The SpaceX IPO is finally here and shares are live and trading!
There are a few things about IPOs that I think us retail investors should know as the action is underway. Not because everyone needs to participate in this IPO or any other, but because these situations tend to attract a lot of attention and excitement.
Two Types of Events in One
An IPO is a bank-managed financial event.
Companies don't go public because they want to make less money. They want to make more money to reach their goals, whether that’s growing shareholder wealth, sending me and my mom to the moon, or both. Companies that go public want to be able to continue to raise capital and grow their business.
The company owners are willing to take on the responsibility of retail shareholders to do that. And because of that, everything around the IPO has a purpose behind it.
An IPO is not just a financial event. It's also a marketing event.
When you start looking at an IPO through that lens, a lot of things make more sense.
The way it's priced. When it's released. How many shares are made available to retail investors. How many of those shares can actually be traded in the first day or two.
Everything about an IPO has a strategy behind it.
So if you decide you want to participate in the SpaceX IPO—or any IPO—keep that in mind. There are a lot of business decisions happening behind the scenes that most retail investors never see.
Expect Some Drama
When a newly public stock swings wildly, I'm not surprised.
The way an IPO is priced can influence the type of action that unfolds afterward.
- If a stock is priced too low at IPO, sometimes you get a dramatic surge higher during the first few days followed by a significant pullback. That can catch newer investors off guard.
- If a stock comes public at a higher price, there may not be enough demand to support that price immediately, then there may be a fall in price that’s fairly significant.
If you want to get familiar with what that looks like, go study some of the bigger IPOs from the past couple of decades. Tesla in 2010, Meta in 2012, Twitter in 2013, Alibaba in 2014, and Uber in 2019. Check out those charts to see how movement can happen during those early stages.
The Market Is Being Made in Real Time
Another thing that's easy to forget is that an IPO isn't like trading a stock that's been around for years.
There may be restrictions around what can and can't be done. There may be limits involving short selling. There may be broker-specific rules that apply during the early days of trading.
If you're going to get involved, it's worth understanding those details ahead of time.
The market is literally being made for the stock in real time.
Buyers and sellers are being matched. Liquidity is developing. The process is still unfolding. That's one reason IPO trading doesn't always begin exactly the way many traders expect.
You're Allocating Attention, Too
The reason I'm sharing all of this isn't really because of SpaceX specifically.
SpaceX is the company everyone is talking about right now, for good reason as the biggest IPO ever.
But it looks like Anthropic and OpenAI may IPO sooner than later too. The AI season of trading and investing is here, and there will likely be even more highly anticipated related IPOs in the future.
If you participate in an IPO, you are not just allocating capital. You are allocating attention.
Make sure you're intentional about both.
The SpaceX IPO is today's headline. But more importantly, the lessons behind it will show up again and again.
👉 PS — Trader Trainings Coming Up!
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- Ticker Request Live → free weekly trading show
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📅 Wednesday, June 17th at 9:15AM ET
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