Musk is looking for an army of loyalists to help make him a trillionaire

Nouri, a 41-year-old fintech entrepreneur, spent years listening to Musk’s video and podcast interviews. Tesla stock makes up about 85% of his net worth, and he plans to buy SpaceX shares when they begin trading. “What is there to think about in this?” Noori said.

He doesn’t consider himself a fan of Musk, he just believes in the tech founder’s vision of a multiplanetary future powered by extraterrestrial artificial intelligence. “Under the leadership of Elon Musk, you have an unlimited industry,” Nouri said.

On Friday, the SpaceX stock ticker is expected to make its debut in the largest initial public offering ever: Musk plans to raise about $75 billion in a deal that could make him the world’s first trillionaire.

The stock offering for everyday investors would also be a historic moment in Wall Street’s retail revolution.

Over the past few years, individual investors have united as a market-moving force, raising hedge-fund bets, rescuing struggling companies and sending preferred stocks straight to the moon. The total volume of both retail stock and options trades reached new records in May, according to Citadel Securities.

Their power is expanding, and Musk knows how to harness it as well as anyone. At Tesla, individual investors make up about a third of the shareholder base. His confidence and enthusiasm helped the company’s valuation reach a level that exceeded the combined valuation of the next 30 largest automakers, despite ranking 12th in United States sales.

Musk has promised to return the favor. “I’m a big fan of small retail investors,” he wrote in a 2020 tweet about a potential public offering of SpaceX or its Starlink business. “Will make sure they get top priority. You can hold me to that.”

Musk is expected to set aside an unusually large portion of the SpaceX shares sold in the offering for individual investors — about 20% or more, compared with the 5% to 7% of shares typically allocated in an IPO. Even that larger share will likely fall short of demand. The company is valued at approximately $1.77 trillion at a target IPO price of $135, effectively inaccessible to most retail investors. Brokerages serving those traders expect a huge influx of buyers.

Financial companies are also responding with similar enthusiasm. Merrill Lynch’s office in Houston held an informational meeting about the SpaceX IPO for clients last week, people familiar with the matter said. Guests received baseball caps emblazoned with the SpaceX logo.

Individual traders are expected to play a key, albeit risky, role in driving double-digit jumps on listing day. Some stocks debuted to great fanfare, then fell within weeks of going public. According to historical data collected by Jay Ritter, professor emeritus at the University of Florida, nearly a quarter of IPO stocks lose at least half their value in the three years after listing day.

During more than two decades as a private company, SpaceX has raised billions of dollars from shareholders, ranging from mutual funds to large endowments to many of the world’s largest money managers. Skeptics, including some retail traders, say the easy money has already been made and the professionals are looking for someone else to get stuck holding the bag.

SpaceX’s valuation has increased by more than 2,000% in the last few years. Individual investors missed out on almost all of those gains – and would suffer the most if stock prices fell.

“I think most retail investors should avoid trading this like the plague,” said veteran fund analyst Dave Nadig, who expects extreme volatility in SpaceX share prices in the weeks after going public. “This is one of the greatest moments I’ve had getting popcorn.”

SpaceX did not respond to requests for comment.

seat belt sign on

The last time Tamar June tried to get in early was in Yahoo’s IPO in 1996. June, now 63, said her home office at the time consisted of a dial-up modem, trading software downloaded from a compact disc, and a poor Internet connection.

“Very painful,” said June, a tech executive based in Reno, Nev. The day Yahoo went public, he ordered 100 shares at market open and sold them an hour later at a 30% profit – minus the huge commission fee.

In 2013, Robinhood Markets launched an app for commission-free trading, making it cheaper and easier for novice investors to trade stocks. For the first time, it became possible to get your hands on all types of investments from Memcoin to complex options on a smartphone.

During the pandemic, Robinhood and other digital investing tools helped give rise to a new generation of day traders, attracted by people stuck at home, some receiving cash from government stimulus payments. Together, these investors fueled the meme-stock craze that sent shares of videogame retailer GameStop skyrocketing — and it caught Musk’s attention.

Jun, whose portfolio is largely tilted toward tech giants like Apple, Oracle and Intel, is one of those competing for SpaceX shares. She said she has followed SpaceX for years and uses Starlink, the company’s satellite internet service at home. There is also the attraction of Musk himself.

June said, “I get it – that guy’s a little weird.” “But think about the ideas they have implemented.”

