The global capital markets witnessed a historic event this past Friday. The rocket, satellite, and artificial intelligence giant SpaceX (SPCX.US) commenced trading on the Nasdaq. On its first day, the SPCX share price surged from the $135 IPO price to a peak of $175 before settling around $161, closing up over 19% for the session. Behind this wealth creation spectacle lies a high-stakes negotiation over pricing power, where Elon Musk exerted immense pressure on Wall Street's premier investment banks. Details of an unusual underwriting agreement have emerged: banks including Goldman Sachs and Morgan Stanley not only accepted a groundbreaking low base fee but also agreed to a zero-fee structure for the multi-billion dollar "greenshoe" option.

Record-Low Fees and an Unprecedented Zero-Fee Greenshoe

This monumental listing involved a base offering raising $75 billion, surpassing the $29.4 billion IPO record set by Saudi Aramco in 2019 to become the largest initial public offering in global capital market history. At the issue price, SpaceX achieved a market capitalization of $1.77 trillion. Including employee stock options and restricted stock units, the fully diluted valuation is approximately $1.8 trillion, officially elevating Elon Musk to the position of the world's first "trillionaire." Goldman Sachs acted as the lead underwriter, with Morgan Stanley, Bank of America, Citigroup, and JPMorgan Chase serving as joint lead bookrunners. An additional 18 banks participated in the syndicate, encompassing nearly all major Wall Street firms.

SpaceX demonstrated remarkable bargaining power in fee negotiations. Musk secured not only a "rock-bottom" underwriting fee far below the industry average for this record-breaking IPO but also a unique clause unprecedented in modern Wall Street investment banking history. This clause stipulates that if the underwriters exercise the over-allotment option, commonly known as the "greenshoe," to sell an additional 15% of shares, SpaceX will not pay any underwriting fees on this $11.25 billion portion. According to the agreement, the company will pay the underwriting team a total of $500 million in fees for the base offering, representing approximately 0.67% of the total $75 billion raised. Even at this meager rate, it remains one of the highest total underwriting fee transactions in Wall Street history. Investment banks typically charge 4% to 7% in underwriting fees for IPOs. For exceptionally large offerings, this percentage drops significantly but usually remains above 1%. Pushing the fee down to about 0.67% is exceptionally low. The more groundbreaking term involves the greenshoe mechanism. Under the agreement, if the underwriters exercise the option to sell an additional $11.25 billion in stock, they will forgo an estimated $75 million in additional fees. The fact that bankers agreed to perform this work for free is particularly striking. The underwriters have 30 days to exercise the greenshoe option. Goldman Sachs and Morgan Stanley, as lead banks, received the largest shares of the fee pool, each getting approximately $100 million. Bank of America, Citigroup, and JPMorgan Chase, playing smaller roles, each received $75 million. For the dozen or so banks serving merely as co-managers, fees dropped to about $2 million each.

A Wall Street 'Greenshoe' Stunt: Musk's Marketing and Bankers' Footwear

The day after the official listing, Musk concluded the record deal in his signature style. Reportedly, to mark the occasion, Musk doubled down by asking bankers from Goldman Sachs and Morgan Stanley to wear actual green sneakers on Friday. The newly minted trillionaire then posted a photo of Morgan Stanley executives, including CEO Ted Pick and Musk's "personal advisor" Michael Grimes, all showing off their Hulk-green sneakers. This image perfectly blended Wall Street's typically serious investment banking culture with Musk's trademark "playful" style, giving the financial term "greenshoe" a dual meaning. In fact, the IPO's pricing mechanism itself was unusual. Unlike the conventional process of setting a price range and determining a final price based on investor demand, SpaceX used a fixed-price model, offering investors only the choice to accept or reject. Reports indicate the IPO was oversubscribed by more than four times, with total orders exceeding $250 billion, far surpassing the $75 billion target. Due to overwhelming demand, underwriters stopped accepting institutional orders after the market close at 4 p.m. ET on Wednesday.

