Want to 'flip' SpaceX's stock on the day of the IPO? Be prepared to pay the price.

By Gordon Gottsegen

Charles Schwab won't penalize traders for selling SpaceX shares on the first day of trading, but there's a $100,000 catch

Elon Musk wanted to reserve a large portion of IPO shares for retail investors.

On top of being the largest initial public offering in history, Friday's hotly anticipated SpaceX IPO is unique in another way. The company is reserving up to 30% of its IPO shares for retail investors.

That means more retail investors than usual will get access to SpaceX (SPCX) shares as soon as they become publicly available, with a more typical retail allocation rarely exceeding 10%. To achieve the 30% allocation to individuals, SpaceX is providing IPO shares through five major retail brokerages: Fidelity, E-Trade, Charles Schwab, Robinhood and SoFi.

However, there's an important caveat if you're a retail investor and want to trade SpaceX shares. Many brokerages have policies in place to discourage IPO "flipping" - the act of selling IPO shares soon after they are listed. That means if you're hoping to trade shares of SpaceX purchased at the IPO price as soon as you get them, you may be penalized.

Only Charles Schwab won't penalize traders for selling on the first day, but Schwab clients have to be pretty big players to get any shares.

Also read: Elon Musk needs the cultish support of everyday investors to pull off the massive SpaceX IPO

Each brokerage has its own policy on IPO flipping. Following is what you should know.

SoFi

SoFi (SOFI) is offering IPO shares of SpaceX to its Active Invest members. These clients aren't prevented from selling their IPO shares; however, if they sell within 30 days of the IPO, they will be flagged as flippers and may be prevented from securing hares in future IPOs.

The first time a member violates the 30-day flipping policy, they're prevented from buying IPO shares for 180 days. On the second violation, they're prevented from buying IPO shares for 365 days. And the third time, they're permanently banned from buying IPO shares.

SoFi customers may also see a $50 fee if they sell their SpaceX IPO shares before the stock's 120th day of trading, and an additional $5 fee for each subsequent sale of IPO shares after those 120 days.

Charles Schwab

Of the five retail brokerages participating in the SpaceX IPO, Charles Schwab (SCHW) is the only one that doesn't have flipping restrictions, meaning that investors can sell their IPO shares immediately.

However, Schwab requires a $100,000 account minimum to participate in IPOs.

Robinhood

Ahead of the IPO, Robinhood (HOOD) announced that its broker-dealer, Robinhood Securities, had been approved as an IPO underwriter - meaning it could play a bigger role in future IPOs.

Robinhood is also providing customers with SpaceX IPO shares through its IPO Access feature. This feature has a policy on flipping, but, unlike SoFi, it doesn't assess any fees. Robinhood customers who sell IPO shares within 30 days will be restricted from participating in future IPOs for a 60-day span.

E-Trade

Morgan Stanley's (MS) E-Trade will offer SpaceX IPO shares through its New Issue Center, which requires customers to fill out an investor-profile questionnaire and submit a conditional offer to buy. If customers are selected to buy those shares and then sell them within 30 days, they will be flagged as a flipper and may lose the ability to access IPO shares for the next 30 days.

Fidelity

Fidelity customers are eligible to request SpaceX IPO shares if they have at least $2,000 in their brokerage accounts.

If customers sell those SpaceX shares within 15 days of the IPO, they will be flagged as flippers. The first time this happens, an investor is blocked from future IPOs for six months. The second time, they will be blocked for a year. The third time, their Social Security number will be flagged and they will be permanently banned from IPO access.

-Gordon Gottsegen

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06-11-26 0851ET