On June 8, Reuters reported that this week, Elon Musk will bring his pioneering business style to the IPO market. His rocket and satellite manufacturing company SpaceX will go public in a model that other companies have never adopted.


SpaceX

SpaceX broke Wall Street's traditional IPO rules with its record-breaking $75 billion listing financing. Here are five major differences in SpaceX’s IPO:

1. There is no IPO price range

SpaceX's target valuation is about $1.8 trillion, with a non-negotiable price of $135 per share. SpaceX set the price ahead of a roadshow meeting with investors. In the past, Wall Street usually used road shows to test market demand and determine the offering price range.

This is a real break from the traditional IPO process. "Typically, a price range provides investors with a starting point and allows the company to adjust based on feedback during the road show. Starting with a fixed price changes the road show from a price discovery process to more like a sales process." said Matt Kennedy, senior strategist at Renaissance Capital, which focuses on IPO research and exchange-traded funds.

Of course, the company's ability to execute its stock pricing plan ultimately depends on market demand. The final IPO price will be determined on June 11, when all will be known, and its shares will begin trading on Nasdaq the next day.

2. Retail investors have a large proportion of allotments

SpaceX is changing the targets for new share allocations and is also pushing investment banks to reduce IPO underwriting fees.

Typically, ordinary retail investors without millions of dollars in capital have few opportunities to participate in IPO subscriptions. But Reuters previously reported that SpaceX is considering allocating up to 30% of the issuance to individual investors. That's an unusually large proportion of retail placements, designed to capitalize on Musk's massive base of loyal fans.

"Retail placements are so large that they may view that group of regular investors who are eager to pursue it as a kind of safety net," said Brian Jacobsen, chief economic strategist at Ankers Wealth Management.

3. Advance share sales

SpaceX employees will be able to sell some of their stock in stages before a standard six-month lock-up period ends, the filing shows, suggesting the rocket maker is not too concerned about insider selling weighing on its stock price.

Almost all of the listings were newly issued shares (i.e., "primary market issuances"). Both strategies, while uncommon, are not without precedent. Musk himself needs to lock up his shares for about a year.

4. Musk has a lot of control

Musk is selling shares, but he is far from giving up control of the company.

Traditional IPOs typically gradually expand oversight of the company. While many tech founders wield outsized influence with special classes of super-voting shares, SpaceX's prospectus shows that Musk will retain up to 85.1% of the company's combined voting rights after the IPO.

This is just the beginning. As CEO, Musk cannot be fired without his consent. In addition, SpaceX has added a number of governance provisions to make it more difficult for shareholders to challenge the company's decisions, such as setting minimum shareholding thresholds for certain legal actions and limiting shareholder proposals.

5. Bet on people, not business

Many investors view investing in SpaceX as a bet on Musk himself rather than a bet on a specific technology. They do like Musk: According to Reuters, SpaceX plans to raise $75 billion, and market demand for its shares is as high as about $150 billion.

SpaceX itself has yet to prove whether its core business can actually survive in the end. The company is currently losing money, largely due to its huge investment in AI computers, and a key part of the company's future plans is to send solar-powered data centers into space. In addition, SpaceX has set huge financial incentives for Musk to promote Mars colonization.

Currently, SpaceX's most profitable division is its "Starlink" satellite Internet business, but this business is still in the construction stage and is undergoing market testing. What's more, SpaceX's future success depends largely on a giant rocket still being tested: Starship.

However, the "poeticness" of SpaceX's mission is unquestionable. As the company puts it: "Our mission is to build the systems and technologies necessary to enable life as a multi-planetary species, to understand the true nature of the universe, and to extend the light of consciousness to the stars."