With SpaceX, Elon Musk is launching an unprecedented initial public offering with an unusual focus on retail investors. That's because SpaceX is depending on their support to justify its massive valuation.
"Retail participation will be a defining feature of the SpaceX IPO," Truist analyst Sam Grelck said in a recent report, noting that the company has reserved up to 30% of its allocated shares for individual investors. If Musk's plans are successful, everyday investors could buy as much as $23 billion worth of SpaceX shares $(SPCX)$ in the IPO.
That's unprecedented in the modern era of IPOs, experts say. Often, retail investors can expect an allocation of around 5%, experts say. Under normal circumstances, Cerity Partners chief market strategist Jim Lebenthal explained, IPO underwriters are incentivized to reward their most important institutional customers with allocations.
Instead, retail is expected to be a major force and to make up for the limits of demand coming from traditional Wall Street.
That's why Fidelity, one of several firms tapped to handle retail allocation, said Thursday that it would make the IPO available to customers with as little as $2,000 in a retail brokerage account. Usually, eligibility is reserved for customers with at least $100,000 in certain assets at Fidelity. That minimum can be extended to as high as $500,000 in certain IPOs.
SpaceX itself reiterated during its IPO road show that "retail investor participation is important to SpaceX."
SpaceX is seeking proceeds of about $75 billion at a $1.75 trillion valuation. Through May, the rest of the U.S. IPO market had raised just $50.83 billion across 152 deals, according to S&P Global Market Intelligence data. SpaceX plans to begin trading on June 12.
Patrick Patin, a portfolio manager at Great Lakes Private Wealth, a Michigan-based financial advisory firm, told MarketWatch that the only IPO he's seen with roughly comparable interest from everyday investors was Facebook, now Meta Platforms (META), with its 2012 public offering.
"We don't have big IPO people, but it's the first time I'm actually getting inbound calls from clients and even some prospects asking us, 'Do you have any shares of SpaceX you can offer us?'" Patin told MarketWatch. "It's only going to get crazier."
SpaceX is unique for a lot of reasons, even excluding its unprecedented IPO fundraising targets. It has held off on exiting the private market for more than two decades while growing to dominate the rocket-launch industry, establish itself as a major player in satellite internet and acquire a struggling artificial-intelligence business it expects to eventually be its biggest segment.
Until now, access to the company has been mostly limited to employees, as well as the usually already wealthy firms and individuals who backed SpaceX's past funding rounds. Most retail investors are only able to get access by investing in other firms with a stake in SpaceX or a via special-purpose vehicle, which can be risky.
That perceived scarcity is behind much of the demand for SpaceX shares, according to Mark Vena, CEO and analyst at the research firm SmartTech Research. SpaceX feels "less like a stock and more like a velvet-rope asset," he said in emailed comments, and that helps make the company more attractive to everyday retail investors.
SpaceX has enlisted Fidelity, Charles Schwab, Robinhood and Sofi to offer common stock to retail investors. SpaceX said it also expects some shares to be offered to retail investors through Morgan Stanley's E-Trade. International investors may also be able to get access through various firms, such as the United Kingdom's Winterflood or Australia's CommSec.
Since SpaceX shares officially launched on some of those platforms this week, retail investors have flocked to social media to announce their bids. Many don't expect to get all of the shares they've asked for, but they're eager for the chance to get a slice of the IPO.
"I requested 285 shares. SO PSYCHED that I'm able to participate via E-Trade!" wrote Kate Davidson of Oregon on X, the social-media platform. "Thank you Elon/SPCX and Morgan Stanley for giving 30% of this offering to the little guy (or gal, as it were)."
The Elon effect
What's behind SpaceX's certainty that retail investors want to be a part of its IPO? The Musk mythos and his so-called cult of personality, according to experts.
"His presence is what drives this super-premium valuation," Lebenthal said. At the heart of the hype is the belief "in the dream" created by Musk, said Baird tech strategist Ted Mortonson, pointing to potentially lucrative but so far largely unproven ventures such as space-based data centers. SpaceX's plans, according to its recent regulatory filings, include asteroid mining and a colony on Mars.
This approach is not new. Musk's ability to effectively capture the public's imagination has helped Tesla $(TSLA)$ become one of the most popular stocks among retail investors over the last several years, fueling its relentless rise to a $1.3 trillion valuation in the face of Wall Street skeptics and hedge-fund short sellers, who have learned the hard way that betting against Musk is risky.
He often talks about futuristic technologies and visions of a world where humanoid robots do all the work, money has been discarded and self-driving vehicles roam the streets. His Neuralink is working to achieve feats that Musk has compared to those of Jesus, while SpaceX is seeking to conquer the stars.
Tesla also caters to retail investors in ways other companies don't, reserving time for questions submitted by everyday investors on quarterly earnings calls and often inviting them to events. In turn, Tesla investors often side with Musk on crucial votes. Last year, they helped pave the way for Tesla to invest in xAI, which SpaceX acquired in February.
"We have the benefit of being founded and led by Elon Musk, one of the great visionaries of our generation," SpaceX touted in its IPO paperwork. Musk is the company's CEO, chair and chief technical officer - while also serving as the "Technoking" of Tesla.
But financial experts are worried that the company is overvalued and that its stock will be prone to immense volatility, despite SpaceX's steps to minimize turbulence.
SpaceX lost $4.9 billion in 2025 on revenues of $18.7 billion, which grew 33% in the last year. At a $1.75 trillion valuation, SpaceX's stock would trade at more than 93 times revenue. By comparison, Nvidia (NVDA) trades at 20 times revenue and Tesla trades at 15 times revenue, according to FactSet.
Pitchbook analyst Franco Granda has forecast that SpaceX could trade like Tesla "on steroids," swinging widely on new milestones or misses. Morningstar analysts this week pegged SpaceX's value at $780 billion and warned that its AI business poses a "material threat of value destruction to the company."
Jon Zetlmaier of Seattle-based Zetlmaier Wealth Management, which advises both high-net-worth individuals and retail investors, said that while it's been "painful" to bet against Musk in the past, he's staying away from SpaceX for now. And Phil DeAngelo, managing director of New York-based Focused Wealth Management, said he wouldn't consider buying SpaceX shares until a market correction or pullback occurs.
However, it's unlikely there's enough skepticism that SpaceX won't be able to achieve its targets, partially thanks to FOMO - the fear of missing out. Baird's Mortonson told MarketWatch that portfolio managers are worried about being underweight if SpaceX shares do end up taking off.
"They're going to have to own it. It's just how much they own" that's up for debate, he said.
S&P Global Market Intelligence told MarketWatch it's been working with some of SpaceX's underwriters to make sure the platform it uses to efficiently coordinate orders during an IPO is up to the task. Institutions, the firm said, will not be skipping the first of the so-called megacap IPOs.
"We expect this to be the highest-volume IPO ever. More interest from the institutions than we've ever seen before," said Darren Thomas, head of enterprise solutions at S&P Global Market Intelligence. "We're looking [at] anywhere between a 4x to 5x increase in the number of institutions that will come into this deal."