Over the past five years, the retail crowd has infiltrated nearly every corner of Wall Street — piling into artificial-intelligence trading, betting on prediction markets and live-tweeting company earnings calls. IPOs, which were once an exclusive domain, are no exception.

Robinhood CEO Vlad Tenev said that in past years the brokerage has had to request issuers to set aside stock for the company’s IPO access program, which randomly distributes allocated retail shares to interested clients. Companies now ask Robinhood how much they should set aside for retail investors, Tenev told analysts on a call this spring.

“We really had to scratch and scratch and ask for grace,” Tenev said. Now, he added, “almost every major IPO of consequence has been on Robinhood’s platform.”

Like other brokerages, Robinhood offers investors the chance to request shares of a specific IPO at the listing price before the company goes public. There is no guarantee that customers will receive all of the shares they desire or none at all. Brokerages offering access to IPOs say it is not unusual for requests to reach 10, 20 or 50 times the number of shares available. Most expect demand for SpaceX to be even higher.

“This is a perfect storm for extreme retail excitement and demand,” said Mike Tracy, chief market analyst and vice president of risk at Apex Fintech Solutions. “Fasten your seat belt.”

After the SpaceX prospectus went public on May 20, visitors to the Charles Schwab webpage on the upcoming IPO tripled, the brokerage said.

“Most of the interest is emotional, which is the honest truth,” said Jeff Judge, a financial planner in Forest Hill, Md. “People want to own a piece of Elon Musk’s rocket company.”

faith based

Musk used his fan base to win a 2024 dispute over his $46 billion compensation package at Tesla. He campaigned on X to get the pay plan approved and the company seized the opportunity to tour a Tesla production plant with the CEO.

“Musk is a superstar, whether you like him or not,” said Randall Brown, a 70-year-old retired physician and business owner who is hoping to buy SpaceX shares. “Whatever he touches, he works.”

That’s the kind of confidence Musk needs to run a venture with a financial picture far worse than that of any other megacap American company. The filing shows SpaceX was unprofitable last year and losses widen into the first quarter of 2026. The company is expected to generate revenues of $18.7 billion in 2025, meaning the company is worth approximately 93.6 times its sales. By comparison, the S&P 500’s price-to-sales ratio is about 3.3, according to FactSet.

According to Wall Street veterans, unlike professionals, individual investors are less likely to examine the price-to-earnings ratio, let alone sophisticated cash-flow analysis, before clicking “buy.” Musk’s fans are more excited by the entrepreneur’s long-term vision about rockets, robots, AI chatbots and data centers in space.

Small-time investors without a six-figure portfolio are welcome: Robinhood does not require a minimum balance to request SpaceX shares. Fidelity typically requires investors to have a minimum of $100,000 or $500,000 in brokerage accounts to join the IPO, depending on the offering. For SpaceX, the fidelity limit was set at $2,000.

Wall Street critics say the risks of holding SpaceX shares extend to millions of rank-and-file savers. A few months before the offering, bankers reached out to major index providers to discuss how SpaceX could join the major indexes earlier than usual. That means SpaceX shares will appear almost immediately in some of the index funds that anchor stock portfolios across the country.

Nasdaq, the exchange where SpaceX chose to list, agreed to expedite its entry into the Nasdaq-100. SpaceX shares will be eligible for inclusion in the index after just 15 trading days instead of waiting a year. The S&P 500 denied Musk early entry on Thursday, saying it would retain its deadlines and rules that require entrants to be profitable first. spacex Loss of $4.9 billion Last year.

SpaceX has begun a sequential lockup release for its stock – meaning more shares will be available earlier than usual for newly public companies – and that could send the stock price lower. A top-heavy market could increase volatility in tech stocks. The rally in semiconductor stocks suddenly reversed last week, sending the Nasdaq Composite down 4.2%, its worst day in more than a year.

Banks are telling potential investors that SpaceX’s revenues could reach $3.4 trillion in 2040, according to one Morgan Stanley The analysis, The Wall Street Journal reported.

On the day of the SpaceX IPO, Josh Hill, a 37-year-old sales manager at a North Carolina-based manufacturing company, plans to have a cup of coffee, close the door to his home office, open Robinhood and wait for SpaceX shares to start trading.

Hill expects Musk to dominate the space industry. “Long-term,” he said, “this is no easy task.”

But will he go shopping on Friday?

“The price has to drop — otherwise, I’m probably not a buyer,” Hill said.

Write to Hannah Erin Lang hannaherin.lang@wsj.com and corey dribush corrie.driebusch@wsj.com