOs, which typically allocate only about 5% to 10% of shares to individual investors, according to Fidelity's website.
Brokerages don't like when shares are immediately resold because it can destabilize the IPO price and strain relationships with underwriters, Taube says. "The brokers that offer these things want people to buy into IPOs because they believe in the company and want to hold the stock long term," he said.
Fidelity will let investors off the hook by day 16, but most other brokers discourage flipping for 30 calendar days. Similar to Fidelity, SoFi increases the penalties for subsequent violations. Individuals who trade their IPO shares within 30 days may be prevented from buying shares in future IPOs for 180 days after the first violation, 365 days after a second violation, and permanently after a third violation, according to the broker's website.
SoFi also may charge a $50 fee for selling IPO shares within the first 120 days of trading, the website said.
More common are the guidelines from E*Trade and Robinhood, two other brokers allocated retail shares. Those who sell within 30 days at Robinhood may not be able to buy IPO shares through the broker for 60 days, while E*Trade says selling in that initial 30-day window may impact an investor's ability to buy shares in future new issues.
Of course, it's unclear how many shares any retail investor will be able to get, Taube says. The offering is currently oversubscribed, and no broker guarantees that those who have registered for shares will receive their full requested allocation.
Write to Abby Schultz at abby.schultz@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 10, 2026 03:00 ET (07:00 GMT)
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