Goldman Sachs · Alibaba · SpaceX · Facebook · Wall Street · Fortune Technology
SpaceX lowballed its bankers on fees. Goldman Sachs has another way to win big
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It’s been widely reported that SpaceX will provide its underwriters a “gross spread” of 0.75% or less for shepherding the biggest initial public offering of all time.
Key facts
- Let’s say that SpaceX shares finish their first day $27 or 20% higher, at $162
- SpaceX has already announced in its latest, amended S-1 that it’s selling 555.6 million shares at $135 in the underwriting, for $75 billion—and is aiming for a $1.75 trillion valuation, biggest
- That’s more than twice the roughly $300 million for Alibaba, and dwarfs the less than $100 million Uber paid and the around $200 million cost to Meta
- The fees get split according to the percentage of the shares each bank gets to distribute; if your allocation is 5%, you’d receive 5% of the roughly $646 million
Summary
For context, the figures when Facebook (2012) and Uber (2019) entered the public markets were between 1.1-1.3%. Ritter recounts the scenario the only other time a U.S. IPO got done at a spread this small. Now, Goldman as leader on SpaceX is orchestrating a trophy offering at the same record-thin percentage that’s a good deal for Wall Street simply because the deal’s so immense. Let’s start with the reward that will be explicitly stated on the prospectus, and gets most of the media attention, that gross spread. That’s more than twice the roughly $300 million for Alibaba, and dwarfs the less than $100 million Uber paid and the around $200 million cost to Meta.