Musk Surpasses the Trillion-Dollar Mark

With SpaceX's listing, Musk's personal wealth officially crossed the trillion-dollar threshold, making him the first human "trillionaire." Musk owns approximately 38% to 42% of SpaceX. At a $1.75 trillion valuation, this stake alone is worth nearly $870 billion on paper. Combined with his over $260 billion stake in Tesla, his total net worth has surpassed one trillion dollars for the first time in history. Calculations based on company filings suggest that once SpaceX shares began trading, Musk's net worth, including Tesla and other assets, would exceed $1.1 trillion. However, Musk himself responded to questions about his wealth on social media platform X in February, writing that his "net worth is almost entirely from Tesla and SpaceX stock, with cash being less than 0.1%." He described his wealth as the market's advance payment on his future capabilities—highly concentrated, not easily liquidated, and subject to extreme stock price volatility. The listing is also creating wealth for company insiders. It is expected to create about 4,400 new millionaires among SpaceX employees, with around 400 current and former employees holding stakes worth $100 million or more. JPMorgan has upgraded Goldman Sachs and Morgan Stanley to a tactical overweight rating, arguing the market underestimates the revenue multiplier effect from the $75 billion SpaceX IPO. Analysts expect second-quarter equities trading revenue to rise 21% year-over-year. Goldman Sachs reports earnings on July 15 and Morgan Stanley on July 16, with the market watching closely for the tangible contribution from the SpaceX deal. As Musk himself has stated, everything he does is aimed at making humanity a multi-planetary species. But for Wall Street investors, the logic of this trade may be simpler: they are buying into both the cash flow of Starlink and the long-term narrative of Musk's bet on an "orbital data center."

Anticipated Surge in Options Trading Activity

On the flip side of intense demand, investors will soon have a new way to speculate on SpaceX's future: options on the company's stock are expected to begin trading next Tuesday. Trading is anticipated to be active, volatile, and potentially expensive initially. Options for Elon Musk's rocket and spacecraft manufacturer will follow its stock, which set a trading record last Friday as investors rushed in. A spokesperson for Cboe Global Markets confirmed that options trading is expected to commence next Tuesday. Market participants expect a wide range of investors to engage, including shareholders seeking downside protection and traders betting on stock price swings. "I expect demand to explode," said Ophir Gottlieb, CEO of Capital Market Laboratories. "This is the largest IPO of all time, with one of the most controversial founders of all time, pursuing arguably one of the most ambitious long-term goals of all time, and that will produce the largest initial options volume, in dollar terms, of all time." Options grant the holder the right, but not the obligation, to buy or sell a stock at a predetermined price within a set period. They provide investors a lower-cost way to gain exposure to a company's shares and express views on both short-term price movements and long-term positions. They typically begin trading within days of a stock's debut.

Expectations for High Volatility

If SpaceX's stock behaves similarly to Elon Musk's electric vehicle company Tesla, its volatility will be higher than average, driving options activity. According to London Stock Exchange Group data, Tesla's five-year beta—a measure of volatility—is 1.81, where 1 indicates volatility in line with the market. "I think we're going to see a lot of movement in the underlying stock," said Seth Hickle, Chief Investment Officer at Mindset Wealth Management, adding that implied volatility for the options could be "very high." Investors anticipate that key events like the first quarterly report after listing and potential inclusion in major stock indices will spur activity. Nasdaq has adjusted its rules to facilitate SpaceX's addition to the Nasdaq-100 Index. MSCI stated it will apply its early inclusion rules for large IPOs, while S&P Global has ruled out fast-tracking it into the S&P 500. "We have been asked 'what day will the options be listed?' more times for this IPO than any I can remember," said Chris Murphy, co-head of derivative strategy at market maker Susquehanna. Skeptics can also use options to express bearish views without the risk of directly shorting SpaceX stock, although it may not be cheap. "With a short, your risk is theoretically unlimited, borrowing costs can be high, and with a float as small as SPCX's, a short squeeze could wipe you out before your fundamental thesis is proven right," said Luke Lango, chief technical analyst at financial research firm InvestorPlace.