The quick profit in SpaceX stock could have implications for investors hoping to participate in future IPOs. (Photo by Miguel J. Rodriguez Carrillo/AFP) (Photo by MIGUEL J. RODRIGUEZ CARRILLO/AFP via Getty Images)
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“I’m sick of hearing about SpaceX,” he says Philip DeAngeloCEO of Focused Wealth Management, registered investment advisor with $2.4 billion assets under management. Then he laughs. “We get a lot of questions from customers.”
For many investors, this isn’t just another IPO. It’s a rare opportunity to buy one of the world’s most closely watched private companies. SpaceX said roughly 30% of the IPO shares will be distributed to retail investors, well above the 5% to 10% allocation that typically goes to individual investors. Investors aren’t just talking about SpaceX. They line up for it. Reports indicate that demand for the offering is coming four times the number of shares available.
That could translate into a big price bump on the first day of trading, tempting some everyday investors to sell quickly – and potentially face a little known rule of wall street. Many brokerages discourage “IPO flips,” or the sale of new shares shortly after trading begins, limiting access to future offerings.
“There are no government rules,” he says Jay RitterDirector of The IPO Initiative at the Eugene Brigham Department of Finance, Insurance, and Real Estate at the University of Florida. Instead, brokerages have adopted their own policies because Wall Street banks that manage IPOs want demand to remain strong after trading begins. A one-day selling rush can push the stock lower and make an offer look less successful.
“If they get a reputation for flipping their clients, it will make it harder for them to get IPO shares from underwriters in future deals,” Ritter says.
In other words, brokerage firms have a professional reason to stay in the good graces of insurers. Access to sought-after IPOs can help attract and retain customers. If too many customers immediately reject newly issued shares, this can make it more difficult for the company to acquire shares in the next hot offering.
Penalties vary by company. Robinhood says customers who sell IPO shares allocated within 30 days may lose access to new IPO allocations for 60 days. At SoFi, selling IPO shares within 30 days triggers a 180-day suspension from future IPO offerings on the first violation and may charge a $50 fee for sales before the 120th trading day, with longer suspensions for repeat violations and a permanent ban after multiple violations. Fidelity says clients who sell IPO shares within the first 15 calendar days may be flagged for flipping and may face restrictions if the behavior is repeated. Electronic Commerce says customers who sell within 30 days may face restrictions on participating in upcoming promotions. (Charles Schwab is extreme with no firm anti-rollover policy)
The stakes are higher with SpaceX because so much stock is expected to land in retail accounts. Ritter says retail investors typically get a much smaller piece of most IPOs. In fact, he says he wouldn’t be surprised if more shares end up in retail hands in SpaceX’s offering than retail investors have received in several IPOs over the past decade combined.
Whether investors should care is a different question.
Historically, IPOs often soar on their first day of trading. Gina Martin AdamsChief Investment Officer at HB Wealth, a fee-only registered investment adviser with more than $30 billion in assets under management, notes that many then go on to provide more implicit returns in the following year.
Ritter, too, says there’s no guarantee that a stock that goes up on the first day will continue to go up.
“If there are restrictions on how fast you can sell, then what?” he says.
For investors who don’t expect to participate in another IPO anytime soon, a temporary restriction won’t matter much. But for those hoping to get into the next wave of high-profile deals, maintaining access shouldn’t be an afterthought.
After 397 U.S. IPOs raised $142.4 billion in 2021, activity has dropped to just 71 offerings in 2022. The market gradually recovered since then, with 109 IPOs in 2023, 150 in 2024 and 202 in 2025. OpenAI recently revealed confidential plans related to a potential IPO, while investors continue to speculate about future offerings from other AI labs like Anthropic.
Neither of these companies has announced plans for widespread retail distribution. There is also no guarantee that retail investors will receive shares if they eventually go public.
For investors taking a SpaceX allocation, the decision may come down to a simple trade-off. Take a quick profit if the stock takes off or hold your place in line for whatever may come next.
