Strong investor demand lifts SpaceX's record-breaking IPO proceeds to $86B
What's the story
SpaceX, Elon Musk's rocket, AI and internet conglomerate, has raised a record-breaking $85.7 billion through its initial public offering (IPO). The amount was revised from the previous total of $75 billion after underwriters exercised their "greenshoe" option to buy more shares due to strong demand. The move comes after SpaceX sold 555.56 million shares at $135 each in what became the largest IPO in history even before this adjustment.
Market mechanism
Explaining the 'greenshoe' option
The 'greenshoe' option is a common feature in most US stock market listings. It acts as a safety valve, helping underwriters stabilize the stock and prevent sharp price fluctuations in the weeks following its debut due to high demand. After its blockbuster NASDAQ debut on Friday, SpaceX's shares have surged 19.5% on Monday.
Investor interest
Offering was oversubscribed by 3-and-a-half to 4 times
According to Reuters, SpaceX's IPO attracted over $250 billion in investor orders, far exceeding the amount the company intended to raise. The offering was oversubscribed by three-and-a-half to four times, highlighting the incredible demand for it. Analysts described this debut as a "Goldilocks" stock market entry that rewarded investors with a strong first-day gain without giving off the impression that it had priced its offering too conservatively.
Market performance
SpaceX's market capitalization surpasses $2 trillion
SpaceX's shares rose another 7% in early trading on Monday, adding to the strong gains from Friday's historic market debut. This surge pushed the company's market capitalization above $2 trillion and made Musk the world's first trillionaire. Underwriters usually exercise the greenshoe option when a stock trades above its IPO price. SpaceX revealed that its underwriters bought 83.3 million additional shares through this option due to high demand from both retail and institutional investors.