European retail investors are among those jockeying for a piece of the hotly anticipated SpaceX initial public offering, but some observers warn the deal could prove a bumpy ride for those without the resources that institutional investors have behind them.
SpaceX is considering allocating as much as 30 per cent of the deal to individual investors – an unusually large retail tranche – with offerings planned in the UK, Germany, Denmark, France, the Netherlands, Norway, Spain, Sweden and Switzerland.
In Britain, eight online investing platforms have begun inviting UK customers to apply for shares in the $75 billion raise, seen by some as the most significant retail offering in the country since the flotation of then state-owned Royal Mail in 2013, and a chance to re-energise a lacklustre investing culture.
European IPO issuance has slumped since 2021 and the proportion of household assets held in financial securities is just 17pc, according to the European Union, a figure dwarfed by the 43pc in the US.
Three academics and one consumer rights advocate advised caution due to the lofty $1.75 trillion valuation of the loss-making SpaceX, while the small float size of less than 5pc and a lack of voting rights could pose risks.
SpaceX did not respond to a request for comment. Its founder and leader Elon Musk said on Thursday that he felt “pretty good” about the company’s revenue projections and that revenue had become “much more predictable”.
Opinion on investment forums and platforms like Reddit is mixed, with some enthusiastic and others put off by the high valuation or Musk’s leadership.
Hargreaves Lansdown said 35,000 of its clients had registered an interest in IPO alerts since SpaceX’s offer was first rumoured in April.
Revolut’s dedicated webpage for the share sale in Britain aimed at signing up new customers features a full-page video of a SpaceX rocket lifting off before outlining risks including that applicants may not receive any shares at all.
Meziane Lasfer, Professor of Finance at Bayes Business School in London, said that while institutional investors have databases and financial analysts to help them determine the true value of a company, retail investors would be taking 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, one of the vast syndicate of banks working on the IPO, said it was looking to treat “individual investors the same way institutions are treated”.
UK-based Marex Financial is operating a public offer platform where the eight retail platforms – also including AJ Bell, CMC Markets, eToro, Freetrade, Interactive Brokers and interactive investor – can send prospective investors’ orders.
Mike Coombes, chief operating officer of British retail investment platform PrimaryBid, said this new approach could set a precedent for other foreign firms targeting UK buyers.
An executive at one of the retail platforms involved said it was encouraging that everyday investors were getting early access to an IPO rather than only being able to buy shares in the secondary market.
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