May 20, 2026

What Is an IPO and Why Is the SpaceX IPO Different?

Brief guide to what an IPO is and why SpaceX’s IPO could redefine going public with an unusual retail allocation.

Key Takeaways

An IPO is the first public sale of shares by a company that begins trading on the stock market.
Reuters reported that SpaceX is targeting a public debut around June 12 on NASDAQ with a valuation of up to US$1.75 trillion.
The reported plan for SpaceX would reserve up to 30% of the offering for retail investors, far above the usual allocation.

What Is an IPO?

An IPO, or Initial Public Offering, is the moment when a company sells its shares to the public for the first time through a registered offering.

In practice, it marks the transition from a private company to a publicly traded company listed on a stock exchange (NASDAQ, NYSE, etc.). The SEC explains that this process is commonly used to raise capital, create a market for the company’s shares, and allow investors to participate in the company’s growth.

Put simply: before the IPO, the company’s shares are usually held by founders, employees, private equity funds, or early investors. After the IPO, any investor with market access can buy those shares once trading begins.

That is why, once an IPO takes place, the company becomes subject to public scrutiny, reporting requirements, and market discipline.

How Does a IPO Works

The process usually includes:

preparing regulatory documentation,
determining how many shares will be offered,
selecting underwriting banks,
and conducting a presentation tour, known as a roadshow, in which the company attempts to convince institutional and, in some cases, retail investors.

Registration with the SEC is essential: under federal securities law, for a company to legally offer shares to the public, it must register with the SEC or qualify for an exemption that allows it to avoid a full public registration.

In many IPOs, the final price is determined very close to the stock market debut, and not all investors receive the number of shares they request.

Investors often have difficulty obtaining shares in an IPO due to stock volatility and purchase allocations handled by private brokers. Lock-up agreements (designed to prevent insider speculation) are also a standard part of the process: these restrict insiders from selling shares for a period after the debut.

Why the SpaceX IPO Is Different

If the SpaceX transaction moves forward within the June window that Reuters has been reporting, it would not be just another IPO: it would potentially become the largest IPO in history.

Reuters reported that the company aims to raise around US$75 billion with a valuation of up to US$1.75 trillion, a scale that would far surpass the current record held by Saudi Aramco, which raised around US$29 billion in 2019.

The major difference is not only the size: it would also be the share distribution. Reuters reported that Elon Musk is considering reserving up to 30% of the IPO for retail investors, a proportion that would be at least three times larger than the typical retail allocation, which in major IPOs usually ranges from 5% to 10%.

That changes the allocation logic: instead of concentrating most of the offering among funds and institutional accounts, SpaceX would seek to make its followers a central part of its shareholder base.

This approach is unusual for another reason: the company would be trying not only to maximize demand, but also to shape the type of shareholder it will have after listing.

Reuters noted that the structure would aim to attract investors perceived as more loyal and less likely to sell immediately, something that could help reduce volatility during the market debut.

The company is even planning an event for 1,500 retail investors on June 11 during its roadshow, and Reuters added that retail investors from several countries — not only the United States — could participate.

Reuters clarified that the size and timing of the offering have not yet been fully finalized. In other words, the SpaceX IPO should currently be understood as an advanced and highly unusual plan, not as an irrevocably completed transaction.

What Investors Should Know about an IPO

In any IPO (and even more so in one this large) there are three essential questions every investor should ask:

At what valuation is the company entering (or exiting) the market?
How much capital does it actually need to raise?
How much of the offering will be available to each type of investor?

When the retail allocation is small, access is usually limited; when it expands dramatically, as in the case of SpaceX, the distribution of demand and the stock’s initial price behavior can change significantly.

It is also important to remember that a company going public does not become less risky simply because it is listed: an IPO does not eliminate uncertainty regarding results, execution, competition, or valuation.

Conclusion

An IPO is the first public sale of shares by a private company. SpaceX’s IPO promises to be different because it combines record-breaking size, a massive valuation, and an uncommon focus on retail investors, with a reported allocation of up to 30% of the total offering.

And it is worth remembering that, with Wallbit’s investment account, you can invest directly in NASDAQ, the NYSE (New York Stock Exchange), and in any asset that launches through an IPO.

Frequently Asked Questions

1) Who decides how many shares each investor receives in an IPO?

The company and the underwriting banks control the allocation process. These include major Wall Street banks such as Bank of America, Citigroup, Goldman Sachs, JPMorgan Chase, and Morgan Stanley, along with many institutional, retail, and private wealth firms.

The SEC states that they have broad discretion in distributing shares and that the agency does not regulate that commercial decision.

2) How is the final IPO price determined?

The underwriting banks collect indications of interest from investors, use that demand to recommend a price, and ultimately the company determines the offering price. This process is part of book-building.

The process determines the optimal stock price through investor demand and the creation of order books. This is the preferred method used by major stock exchanges over fixed-price methods.

3) What is the greenshoe option and what is it used for?

The greenshoe option is a clause in an Initial Public Offering (IPO) that allows underwriters to sell more shares than originally planned if demand exceeds expectations.

It is typically used to ensure price stability and liquidity, and to support share prices in the market. The SEC notes that it is usually exercised within a typical 30-day period and that, in many offerings, it can cover up to 15% of the size of the transaction.