Elon Musk’s SpaceX (SPCX) was officially listed for trading on the Nasdaq, marking a historic moment for global capital markets. On its first day of trading, SPCX shares surged from the IPO price of $135 to as high as $175, before stabilizing around $161, closing the day with a gain of over 19%. Based on the IPO price, SpaceX’s market capitalization reached $1.77 trillion, with a fully diluted valuation of approximately $1.8 trillion. Musk’s personal wealth officially crossed the trillion-dollar mark, making him the first “trillionaire” in human history. Musk holds approximately 38% to 42% of SpaceX’s shares, and together with his over $260 billion stake in Tesla, his total net worth has crossed the trillion-dollar threshold for the first time ever.
Behind the scenes of this wealth frenzy, however, lies Musk’s so-called “extreme squeeze” on Wall Street’s top investment banks over pricing power. Details of a rare underwriting agreement have surfaced: Goldman Sachs and Morgan Stanley, among other banks, not only accepted an unprecedentedly low base fee but also agreed to charge zero fees on the multi-billion-dollar “greenshoe option.” The IPO’s base fundraising scale reached as high as $75 billion, surpassing the previous record of $29.4 billion set by Saudi Aramco in 2019, and becoming the largest initial public offering in the history of global capital markets. The underwriting syndicate includes nearly all major Wall Street banks, with Goldman Sachs serving as lead underwriter, and Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase as joint lead underwriters, alongside 18 other banks participating in the distribution.
Investment banks typically charge underwriting fees of 4% to 7% in an IPO, and even for large-scale transactions, the fee rate is usually above 1%. SpaceX pushed the fee rate down to approximately 0.67%, with the company agreeing to pay $500 million to the underwriting team, equivalent to about 0.67% of the $75 billion total raised. An even more groundbreaking clause involves the greenshoe mechanism: if the underwriters exercise the over-allotment option to sell an additional 15% of shares, SpaceX will not pay any underwriting fees for these new shares worth up to $11.25 billion. This means that banks such as Goldman Sachs and Morgan Stanley will forgo an additional $75 million in fee income from this deal. As the lead banks, Goldman Sachs and Morgan Stanley each secured the largest share of the fee pool, approximately $100 million each, while Bank of America, Citigroup, and JPMorgan Chase each received about $75 million. The other dozen or so co-underwriters received only about $2 million each.
The day after SpaceX’s IPO, Musk concluded this record-breaking deal in his signature style. He demanded that bankers from Goldman Sachs and Morgan Stanley wear actual green sneakers, and then posted a photo of a Morgan Stanley executive showing off the green shoes. This gave a double meaning to the financial term “greenshoe.” Additionally, the company’s stock options are expected to begin trading next Tuesday, with the market anticipating active and volatile initial trading. Nasdaq has adjusted its rules to simplify the process for SpaceX to join the Nasdaq 100 Index, and MSCI has stated that it will adopt an early inclusion rule for large IPOs. SpaceX’s listing has also created wealth on a massive scale within the company, expected to produce approximately 4,400 newly minted millionaires, of which about 400 will hold shares worth $100 million or more.
