SpaceX lowballed its bankers on fees. Goldman Sachs has another way to win big

Key Points:

• SpaceX is planning a record-breaking IPO, selling 555.6 million shares at $135 each to raise $75 billion, targeting a $1.75 trillion valuation, with an additional 15% over-allotment potentially pushing the total raise to over $86 billion.
• The underwriting fees for this IPO are approximately $646 million, more than double Alibaba’s 2014 record, split among a mix of major and boutique banks, with Goldman Sachs as the lead underwriter aiming to capture the largest share.
• Unlike typical IPOs, about 30% of shares will be allocated to retail investors through platforms like Charles Schwab and Robinhood, but Goldman Sachs, as lead left underwriter, will control most allocations to institutional investors, enhancing its influence and potential earnings.
• A typical first-day "pop" in IPO stock price could generate $17.3 billion in immediate gains for initial investors, with an estimated $5 billion potentially flowing back to underwriters like Goldman Sachs in “soft dollars,” which are commissions exceeding trade execution costs.
• Despite AI's transformative impact on industries, the traditional IPO process remains unchanged, benefiting Wall Street firms substantially, with Goldman Sachs expected to enjoy significant profits from SpaceX’s offering and upcoming tech IPOs.