A collective sigh of relief swept across Wall Street after trading for SpaceX’s landmark Nasdaq launch went smoothly, setting a new template for the trading firms and exchanges that are bracing for the giant IPOs of OpenAI and Anthropic later this year.
SpaceX’s record-breaking debut on Friday dwarfed the previous largest flotation on US exchanges by nearly three times. The sheer size of the launch had worried market participants, who still had lingering bad memories of Facebook’s disastrous stock market debut in 2012.
However, trading systems at the banks underwriting the IPO, exchanges, market makers, clearinghouses, and other market infrastructure firms held up to the challenge of processing millions of client orders.
“People go back to the Facebook … days and ‘was this going to turn into one of those companies,’ but I honestly think the banks in the US did a fantastic job, the SpaceX crew did a fantastic job telling the story when they did their rounds. And as you can see, it went extremely smoothly,” said Jeff Parks, CEO of Canadian investment firm Stack Capital Group. Nearly a third of Stack’s portfolio is SpaceX, in which the company began investing in 2021.
He was referring to the turbulence that surrounded Facebook’s ill-fated IPO, when technical problems turned a landmark listing into one of Wall Street’s most notorious trading fiascos. It left investors and brokers in limbo for hours and ultimately cost market makers hundreds of millions of dollars.
SpaceX is biggest IPO ever recorded
According to Citadel Securities, the largest US retail market maker, SpaceX’s debut generated the highest retail order activity for an IPO auction ever. A Citadel Securities spokesperson said the firm handled the majority of the retail orders for SpaceX.
Morgan Stanley, the so-called “stabilization agent” for the glitzy market debut, had the key role in managing SpaceX’s market opening. The bank had to ensure an orderly rollout even as it grappled with unprecedented investor demand. A stabilization agent typically buys up shares in the open market to shore up stocks that witness steep declines on opening day.
One of the lead underwriters advising SpaceX, who requested anonymity as the matter is confidential, said the IPO was a monumental event for the exchanges and the banks and crucial to get right.
Trading platform Charles Schwab said it has seen well over a million orders in SpaceX in the first few hours of trading, which is a significant figure in comparison to past IPOs, according to a spokesperson for the company.
Reuters reported on Thursday that Wall Street traders, brokers, and exchanges had been stress-testing their trading systems for several weeks leading up to the blockbuster IPO.
SpaceX shares “are not going up in huge blocks, but they’re bleeding higher, and a lot of that is due to a little bit more of a boring and softer opening print than a lot of folks expected,” said Mike Dickson, head of research & quantitative strategies at Horizon Investments. “I’m a little surprised there’s not more volatility, given a lot of the oversubscription headlines.”
Elon Musk becomes world’s first trillionaire
Following the IPO, Elon Musk became the world’s first trillionaire by combining his holdings in SpaceX (roughly 42% of the company’s stake), Tesla (worth approximately $174 billion), Neuralink, and the Boring Company, as well as prior gains from Tesla share sales.
The key to Musk becoming a trillionaire lies in the SpaceX-xAI merger, which can be traced back to the acquisition of Twitter and its rebranding to X.
Musk bought the social media platform in 2022 for $44 billion, rebranded the company, and eventually launched Grok, an artificial intelligence model that used the platform as its training ground.
To develop Grok, Musk then launched xAI, the AI company that eventually became X’s main company in a merger that valued the combined company at approximately $113 billion.
The subsequent merger with SpaceX valued the company at $250 billion, representing a net gain of $206 billion in valuation relative to the $44 billion initially needed to buy Twitter.
Now, both companies are valued at $2.1 trillion, with the stock jumping 19% on its first day and closing at a unit price of $161, in what experts call the biggest IPO ever.
