When SpaceX starts trading, some ‘shareholders’ will discover they own nothing at all

Good morning. On Fortune’s radar today:

SpaceX IPO will reveal which “shareholders” got scammed.

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SpaceX IPO will finally unveil which “secondary” market buyers were scammed and which were not

 The stock market in New York will open at 9.30 a.m. local time as usual today and then, a few hours later, shares in Elon Musk’s SpaceX will begin trading publicly, starting at an offer price of $135 per share.

At a value of $1.8 trillion, the SpaceX offering will be the biggest IPO of all time.

The event will be especially nerve-wracking for one group of investors: the doctors, lawyers, dentists, entrepreneurs, and other high-net-worth individuals who privately bought shares on the shadowy “secondary” market back when SpaceX’s stock consisted only of private equity. When the insider lockup period ends, they will find out whether they hit the jackpot or were taken in by a scam, reports Fortune’s Allie Garfinkle.

Because secondary shares are traded via private contracts, often in secret, buyers are vulnerable to fraud. They won’t know if the paper contracts they bought are worth the paper they’re written on until it comes time to try to sell them. It’s not a question of whether fraud will be uncovered when SpaceX IPOs; it’s a question of how much fraud will be uncovered.

“How many people think that they have bought into SpaceX, but they’re actually just funding some dude’s coke habit in Miami? The number is not zero,” said Anduril cofounder Matt Grimm, when he spoke to Fortune a few months ago.

“In some cases, they literally are being scammed.” 

The IPO has raised $75 billion, per the FT, and the total funds raised based on the portion of the stock being offered could hit $86 billion. Demand for the shares was three times the amount on offer.

Goldman Sachs is the lead bank on the IPO and it got there by agreeing to take one of the lowest fees on record, a “gross spread” of just 0.75%, Fortune’s Shawn Tully reports. The bank will nonetheless get a chunk of the estimated $646 million in fees, and thus likely capture the largest dollar amount. 

Meet the SpaceX employees who are set to become multimillionaires thanks to its IPO: from execs to even welders - Preston Fore

How Elon Musk sold a $1.77 trillion dream—and what other CEOs can learn from the SpaceX IPO - Diane Brady

SpaceX Shares Indicated More Than 35% Higher in Shadow Trading - Bloomberg

‘China follows Musk very closely’:........

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