Eight online investing platforms in the UK are inviting customers to apply for shares in SpaceX's $75 billion IPO, marking a significant retail offering since Royal Mail's 2013 flotation. This move aims to revitalize the UK's investing culture, which has been lackluster in recent years.
The European IPO market has been sluggish since 2021, with household assets in financial securities at just 17%, compared to 43% in the US. The SpaceX IPO has generated mixed reactions on investment forums, with some investors excited about the opportunity, while others are wary of the high valuation and Elon Musk's leadership. Platforms like Hargreaves Lansdown have seen significant interest, with 35,000 clients registering for IPO alerts since April.
Revolut has launched a dedicated webpage for the SpaceX share sale, featuring a video of a rocket launch and outlining potential risks. Meziane Lasfer, Professor of Finance at Bayes Business School, warns that retail investors face significant risks due to the company's high price-to-sales ratio of 100 times. JPMorgan, part of the syndicate of banks working on the IPO, aims to treat individual investors similarly to institutional ones.
“The retail interest here is unlike any other deal, investors want to be part of the dream.”
Ygal El Harrar, BNP Paribas' global head of equity capital markets, technology
UK-based Marex Financial is facilitating the public offer through a platform where eight retail platforms, including AJ Bell, CMC Markets, eToro, Freetrade, Interactive Brokers, and interactive investor, can submit prospective investors' orders. This approach could set a precedent for other foreign firms targeting UK investors. eToro's minimum application is $750, while Hargreaves Lansdown requires £1,000 ($1,334).
BNP Paribas' Ygal El Harrar notes that retail participation in IPOs is a growing trend among technology companies, with retail investors now accounting for up to 30% of the order book. Despite regulatory efforts to make IPOs more accessible to retail investors, there have been few opportunities amid a global slowdown in new listings. The Deliveroo IPO in 2021 was one of the few to include a retail tranche, offering a £50 million slice of its £1.5 billion IPO via PrimaryBid.
“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.”
Meziane Lasfer, Professor of Finance at Bayes Business School
Background
The SpaceX IPO represents a potential shift in the European retail investing landscape, offering everyday investors early access to a high-profile IPO. Investors should remain cautious, however, given the high valuation and potential risks involved.
The SpaceX IPO could set a new precedent for retail investor participation in high-profile offerings, but potential investors should be mindful of the risks associated with the company's high valuation and limited float size.
