SpaceX Is on the Verge of Making Dubious History Yet Again, and Retail Investors May Pay the Price
Key PointsElon Musk’s Space Exploration Technologies etched its name in Wall Street’s record books with its June 12 initial public offering (IPO).
On June 12, SpaceX, led by Elon Musk, set a new record by raising $85.7 billion during its initial public offering (IPO), surpassing Saudi Aramco's previous record. With an initial valuation of $1.77 trillion, SpaceX also holds the title of the largest-ever IPO. However, the company's history-making actions may come at a cost for retail investors.
SpaceX's IPO featured a unique insider share-unlock schedule, which could potentially lead to a surge in share supply and impact retail investor returns. Despite Elon Musk, the majority shareholder, being barred from selling shares for 366 days, early-release-eligible insiders can begin selling shares as early as two trading days after SpaceX's first quarterly report.
This accelerated release of shares may put downward pressure on the retail investor's investment gains. Furthermore, SpaceX's historically low float, with only approximately 5% of its outstanding shares offered during the IPO, raises concerns for retail investors as the rapid growth of shares post-IPO event could create a significant wealth transfer from retail investors to SpaceX's insiders.
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