SpaceX has rewritten the century-old IPO process with a single offering

Original Author: Prathik Desai

Original Translation: Luffy, Foresight News

An IPO is a significant ritual in the capitalist system. Company executives embark on multi-week roadshows, presenting their business plans to major fund managers to secure institutional investment. Investment banks act as underwriting intermediaries, aggregating market subscription demand, evaluating company valuation, setting the final offer price, and completing share allocation. When the listing day arrives, the bell rings, and a private company officially becomes a public one. Subsequently, secondary market buy and sell orders continuously interact, completing price discovery over several hours or even days following the opening.

The core reason this process of roadshows, pricing, and bell-ringing listings has persisted for so long is that external parties could not access the real operating data of private companies, relying solely on investment banks for pricing. In the past, every company had to fully complete this process to be listed on an exchange.

However, SpaceX, which recently listed on the US stock market, pursued a completely different path to going public. Elon Musk directly set the offer price before the investment banks had even conducted their pricing calculations and roadshows.

Traditional IPOs bundle three core tasks—price discovery, finding investors, and share settlement—and assign them to investment banks for unified execution, paying them a bundled service fee. For this listing, SpaceX completely unbundled these three stages, assigning them to different channels for independent execution. Before the investment banks even formally began the listing process, the market had already established a fair valuation for the company, and a large number of investors were already queuing up for subscriptions.

This article will dissect how SpaceX is changing the way companies go public and the shifting role of investment banks in this new listing landscape.

The Origin of Investment Bank Underwriting Fees

Investment banks charge underwriting fees to companies planning to go public. For nearly a century, this fee has typically been calculated as a percentage of the total capital raised by the company.

The complete underwriting process includes: the bank organizing global roadshows, collecting indications of interest from institutional and retail investors at various price ranges, determining an offer price acceptable to the market, and ensuring the smooth settlement of shares. In a firm commitment underwriting model, the bank buys the entire share issuance from the company and then distributes it to all subscribing investors.

The long-term bundling of the three functions—price discovery, distribution and allocation, and share settlement—was a constraint imposed by early market infrastructure. Investment banks were the only institutions with a complete picture of market information, making them best positioned to judge market demand. They had early access to the company's full financial data and development plans, allowing for precise stock price estimation. They possessed vast and diverse client resources and cross-industry partnerships, enabling them to allocate shares to top institutions and retail investors. Simultaneously, they had mature clearing and settlement systems to ensure proper share delivery.

Therefore, companies planning an IPO had no choice but to purchase these bundled services and pay the corresponding fees.

The unbundled IPO has fundamentally broken the investment banks' monopoly. Before the banks even start preparing for the listing, public channels such as perpetual contract trading platforms, prediction markets, and secondary markets for private shares have already fully displayed the genuine market demand. Companies can now negotiate underwriting fees independently and select the most efficient service channel for each stage of the listing process.

The average underwriting fee for a mid-cap US IPO is about 7% of the total capital raised, while the rate for large-scale projects drops significantly. For Alibaba's $25 billion IPO in 2014, the underwriting fee was only 1.2%. For this SpaceX listing, the underwriting fee was as low as 0.67%. While many reasons could explain this extremely low fee for the largest IPO in history, the unbundling of the listing process and the weakening of traditional investment bank functions are undoubtedly contributing factors.

Price Discovery: Banks Lose Pricing Power

SpaceX broke the traditional IPO rules right from the preparation stage. In a traditional process, the bank sets a price range, gradually tests market acceptance, and finally determines the offer price. In contrast, Musk directly announced a fixed offer price of $135, leaving investors with only the choice to subscribe or skip.

SpaceX could skip the bank's pricing stage because the market had already completed valuation pricing weeks before the listing.

Three types of public markets provided price signals for SpaceX from different dimensions:

• Private Secondary Markets (Hiive, Forge): Company employees and early investors traded private shares. The trading price for SpaceX stabilized around $150, close to the opening price on the first day of listing.
• Prediction Market (Polymarket): Users placed bets on the closing price of the first trading day. The highest betting volume corresponded to a company valuation exceeding $2 trillion. On Friday, June 12, SpaceX officially listed, closing at approximately $161 on its first day, up 20% from the offer price, giving the company a total valuation of $2.1 trillion.
• Hyperliquid Perpetual Contract Platform: Traded a synthetic perpetual contract for SpaceX 24/7, reflecting the market's real-time valuation expectations for the stock.

