How does Fidelity intend to allocate shares of the SpaceX IPO?
Fidelity’s approach to the SpaceX IPO share allocation
Fidelity’s goal is to attempt to allocate some shares of the IPO to all customers who confirm their indication of interest. That said, we anticipate demand on the offering may be significant and could be greater than the supply of shares Fidelity receives from the Issuer, which may prevent us from accomplishing our goal.
If Fidelity is unable to allocate shares to all customers interested in participating, we will use a “lottery” to allocate shares as fairly and equitably as possible across all interested clients. Please note that due to the limited amount of shares available on any IPO, clients may receive fewer shares than they requested or in some cases none at all.1
Paying for shares allocated
Any shares acquired as part of the IPO must be paid for in full no later than one business day after the stock trades in the secondary market. If you have cash in your account equivalent to the purchase, it will automatically be debited from your account on settlement. If you need to add funds to pay for the shares, payment can be made by check or wire.
You cannot pay for your allocated shares with physical cash, credit card, or the proceeds from the sale of those shares. Failure to pay for shares by settlement may result in the loss of any shares allocated to you. You will also lose any potential gains and be responsible for any losses attributable to the sale of the allocated shares.
Trading after allocation
After an IPO begins trading in the secondary market, investors are free to sell their shares at any time. However, selling too quickly, often referred to as “flipping,” can carry consequences.
For the SpaceX IPO, a 15-calendar-day tracking period would apply:
- Selling shares within the first 15 days is considered flipping.
- Investors can sell without penalty starting on day 16.
What happens if you flip shares?
Flipping shares allocated to you as part of the SpaceX IPO will restrict your ability to participate in future IPOs through Fidelity:
- First occurrence: Restricted for 6 months
- Second occurrence: Restricted for 1 year
- Third occurrence: Permanently restricted (tracked by Social Security number)
Flipping policies are designed to encourage long-term investing and reduce volatility of shares allocated in an IPO.