Financial markets are making intensive preparations as SpaceX approaches its historic $75 billion public trading launch, with brokers, exchanges and trading firms conducting round-the-clock system checks to prevent the technical disasters that disrupted previous major stock debuts.
The shadow of Facebook’s troubled 2012 market launch looms large over preparations, as that debut suffered from system failures that created hours of confusion about trade completions and ultimately resulted in hundreds of millions in losses for trading companies. Investment firms have spent weeks preparing to ensure SpaceX’s Friday market entry succeeds, especially with other major debuts from Anthropic and OpenAI anticipated later this year.
“It’s an historic event,” Peter Tuz, president of Chase Investment Counsel in Charlottesville, Virginia, said. “I hope it trades successfully afterwards, for the market’s sake. If something like this comes out and trades down, not only will it cast a pall over the market in general, but over the other IPOs that are lining up for the rest of the summer.”
Although financial executives are hosting elaborate client celebrations and decorating their offices to promote the space company, those in critical positions at trading platforms, investment houses and brokerage firms remain focused on guaranteeing a seamless market launch. Demonstrating how deeply the Facebook experience affected the industry, one Wall Street executive involved in the IPO who spoke anonymously referenced continuing trauma from that earlier debut.
Leaders at trading platforms including major market makers like Citadel Securities and Jane Street have conducted extensive simulations and system stress tests, according to three sources with direct knowledge. Trading platform officials invited clients to participate in weekend practice IPO sessions throughout the past month, two sources revealed.
Lead underwriter Morgan Stanley holds the crucial position as the IPO’s stabilization agent, the firm responsible for opening the stock and maintaining orderly trading. Morgan Stanley did not respond to requests for comment.
Leaders at S&P Global, which provides technology to facilitate institutional investor allocations and collaborates with SpaceX’s underwriters on order processing, have continuously tested their systems given the transaction’s enormous scale.
Darren Thomas, head of enterprise solutions at S&P Global Market Intelligence, said the firm also used AI to make sure its code was operating efficiently.
“We really had to scale the infrastructure so that it could handle much larger volumes,” said Thomas. “We’ve never seen anything of this size before.”
Trading platforms have enhanced their infrastructure to manage increased volumes following the technology breakdown that disrupted Facebook’s $16 billion IPO. The exchange where it was listed paid almost $42 million in participant claims after they estimated collective losses of $500 million. Regulators also imposed a $10 million fine on the exchange.
During that same period, BATS Global Markets tried to launch its own stock on its trading platform, but severe technological problems forced BATS to completely abandon the offering.
The exchange has completely rebuilt its trading systems, enhanced its primary IPO technology Bookviewer in preparation for the SpaceX IPO, and established a backup trading platform in case its main technology encounters problems.
The exchange has previously conducted IPO practice sessions, including preparations before chip designer Arm Holdings’ 2023 debut. The exchange declined to comment.
Citadel, Jane Street, and other rapid-trading firms have performed multiple internal system tests to prepare for the exceptional volume of client orders, sources indicated.
S&P has spent the past six weeks stress-testing its infrastructure through multiple upgrades and live testing to boost capacity by 200% and improve response speeds. The company has not required system testing for other recent large IPOs, but SpaceX’s unprecedented magnitude made ensuring foolproof systems necessary, S&P executives stated.
Contributing to uncertainty, SpaceX has allocated an unusually high number of shares for individual investors — coinciding ironically with a significant decline in technology stocks amid concerns that the AI-driven market surge has become excessive.
“No one’s ever tried an IPO of this size, and no one has tried to place as much with retail,” said one individual close to the transaction, who asked not to be named. He added that the possibility of a “chaotic and volatile aftermarket” may cause some wariness among both institutions and individuals.
During standard IPOs, exchanges gather incoming purchase and sale orders before trading starts, involving investors repeatedly canceling orders and submitting new ones at varying prices as they assess market sentiment. Underwriters observe these orders and postpone the launch until they identify a balanced opening price where supply equals demand.
This procedure aims to prevent chaotic price fluctuations when stock trading begins, but even with underwriters’ careful management, opening-day trading remains unpredictable. Technology issues notably disrupted this process during the Facebook IPO, creating a massive backlog of unprocessed orders and hours of uncertainty regarding trade completion.
“Every investment management firm in the country is talking about and considering SpaceX,” said Jed Ellerbroek, portfolio manager at Argent Capital Management. “We all know Friday’s trading day is going to be crazy.”
