Anyone With $2,000 Can Buy Into Spacex's IPO — Critics Compare It To 'Selling Suicide Pills at the Drugstore'

Fidelity Investments just said it will make the SpaceX IPO available to more people. It will allow investors with a retail brokerage account with at least $2,000 to invest in the IPO. Historically, Fidelity has mandated a minimum of $500,000 in brokerage accounts.

'SpaceX has decided to reserve a much higher percentage of the offering (up to 30%), which means there should be more shares available to retail clients, which is why we have decided to reduce IPO eligibility for this offering,' according to Fidelity.

In its SEC filing, SpaceX said allocated shares for retail investors would be available on Charles Schwab, Fidelity, Robinhood, SoFi Technologies, and E*Trade. Schwab requires a brokerage account balance of at least $100,000, while others like Robinhood or SoFi do not mention a minimum brokerage account balance requirement.

Fidelity highlighted that IPO demand is likely to be 'significant' and clients can alert the brokerage of interest in buying a minimum of a single share, up to a maximum of 1 million. Meanwhile, SoFi and Robinhood had stated that stock allocations could be disallowed or limited for those who invested in earlier IPOs, but sold shares within 30 days of the offering.

Fidelity Faces Backlash From Investor Communities

However, the news of enhanced accessibility to the SpaceX IPO did not appeal to investor communities. The update immediately triggered strong reactions on social media platforms overnight, especially because more people would be investing in a highly overvalued company that is yet to record a profitable year.

One X user said: 'This is a crime. This is deliberately exposing the general public to the most overvalued company in the history of the stock market in order to prop up an IPO that jailbreaks the entire index/pension/retirement fund system. This is selling suicide pills at the drugstore.'

While many defended Fidelity's move, arguing that the brokerage isn't forcing anyone to participate in the IPO, many users highlighted that some index funds will be compelled to buy SpaceX shares post addition to the Nasdaq 100 and S&P 500 indexes.

'Wall Street just turned millions of people into venture capitalists overnight,' another user on X mentioned.

Some X users also pointed out how rules were changed so that the US indexes will add the stock almost immediately following IPO close. 'This means everyone's retirement fund will be exposed to it before the market reprices. It's a rug pull funding exit liquidity for VCs and founders,' the user wrote.

Analysts Warn of Investing in SpaceX at Extremely High Valuations

SpaceX is offering over 555.5 million shares at $135 apiece, valuing the company at over $1.7 trillion. Morningstar analysts said in a research note this week that SpaceX is 'significantly overvalued', and investors could purchase the stock at 'more attractive levels' after its IPO.

Most of SpaceX's market cap is based on the assumption that it will succeed in developing new-age technologies that are 'novel and untested', which will also likely lead to major spending costs in the coming years.

Meanwhile, Truist analysts had cautioned of potential volatility with SpaceX, citing its exposure as a 'key factor' for its early trading period.

Even PitchBook's Franco Granda had stated in March that SpaceX shares could trade like Tesla 'on steroids.'

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