Dear Reader,
This is Dylan Jovine with Behind the Markets.
Happy Friday. Today is Friday, June 12th. TGIF.
It is also IPO day for SpaceX.
It's kind of like the moon landing for IPOs.
Kind of a big deal.
Yesterday I walked you through the history of how IPOs trade after listing and when the best time to buy is if you didn't get any shares.
Today I want to give you a warning a lot of people don't know about.
Brokerage Firms Can Punish You for Flipping SpaceX Too Quickly
SpaceX is raising $75 billion, selling stock at $135 a share.
30% of that is allocated to retail investors.
That's actually a signal — Elon knows where his bread is buttered.
But if you got shares and your plan is to flip them quickly, you need to understand the rules first.
Because the penalties are real.
Fidelity — You must hold for at least 16 days. Sell before that and you get a six-month ban from buying IPOs. Second violation: one year. Third violation: permanent ban.
SoFi — 30-day anti-flipping policy. Similar penalties. They also charge you an extra $50 to process the transaction if you sell within the first 120 days.
Robinhood — 30 days. First violation gets you a 60-day ban from future IPOs.
E-Trade — 30 days.
Charles Schwab — No anti-flipping policy for IPOs.
Why Do These Rules Exist?
Remember what we talked about earlier this week.
This is one big, legal, concerted manipulation to manage the release of shares into the market.
Goldman Sachs and Morgan Stanley are running the book.
They have allocated two-thirds of the shares to institutions and one-third to retail.
If all the retail buyers flip immediately, you get a flood of stock hitting the market at the same time, the price destabilizes, and that is egg on the face of everyone who ran this deal.
These guys are going for a perfect landing.
An Olympic-level backflip with a 10 from every judge.
They don't want flippers crashing the stock on day one.
Hence the penalties.
A Word on the IPO Bans
There are a lot of good deals coming in the next six months.
OpenAI. Anthropic. Others.
A six-month ban from IPO participation is a real cost if you sell too early.
Know the rules at your brokerage before you do anything.
Good luck today. Happy hunting.
I hope you have a little bit of fun with it — because you're allowed to.
Have a wonderful weekend.
I'll see you Monday.
“The Buck Stops Here,”
Found this helpful? Share it with others.
Written by Dylan Jovine