On the eve of SpaceX's IPO, retail investors rushed to buy in with $70 billion, while tech stocks were sold off to raise funds.

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SpaceX's IPO is making history. So far, the rocket and satellite company has attracted over $70 billion in retail subscription orders, positioning it to become the largest IPO ever and triggering a chain reaction in the market.

According to a Bloomberg report on Thursday, sources revealed that retail investors are expected to be allocated at least 20% of the available shares. Based on an IPO size of $75 billion, this means a large portion of retail demand will not be met. At the same time, around 1,000 institutional investors have submitted orders, with the international allocation expected to be less than 10%. For Japan, the allocation was recently increased from $2 billion to $2.5 billion earlier this month.

To raise funds to participate in this IPO feast, retail investors have been net sellers of individual stocks for three consecutive trading days—something not seen since March 2020.

Chip stocks and recent AI-related stocks have been at the forefront of the sell-off, with Micron, Qualcomm, Broadcom and others coming under pressure one after another. Analysts warn that as several large IPOs are rolled out back to back, market volatility may intensify further.

Record-breaking subscriptions, pricing terms basically locked in

The IPO price for SpaceX is set at $135 per share, with plans to issue 555.6 million shares, raising approximately $75 billion in funds and valuing the company at around $1.8 trillion. These terms are not expected to change.

If the offering is completed at $75 billion, SpaceX will surpass Saudi Aramco’s $29.4 billion record set in 2019, claiming the title of the largest IPO in history.

Retail subscription enthusiasm is particularly notable. Over $70 billion in retail orders far exceed the maximum shares they can be allocated—even at a 20% allocation rate, with a $75 billion offering size, the vast majority of retail demand will be unmet. This means that many of Musk's loyal fans will miss out on entering during the IPO phase, which could in turn further drive up demand when the stock is publicly traded.

BNP Paribas analyst James Picariello estimates that retail investors hold about 40% of Tesla's shares, showing this group’s high recognition of Musk's companies. SpaceX has specially reserved up to 30% of the offering for retail, and Fidelity has lowered the customer participation threshold to just a $2,000 account balance.

Retail investors sell tech stocks to free up funds for SpaceX

Retail enthusiasm for SpaceX is putting pressure on existing tech stock holdings. Data from Vanda Research shows that non-professional traders have been net sellers of individual stocks for three straight days, the first time since March 2020, with the sales concentrated in chip stocks and recent AI stocks.

On Monday, the scale of funds withdrawn by retail investors from individual stocks hit the highest since November 2023; when tech stocks led the S&P 500 lower on Tuesday, retail investors also chose to wait on the sidelines. During Tuesday’s tech stock sell-off, Micron was the biggest loser in the S&P 500, while Qualcomm fell another 6.9% on Wednesday and Broadcom dropped 5.1%.

Vanda global macro strategist Viraj Patel said:

"Current evidence suggests that retail investors may be stockpiling ammunition for the upcoming IPO. Typically, this time of year sees more market activity than what we're witnessing, yet some factors appear to be causing retail to stand down."

BNP Paribas Head of US Equity Derivatives Strategy Greg Boutle noted that Micron’s decline may be a reflection of retail investors "selling recent winners and leveraged products" to invest in SpaceX.

Multiple IPOs stack up, raising market volatility risk

Analysts point out that SpaceX is not the only major IPO coming up—Anthropic and Sam Altman's OpenAI are also brewing plans to go public. With large-scale share sales by existing tech companies, pressure in the market may persist.

Gil Luria, Director of Technology Research at DA Davidson & Co., said in a Bloomberg TV interview:

"Investors will have to free up funds from all public market positions, especially technology stocks, including the largest market cap names, to provide funds for these IPOs."

Douglas Beath, global equity strategist at Wells Fargo Investment Institute, said retail sell-offs ahead of the IPO are unlikely to cause a sustained drop in US stocks or to mark a short-term top, but retail investors make up an important segment of "fast money," which could have a notable impact in the short term.

He added that the share of US households’ stock holdings as a percentage of total financial assets is near a historical high of 35%, meaning amateur investors may "sell existing positions to finance new ones," which may "create a degree of indigestion in the market."

It is worth noting that overall retail participation has declined. Bloomberg Industry Research data shows that retail accounted for 17% of US equity trading volume in Q1 2026, down from nearly 21% a year earlier; JPMorgan analysts attribute this to the long-term downtrend since the "meme stock frenzy" peaked in early 2021. Nevertheless, given SpaceX's higher allocation for retail, analysts expect retail participation in this IPO will be greater than before.

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