Before the official listing, these pre-IPO perpetual contracts, not backed by actual underlying shares, were essentially leveraged bets on the stock's opening day price. The majority of Hyperliquid's open interest was concentrated on the SpaceX contract. During the morning of the listing day, the price range for this perpetual contract was $174-$185, a 30%-35% premium over the $135 offer price. Meanwhile, the SpaceX stock peaked at $176 during intraday trading. After the stock officially launched on the exchange, the perpetual contract price quickly converged towards the $150 opening price.

Is this merely a coincidence? Previous cases have already demonstrated the reference value of these new pricing channels. Weeks earlier, when chip company Cerebras went public, the price of its corresponding IPO perpetual contract on Hyperliquid deviated from the actual Nasdaq opening price by only 1.3%, with the spread nearly disappearing after the stock opened. At that point, the company hadn't even finalized its offer price, yet the market had already preemptively judged the opening price.

By leveraging various public trading markets, SpaceX bypassed the first core task traditionally handled by investment banks: price discovery.

Share Settlement: The Tokenization Track Exposes Underlying Custody Vulnerabilities

After traditional banks complete pricing, their second core task is distributing shares and matching them with investors. We will skip distribution for now and dissect the third bank function: share allocation and settlement.

On the day of SpaceX's listing, stock trading was dispersed across multiple platforms, a model completely different from a traditional IPO. On the Solana blockchain, Backpack issued tokens; the US-compliant institution Kraken launched corresponding products; Ondo issued tracking tokens; Hyperliquid listed a synthetic perpetual contract—all with SPCX as the underlying asset. Multiple centralized exchanges like Bitget, Bybit, and Binance also opened IPO subscription channels.

On the listing day, different platforms yielded completely different results.

Products that directly held actual shares or were connected to shares via compliant brokerage/prime brokerage firms opened on time, with prices tracking the underlying stock. Backpack's Solana token had a 1:1 correspondence with real shares held by a custodian broker; Kraken's US segment connected to shares via Payward Securities; Ondo published daily asset custody certificates ensuring the tokens were fully backed; Hyperliquid's perpetual contract inherently didn't require holding the stock, and its price automatically synced after the stock listed.

Binance, Bybit, and Bitget launched tokenized subscription campaigns. The xStocks platform promised tokens were fully backed by real shares. However, these platforms ultimately failed to secure sufficient share allocations, leading to full refunds. Binance alone refunded $557 million.

The root cause wasn't blockchain technology itself; compliant custody channels completed settlement without issue. SpaceX's offering was heavily oversubscribed, with market demand reaching 3.5 to 4 times the $75 billion fundraising target. Centralized exchanges, which relied on third-party intermediaries for share allocation, experienced settlement failures and were forced to issue full refunds.

When price discovery becomes completely public and freely accessible, pricing is no longer a scarce, high-value step in the IPO process. The core competitive factor shifts to the ability to deliver the corresponding shares in full.

The challenge of share settlement isn't new. Wall Street faced a similar crisis 60 years ago and built the necessary infrastructure to resolve it permanently.

In the late 1960s, US stock trading volumes exploded. Because stock certificates were paper, every trade required finding, matching, and physically delivering documents. Back offices were overwhelmed by mountains of paperwork. Exchanges even closed on Wednesdays just to process the backlog. Ultimately, the industry found a solution: eliminating the circulation of paper documents.

The Central Certificate Service was established in 1968 and reorganized as the Depository Trust Company in 1973. All paper shares were deposited in a central vault, and ownership was recorded only through book-entry changes. With all assets held by a trusted third party, settlement risk was eliminated. The depository could guarantee that sellers held sufficient shares and that buyers could complete the transfer.

This is also the core problem custody infrastructure needs to solve: verifying that the seller actually owns the underlying asset and can complete its transfer.

