SpaceX (SPCX.US) super IPO closes! Musk becomes a trillionaire and Wall Street investment banks also make a fortune.

SpaceX, a space exploration technology company, completed the largest IPO in history this past Friday. SpaceX(SPCX.US) CEO Elon Musk further solidified his position as the world's richest person, becoming the first trillionaire in history. At the close of trading on Friday, SpaceX's stock price rose by 19.22%, with a market value of $2.1 trillion. According to the Forbes billionaire list, Musk's personal net worth reached $1.1 trillion. At the same time, Wall Street investment banks responsible for underwriting this IPO, such as Goldman Sachs Group, Inc. and Morgan Stanley, also received significant income from it. A total of 23 underwriters participated in this offering, with major Wall Street banks such as Goldman Sachs Group, Inc., Morgan Stanley, Bank of America Corp, Citigroup, and JPMorgan Chase all participating. All underwriters were able to allocate stocks and receive corresponding underwriting income. According to regulatory filings, SpaceX is expected to pay approximately $500 million in underwriting fees, equivalent to 0.7% of its $75 billion IPO financing size. According to sources, the lead underwriters Goldman Sachs Group, Inc. and Morgan Stanley will each receive a 20% share of the underwriting fees, approximately $100 million. Bank of America Corp, Citigroup, and JPMorgan will each receive around $75 million. Although the absolute amount is significant, this fee rate is actually quite low when measured against the standards of large IPO transactions, reflecting investment banks' willingness to compromise on fees in exchange for the opportunity to establish a long-term relationship with SpaceX and Musk. Analysts have noted that this ratio matches the lowest recorded level of traditional US IPO history. Typically, for large IPOs with financing sizes in the hundreds of billions of dollars, underwriting fees for investment banks are often between 1% to 3%. For comparison, Facebook's IPO in 2012 and Uber's IPO in 2019 had underwriting fees of about 1.1% to 1.3%. However, analysts point out that true wealth does not come from underwriting fees, but from so-called "soft dollars." Soft dollars essentially refer to fund managers who receive quality IPO allocations and return part of the profits to underwriters through subsequent trading commissions. While all underwriters can allocate stocks and receive corresponding underwriting income, the ultimate decision-making power lies with one institution - the lead underwriter. Goldman Sachs Group, Inc. holds this role in SpaceX's prospectus on the top left corner. Morgan Stanley, Bank of America Corp, Citigroup, and JPMorgan follow closely behind as Joint Book-Running Managers. The amount of soft dollars flowing back is often much higher than the actual trading execution costs, and Goldman Sachs Group, Inc. is likely to be the biggest beneficiary of SpaceX's IPO. More importantly, the market widely expects that the two largest star artificial intelligence companies, OpenAI and Anthropic, will also launch IPOs in the future, with Goldman Sachs Group, Inc. and Morgan Stanley still playing pivotal roles. This means Goldman Sachs Group, Inc. and other Wall Street investment banks will continue to see significant profits in the next round. This article is a reprint from Cailianshe, GMTEight editor: Chen Yufeng.