We’ll find out this week if Elon Musk still has the magic touch to abracadabra the biggest IPO ever.
Why it matters: A successful trading debut for Musk’s SpaceX would confirm his knack for using sci-fi-worthy pronouncements, outlandish personal behavior — and actual innovations — to grab investor attention and turn it into cash for his companies
The latest: Up to a quarter of the shares set to be sold to the public next week are earmarked for smaller retail traders and individuals, the Financial Times reported, calling it a “record IPO allocation.” (Reuters previously reported that roughly 30% could go to retail.) – Large investors like mutual funds, ETFs and hedge funds, which buy giant slugs of stock, typically receive preferential IPO treatment, with smaller traders largely an afterthought. – The FT says between 5%-10% of shares are typically reserved for retail. Between the lines: The decision likely reflects the huge role that individual investors played in the rise of Musk’s other $1 trillion-plus company, Tesla. Flashback: After Tesla’s 2010 IPO, the company was embraced by an army of intensely loyal, highly online true believers known as “Tesla fanboys.” – For years, they championed the cars and the shares, even as Tesla posted persistent losses that pushed it toward the brink of bankruptcy. – Tesla’s shares largely held their value, enabling the company to repeatedly raise cash by selling more stock, staving off disaster.
By the numbers: Between 2015 and 2020, Tesla sold over $5.5 billion in stock, which allowed it to not only survive, but achieve steady profitability and eventually be included in the S&P 500. Fun fact: That partnership worked out, not only for Tesla, but for the fanboys too. Between the end of 2019 and today, Tesla shares are up nearly 1,400%. – Gains over the last 10 years are roughly 2,400%. – Since the IPO, the stock is up almost 25,000%.