SpaceX, OpenAI...: How Does an IPO Actually Work?

An IPO (Initial Public Offering) is the moment a private company goes public. Note that "public" has a specific meaning here: we are not talking about state-owned enterprises, but rather a company whose capital is opened to external investors. Prior to this, the company is owned by a closed circle: it's founders, employee shareholders, or venture capital funds, for instance. Afterwards, the shareholder base diversifies, even if the company retains controlling shareholders or is a majority owner. In any event, it marks the beginning of a more or less liquid market where ownership titles - shares - can be traded, with supply and demand interacting to establish a price.

A Heavy and Well-Oiled Machine

But before that, the company must get into battle mode for the IPO. It is a long, time-consuming and costly process. To keep things simple today, we will skip the internal restructuring required for listing, which is by no means a small feat.

On the financial side, in the months leading up to the operation, the company selects one or more major investment banks, known as underwriters, tasked with organizing and placing the offering. Goldman Sachs, Morgan Stanley, JPMorgan, Bank of America and Citigroup are reportedly tipped to lead the SpaceX IPO. Their job involves analyzing the company from top to bottom, drafting the prospectus, and, crucially, gauging institutional investors to find the right offering price. This is known as the roadshow. Executives of the company-to-be-listed spend several weeks conducting back-to-back presentations in hotel ballrooms or bank boardrooms in New York, London, Paris and Singapore. They sell their "story" to fund managers who will then decide whether or not to place an order. Following this informal round, the banks build what is called the order book: who wants how many shares, and at what price. From this book, the IPO price emerges.

Let's look at four key things to understand about these operations.

The Money Does Not Always Go into the Company's Coffers

The first misconception to clear up is that an IPO is not necessarily a fundraising event. A distinction must be made between primary shares (new) and secondary shares (existing). When a company issues new shares during its IPO, it is indeed raising capital; the money enters its coffers and can be used for investment, debt reduction or expansion. However, when existing shareholders sell their shares as part of the deal, the money does not go to the company: it goes into their pockets.

That said, both mechanisms often coexist in the same IPO. The operation thus allows the company to raise funds for financing while enabling existing shareholders to monetize all or part of their holdings. In this case, the company's free float - the portion of capital freely tradable on the exchange - will consist of both the new shares and those sold by previous shareholders.

The First Winners Are Often Already on Board

This leads to another central question: who truly benefits from an IPO? The honest answer is: primarily those who were there before. The funds that financed SpaceX or OpenAI in their early days, having accepted high risk for years. Management generally provided the vision and the long hours. The IPO is their exit strategy, whether in full or part. Founders and employee shareholders see their stock options become liquid. Banks pocket commissions that can amount to colossal sums.

And where does the individual investor fit in? Usually at the end of the chain. In major US IPOs, shares are first allocated to institutional investors who participated in the book-building process. Retail investors, most of whom buy on the secondary market as soon as trading opens, at a price determined by real-time supply and demand, which can be far removed from the IPO price - in either direction.

While mechanisms exist to enable individuals to subscribe like institutions, they are typically limited to certain brokers and subject to discretionary allocation. For a European retail investor using a standard broker, the most frequent scenario remains: no access to the US IPO at the offering price, with purchase only possible after the first trade.

What Does a "1,000 Billion Dollar IPO" Mean?

Another common confusion is the blurring of lines between the amount of capital raised and the market capitalization. On the day of its debut, a company is valued by the market at the IPO price multiplied by the total number of shares outstanding. If OpenAI goes public at a valuation of 1,000 billion dollars, it means the market estimates the entire company is worth that sum, not that 1,000 billion dollars are changing hands. It is a collective and instantaneous valuation that can be raised or reduced, even within the first minutes of trading.

OpenAI could also use the occasion to issue new shares and bring in fresh cash, relying on the appetite of new investors. Suppose management hopes to raise $50bn. In this case, you might also hear of a "50 billion dollar deal." This refers to the capital raise, not the overall valuation of the company. Both figures often circulate in parallel in the press, sometimes without much distinction. Hence the importance of knowing which one you are looking at.

Is an IPO a Good Deal?

The history of major tech IPOs teaches a certain humility. Facebook had a sluggish start before becoming one of the most profitable stocks of the decade. Uber and Lyft went public with great fanfare only to spend several years trading below their offering price.

However, the AI fever has created a hyper-speculative environment for companies closely or distantly related to this ecosystem. Cerebras, which listed on the Nasdaq in mid-May, saw its share price jump from an IPO price of $185 to $367 during the first session due to a surge in demand. A few days later, it was trading at $290, meaning those who subscribed at $185 gained 57% in a few days, while those who bought at the peak are facing a 21% loss. CoreWeave, whose IPO dates back to March 2025, followed a similar trajectory (IPO price $40, peak at $187, around $101 as of May 20).

In Europe, it must be admitted that the IPO track record is somewhat mixed, for reasons we will not detail here but which relate notably to the structure of corporate financing cycles. The largest recent operation, Verisure, failed to ignite, with a share price languishing well below its 2025 IPO level. Conversely, hyper-speculation in semiconductors is also present, as evidenced by the Silex IPO, where the share price tripled in a few days in May 2026.

A New Dimension: SpaceX and OpenAI

SpaceX and OpenAI are set to take US IPOs to a whole new level. The valuations of these companies will be incredibly high. There is talk of over 1,000 billion dollars for OpenAI - equivalent to the annual GDP of Switzerland. For SpaceX, it is even more staggering. Rumors suggest a valuation of 1,800 to 2,000 billion dollars for a capital raise of $80bn. Until now, the Saudi giant Saudi Aramco dominated the rankings with a valuation of 1,700 billion dollars in 2019, but a capital raise "limited" to $25.6bn.

Unlike the Saudi firm, a star of the oil industry, the two Americans operate in a sector where prospects go "to infinity and beyond," at least on paper. And even if they are currently loss-making, they will generate unprecedented excitement. The spectacle is guaranteed and will likely spill over into the rest of the market. This is perhaps the moment to remember that a great story is not an investment thesis - bearing in mind that, these days, the market often prefers a good story over Excel spreadsheet ratios.