Musk’s Bold IPO Play: 30% to Retail Investors?

Elon Musk is reportedly considering allocating up to 30% of SpaceX’s new shares to retail investors, relying on his highly enthusiastic fan base to help stabilize the stock price after listing. In typical U.S. IPO practice, companies usually allocate only 5% to 10% of shares to retail investors without lock-up restrictions.

SpaceX’s IPO could raise between $70 billion and $75 billion, targeting a valuation of $1.75 trillion. This would far exceed the $29 billion raised by Saudi Aramco in 2019, making it the largest IPO in history.

It is understood that Musk’s plan was communicated to Wall Street by SpaceX CFO Bret Johnsen. The plan combines a massive retail allocation with an unusually hands-on approach to selecting investment banks. Instead of allowing broad competition among banks, SpaceX is tightly controlling their roles in the IPO process based on existing relationships and prior ties.

Morgan Stanley, considered Musk’s “go-to” investment bank, is expected to handle smaller retail investors through its E*Trade platform. Bank of America will focus on high-net-worth individuals and family offices in the United States, while UBS will be responsible for marketing to international investors. Citigroup is coordinating distribution to international retail and institutional investors, working alongside banks with regional expertise to help sell shares to overseas individual investors.

In international markets, Mizuho Financial Group, Barclays, Deutsche Bank, and Royal Bank of Canada will each oversee distribution in their respective regions.

Additionally, Robinhood—widely regarded as a hub for U.S. retail investors—is competing with several Wall Street banks to secure a significant allocation of SpaceX shares for direct sale to its users. Robinhood is likely to offer these shares through its IPO Access platform, which allows users to purchase stocks at IPO prices before they begin public trading. Apparel company Figs Inc. was the first to use this platform, allocating about 1% of its IPO shares to Robinhood users.

All parties expect exceptionally strong retail demand for the SpaceX IPO, driven both by wealthy family offices that have supported Musk for years and by smaller investors drawn to his technological vision. SpaceX is effectively betting that these investors will not immediately sell their shares after allocation or engage in so-called “pop-and-dump” trading.

Rowan Taylor, managing partner at aerospace and defense-focused private equity firm Liberty Hall Capital Partners, commented: “This is a once-in-a-lifetime moment—people may feel they simply have to participate.” He added that the level of market enthusiasm is comparable to Google’s public listing two decades ago, fundamentally reflecting investor confidence in Elon Musk.

Typically, IPO issuers prefer to allocate a larger share to institutional investors in order to reduce the risk of sharp price declines caused by concentrated retail selling in the early trading period. This approach helps stabilize the stock price and gives institutions greater influence over pricing and share distribution.

This can also be observed in reforms to Hong Kong’s IPO mechanism. On August 4, 2025, the Hong Kong Exchange introduced a new allocation framework, replacing the previous mandatory clawback system with “Mechanism A” and “Mechanism B.” The core idea of the reform is to give institutional investors a greater role in pricing. Mechanism A retains the traditional structure but lowers the clawback cap from 50% to 35%, while the new Mechanism B allows issuers to lock in the international placement portion directly, meaning the public offering tranche no longer adjusts based on retail demand.

Since the reform, about 87% of newly listed companies have chosen Mechanism B, and those companies have generally seen stronger first-day IPO performance.

However, Musk appears to be taking the opposite approach by allocating a larger share to retail investors—perhaps signaling strong confidence in his own market appeal.