SpaceX's 0.75% IPO Fee Masks Goldman's Real Payday
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- SpaceX is selling 555.6 million shares at $135 to raise $75 billion, targeting a $1.75 trillion valuation — the largest IPO ever on a U.S. exchange, more than triple Alibaba's 2014 record.
- Goldman Sachs is the "lead left underwriter" on SpaceX's prospectus, giving it sole authority to allocate the vast majority of shares to institutional clients like hedge funds and mutual funds.
- Banks accepted a record-low gross spread of just 0.75% — tied for the lowest ever on a conventional U.S. IPO — yet will split approximately $646 million in total fees across 23 underwriters.
- The four other "joint book-running managers" — Morgan Stanley, B of A Securities, Citigroup, and J.P. Morgan — receive an outsized fee share but have little say in which institutional clients get allocated shares.
- Retail platforms like Charles Schwab, Morgan Stanley's E*Trade, and Robinhood will receive an estimated 30% of shares, compared to the typical 5% or less in most IPOs.
- The real windfall flows through "soft dollars" — roughly 30% of first-day profits boomerang back to bankers, mostly to the lead left underwriter, and a 20% Day 1 pop to $162 would generate $17.3 billion in profits "left on the table."
- SpaceX reserved 5% of shares at the $135 offer price for employees, friends, and family, who are exempt from lock-up provisions — a move University of Florida professor Jay Ritter says suggests Musk wants a strong opening-day pop.
Why it matters: Goldman Sachs' role as sole allocator of institutional shares turns a record-thin 0.75% fee into potentially the largest single-bank IPO payday ever. The 23 underwriters effectively paid for prestige and distribution rights, while Goldman collects the real windfall through soft-dollar kickbacks that the disclosed $646 million in fees doesn't capture.