Tokenization models face this same vulnerability. Tokens can be issued in advance, but the underlying shares may not be simultaneously deposited with a compliant custodian. If tokens are backed by real shares adequately custodied by a broker, settlement is guaranteed. If tokens are sold first without securing the underlying shares, the redemption promise becomes unsupported. The incident in 2026 occurred precisely because platforms issued tokens but couldn't subsequently acquire the corresponding real shares.

In the future, the challenge of IPOs will no longer be price discovery, but verifying that the underlying assets genuinely exist and can be transferred normally.

What Irreplaceable Value Do Investment Banks Retain?

Reviewing the new listing process comprehensively, the three traditional functions have been diverted to external channels.

Primary market price discovery is no longer monopolized by investment banks. Weeks or even months before the listing, private secondary markets, prediction markets, and perpetual contract platforms continuously provide public valuations. By the time SpaceX set its offer price, multiple channels had already established a fair market price.

Listing and trading channels are no longer singular. While SpaceX listed on Nasdaq, multiple on-chain trading channels opened simultaneously. Blockchain supports 24/7 trading, meaning secondary market liquidity isn't confined to a single traditional exchange.

The core barrier for share settlement is asset custody qualifications. This capability was once exclusively controlled by investment banks, relying on depositories for settlement guarantees. Today, any institution with compliant custody qualifications can undertake this business.

So, what still requires investment banks? Currently, banks retain four core intermediary functions that are difficult to replace.

The first is credit endorsement. The lead underwriter's name on the prospectus acts as a credit guarantee for the project, providing a safety net for conservative institutional investors. This reputation, built over decades, cannot be replicated by on-chain token platforms. Banks charge fees for this endorsement. For this listing, SpaceX paid a total of $500 million in underwriting fees, with Goldman Sachs and Morgan Stanley each receiving $100 million, even though these two banks played almost no role in the pricing process.

The second is share allocation authority. The lead underwriter still holds the power to decide the allocation of most shares, selecting which investors can participate in the subscription.

Next is risk assumption. SpaceX used a firm commitment underwriting model. The banks signed contracts to buy the entire share issuance from the company before distributing it externally. If market demand collapses and subscriptions are insufficient, the unsold shares are entirely absorbed by the banks, and SpaceX incurs no loss. On-chain platforms cannot assume such massive downside risk.

Finally, there is market stabilization. When stock prices fluctuate sharply in the early stages of listing, the lead underwriter can use the Greenshoe option to oversell shares moderately and then repurchase them in the secondary market, curbing extreme price volatility. After this SpaceX listing, Morgan Stanley was responsible for post-listing stabilization operations. This function requires a large balance sheet and a professional market-making team, capabilities currently only available to investment banks.

Apart from these, the remaining steps in the entire listing process are being taken over by new market channels that offer lower costs, longer trading hours, and complete transparency.

Blockchain-based pricing channels have already proven their value, enabling continuous 24/7 estimation of a company's valuation, with efficiency surpassing traditional investment banks. SpaceX's significant oversubscription and nearly 19% first-day gain represent a textbook listing scenario, validating the effectiveness of these new pricing channels.

The traditional IPO model has been fundamentally unbundled. Each function is now handled by the most efficient channel, a trend of specialization seen across various industries. As mentioned in the previous article "Reshaping Private Market Valuation," the market no longer waits for investment banks to value private companies. Banks, which once monopolized the core functions of pricing and share settlement, can no longer command high fees for these standardized services in the new listing ecosystem.

Will Investment Bank IPO Business Revenue Wither Completely?

Not likely. SpaceX's exceptionally low 0.67% underwriting fee is not the core source of bank revenue from IPOs.

Based on the first-day gain, SpaceX raised $75 billion, resulting in a single-day paper profit of approximately $14 billion. The investors who could access this profit were largely existing clients of the underwriting banks. While banks cannot directly trade the shares for their own account, they secure prime IPO allocations for their clients, using this to generate substantial trading commissions.

This is the core reason why nearly twenty investment banks competed for underwriting roles despite the 0.67% fee. Underwriting service fees have become a secondary consideration. The real drivers for banks competing for these mandates are share allocation power, derivative trading commissions from clients, and long-term wealth management business.

The profit logic for investment banks is evolving. They are moving from standardized, replaceable pricing services towards a scarce resource: the channel for accessing IPO share subscriptions.