“I am so sick of hearing about SpaceX,” says Philip DeAngelo, managing director of Focused Wealth Management, a registered investment advisor with $2.4 billion of assets under management. Then he laughs. “We’re getting a lot of questions from clients.”
For many investors, this isn’t just another IPO. It’s a rare chance to buy into one of the world’s most closely watched private companies. SpaceX has said roughly 30% of its IPO shares will be allocated to retail investors, far above the 5% to 10% allocation that typically goes to individual investors. Investors aren’t just talking about SpaceX. They’re lining up for it. Reports suggest demand for the offering is approaching four times the number of shares available.
That could translate into a big price bump on the first day of trading, which will tempt some everyday investors into selling quickly – and potentially encountering a little-known Wall Street rule. Many brokerages discourage “IPO flipping,” or selling newly allocated shares shortly after trading begins, by restricting access to future offerings.
“There are no government rules,” says Jay Ritter, the Director of The IPO Initiative in the Eugene Brigham Department of Finance, Insurance, and Real Estate at the University of Florida. Instead, brokerages adopted their own policies because the Wall Street banks that manage IPOs want demand to stay strong after trading begins. A day-one rush of selling can push the stock lower and make an offering look less successful.
“If they get a reputation for their clients flipping, it’s going to make them harder to get IPO shares from the underwriters in future deals,” Ritter says.
In other words, brokerages have a business reason to stay in underwriters’ good graces. Access to sought-after IPOs can help attract and retain clients. If too many customers immediately dump newly issued shares, that can make it harder for the firm to obtain shares in the next hot offering.
The penalties vary by firm. Robinhood says customers who sell allocated IPO shares within 30 days can 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 it may charge a $50 fee for sales before the 120th day of trading, with longer suspensions for repeat offenses and a permanent ban after multiple violations. Fidelity says customers who sell IPO shares within the first 15 calendar days may be flagged for flipping and can face restrictions if the behavior is repeated. E*Trade says customers who sell within 30 days can face limits on participating in upcoming offerings. (Charles Schwab is an outlier with no firm anti-flipping policy)
The stakes are higher with SpaceX because so many shares are expected to land in retail accounts. Ritter says retail investors typically receive a much smaller slice of most IPOs. In fact, he says it wouldn’t surprise him if more shares end up in retail hands in the SpaceX offering than retail investors received across many IPOs over the past decade combined.
Whether investors should care is a different question.
Historically, IPOs often jump on their first day of trading. Gina Martin Adams, chief investment officer at HB Wealth, a fee-only registered investment advisor with more than $30 billion in assets under management, notes that many then go on to deliver more muted returns over the following year.
Ritter, likewise, says there’s no guarantee a stock that surges on day one will keep rising.
“If there are restrictions on how quickly you can sell, so 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 in on the next wave of high-profile offerings, preserving access shouldn’t be an afterthought.
After 397 U.S. IPOs raised $142.4 billion in 2021, activity fell to just 71 offerings in 2022. The market has gradually recovered since then, with 109 IPOs in 2023, 150 in 2024 and 202 in 2025. OpenAI recently disclosed confidential plans related to a potential IPO, while investors continue to speculate about future offerings from other AI labs like Anthropic.
None of those companies has announced plans for a broad retail allocation. There’s also no guarantee retail investors will receive shares if they eventually do go public.
For investors who receive a SpaceX allocation, the decision may come down to a simple trade-off. Take a quick profit if the stock jumps, or keep your place in line for whatever might come next.
