How to Buy SpaceX Shares Through Your Brokerage Account: A Step-by-Step Guide

As SpaceX approaches a historic initial public offering, which is expected to be the largest IPO in history, investor demand is likely to increase significantly. However, participating in IPOs generally requires investors to meet a minimum brokerage account balance.

Brokerages such as Fidelity Investments, Robinhood Markets, Charles Schwab, SoFi Technologies, and Morgan Stanley's E*Trade are planning to offer SpaceX shares to their clients. The amount of shares available to retail investors will depend on how much is initially purchased by institutional investors.

Investing in IPOs carries risks, as the stock price can fluctuate considerably during early trading after listing on a public exchange. As brokerages assess customer interest in the SpaceX IPO, it is important to ensure you are eligible to participate, since most brokerages have specific brokerage account balance requirements for IPO participation.

IPO Eligibility Relaxed for Investors

Some brokerages, like Fidelity Investments, require a minimum of $500,000 in brokerage account balances to participate in IPOs. At the same time, brokerages such as Charles Schwab have historically required a minimum balance of at least $100,000. Meanwhile, SoFi and Robinhood do not specify any minimum brokerage account balance requirements for IPO participation.

To make SpaceX IPO shares accessible to more people, Fidelity has announced that investors with a retail brokerage account of at least $2,000 will be able to participate in the SpaceX IPO.

'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.

Fidelity highlighted that IPO demand is likely to be 'significant', and clients can notify the brokerage of their interest in buying a minimum of a single share, up to a maximum of 1 million.

Express and Confirm Your Interest in IPO

Brokerages generally require customers to submit a conditional indication of interest to be eligible for an IPO. Note that even if you show a nonbinding expression of intent to buy more shares than you plan, it won't boost your chances of securing a higher allocation, as brokerages usually do not consider the size of the intended purchase.

Post-IPO pricing, investors must also confirm their interest in participation and finalise the number of shares they want to buy. On the day of the IPO, the shares you intended to purchase will be allocated to your brokerage account.

Allocations are likely to differ as brokerages follow their own processes to determine them. SoFi has 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. Some brokerages also consider factors like having direct deposit set up and the total asset value accumulated through the brokerage.

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

Disclaimer: Our digital media content is for informational purposes only and does not constitute investment advice. Please conduct your own analysis or seek professional advice before investing. Remember, investments are subject to market risks, and past performance does not guarantee future returns.