Fourfold oversubscription, a “battle for subscription” among major institutions

SpaceX’s IPO subscription size has surpassed $25 billion. After this news came out, the whole investment banking world went into chaos.

Why is it so crazy? Let me break down the logic behind it.

First, this is a “supply-side” issue. SpaceX only plans to raise $75 billion, but people want to buy $250 billion—demand far exceeds supply, to the extreme. Based on an oversubscription ratio of 3.5 to 4 times, if you apply for $1 million, you might end up receiving only about $250,000 to $280,000. And this is data from the institutional side; the situation is even harder to gauge for retail investors.

Second, all the major institutions participating this time have gone all in. Reports say that subscription orders submitted by multiple institutional investors are all over $10 billion. These are not the small-scale amounts of a few tens of thousands that retail investors make—these players have truly poured in tens of billions of dollars.

There are reports that long-term holding funds—meaning those long-line funds that buy and don’t sell—have already submitted “a considerable” number of orders. What does this indicate? It shows that this is not speculation, but genuine strategic allocation. What these long-term funds are looking at isn’t short-term price fluctuations, but SpaceX’s growth space over the next ten years, or even twenty years.

Another detail worth noting: SpaceX’s roadshow is still ongoing, and the order data will continue to grow. Also, some large institutions are used to placing orders only in the last few days of the IPO process, so the final number could be even more shocking than the current $250 billion.

Given this situation, SpaceX actually has two options: either issue more shares, or raise the offering price. The market generally expects that the price may be adjusted, because a 4x oversubscription scenario is far too rare.

So don’t think that $135 is the final price. Tomorrow, June 11, the final pricing will be officially set. Will it rise to $140, $150, or even higher by then? No one knows for sure. But what can be certain is that this “battle for subscriptions” is still far from over.
#SpaceX認購規模超2500億美元