I wrote back in April how to play an IPO (initial public offering) as an investor. In short, very carefully as the recent Cerebras listing showed.
IPO pricing was $185; the stock opened at $350 and closed its first day of trading at $311.07. After six days of trading it closed just above $280. So when you got in really matters. Pretty much everybody who bought in the first week of trading is losing money, while those who got in the IPO are doing great. It’s an earnings multiple of about 210 times and the sovereign wealth fund of the UAE is its biggest customer at around 86% of revenue. It’s wild, but that’s kind of become the point of IPOs.
The only way to make money here was to short the opening pop, or to get in on the IPO. That’s where I want to focus with the SpaceX listing now confirmed for June 12 and Anthropic and OpenAI likely shortly thereafter.
The simple version of how you get access to IPO shares is that you can’t. It is very unlikely a South African broker will have any allocation, and if they do it will be small and will go to fancy high-value clients.
You certainly can try with an offshore broker, but again the demand here is going to be huge and allocations are going to be tiny. So only the high-value clients will get any.
There are indirect routes such as Scottish Mortgage whose portfolio is now about a quarter SpaceX. But much of this is seemingly already priced in as the stock has doubled in recent years.
The ARK Venture Fund was 17% SpaceX at the end of March, but both of these options are far from clean as they have potentially overrun the SpaceX actual pricing and there are other assets in the funds.
There are also a number of brokers offering varying degrees of fractional tokenised shares in SpaceX. But here the small print is what matters and, in most cases, there is no small print. In other words, they’re not telling us how they’re pricing the token. Do they have stock, or are they just taking your money? I don’t know and they’re not telling.
ETFs such as UFO will include SpaceX in their funds soon after listing, but they’ll be buying at the high prices, ahead of the drift lower.
Personally, I don’t have any interest in the SpaceX listing (I don’t like how Elon Musk runs his companies, nor the X.com and xAI holdings). But if I did (and we have the large AI IPOs later in the year), I would either try to get some allocation offshore from a legit broker, short the pop or just wait for the dust to settle.
The last is my preferred option and will probably take a year or so, but at least I am not getting horridly ripped off with insane valuations.
