Individual investors throughout Europe are rushing to secure positions in SpaceX’s highly anticipated stock market debut, though financial experts caution that everyday buyers may face significant challenges that large institutional investors can better navigate.
The space company is contemplating dedicating up to 30% of its offering to regular investors — an exceptionally high percentage for retail participation — with shares being made available across the UK, Germany, Denmark, France, the Netherlands, Norway, Spain, Sweden and Switzerland.
Across Britain, eight digital investment platforms have started accepting applications from UK residents for shares in the $75 billion fundraising effort, which some view as the most important retail stock offering in the nation since Royal Mail’s privatization in 2013, potentially reviving sluggish investment participation.
“The retail interest here is unlike any other deal, investors want to be part of the dream,” said Ygal El Harrar, BNP Paribas’ global head of equity capital markets, technology.
New stock offerings in Europe have declined dramatically since 2021, and household financial securities ownership stands at merely 17% according to European Union data, significantly trailing the 43% rate in the United States.
Four experts including three academics and one consumer advocate recommended proceeding carefully given SpaceX’s elevated $1.75 trillion valuation despite ongoing losses, while the limited float size under 5% and absence of voting rights could create additional hazards.
SpaceX declined to provide comment when contacted. Company founder and chief executive Elon Musk stated Thursday that he felt “pretty good” about the company’s revenue projections and that revenue had become “much more predictable.”
Discussion across investment forums and platforms like Reddit shows divided opinions, with some showing excitement while others express concern about the steep valuation or Musk’s management style.
Hargreaves Lansdown reported that 35,000 clients have signed up for IPO notifications since SpaceX’s potential offering first emerged in April rumors.
Revolut’s specialized British webpage for the stock sale, designed to attract new customers, displays a full-screen SpaceX rocket launch video before detailing risks including the possibility that applicants might receive no shares whatsoever.
Meziane Lasfer, Professor of Finance at Bayes Business School in London, explained that while institutional investors possess databases and financial analysts to assess a company’s actual worth, retail investors would face a “very big risk.”
“It is a company that is making huge losses and at the price it’s coming to market, it’s at 100 times price to sales, which is extremely high…Normally about twice to three times is very good.”
The CEO of JPMorgan, part of the extensive banking syndicate handling the IPO, stated the goal was treating “individual investors the same way institutions are treated.”
UK-based Marex Financial operates a public offering platform where the eight retail platforms — including AJ Bell, CMC Markets, eToro, Freetrade, Interactive Brokers and interactive investor — can submit potential investors’ orders.
Mike Coombes, chief operating officer of British retail investment platform PrimaryBid, indicated this innovative approach might establish a model for other international companies seeking UK purchasers.
One executive from a participating retail platform noted the positive aspect of ordinary investors gaining early IPO access instead of only purchasing shares on the secondary market.
eToro announced in a press release that its platform requires a minimum $750 application, while Hargreaves Lansdown requests £1,000 ($1,334).
BNP Paribas’ El Harrar observed that retail involvement in IPOs has become a new focus for technology companies, which have moved from allocating perhaps 15% maximum of their order books to such investors, to doubling that amount.
Although UK regulations have been modified to simplify retail investor IPO participation, available deals remain scarce amid a worldwide decline in new listings.
Among the 15 largest UK IPOs in 2021, only one included retail participation according to Coombes. Deliveroo offered regular investors a 50 million pound portion of its £1.5 billion IPO through PrimaryBid. The shares dropped as much as 30% during the first trading day.
