Leif Abraham on Public.com's SpaceX IPO surge: half of all Friday buyers chose SpaceX, 533% more than NVIDIA

soon. Let me tell you about CrowdStrike. Your business is AI. Their business is securing it. Crowd Strike secures AI and stops breaches. Our next guest is Leaf Abraham from Public. He's the co-founder, co-CEO. Here to break down what happened on Public when SpaceX went public. How you doing, Leaf? Good to see you. Beautiful background. What's up, guys? Hope you're enjoying New York City. What's up?

It's fantastic. Was was Friday crazy for you? Was the weekend crazy for you? Is today crazy for you? Is it all just like crazy in the wow this is a historic moment versus like crazy at the office like the servers are on fire? Like does that happen with you?

Yeah, I mean by now it's obviously more kind of business as usual when IPOs happen, but on Friday definitely. I mean SpaceX was the most popular IPO that we have seen on the app ever. Yeah,

by like a wide margin. And um you know to give an example of like you know of everyone who bought a stock on Friday, nearly half of people who bought a stock on Friday bought SpaceX,

right? So which is obviously quite quite crazy, right? Like now

diagram is a circle

like second most traded stock was Nvidia and SpaceX was like 533% more trading than Nvidia that day, right? So definitely, you know, the the like one of the kind of craziest IPOs that we've seen so far.

Yeah. What was the resale allocation actually like on the ground? We heard numbers like it's it's double overs subscribed, but then the number that I saw reported was like a hundred billion for retail. And that seemed like way more than what would actually go to retail because so much of it is going to be anchored by the banks and what I would not put in the retail bucket like JP Morgans's like you know client

and and and you would think so but I think we when when people talk retail they think what you and I were just thinking of like basically people who use retail investing apps like public and the like

individuals and they're making individual like self-directed you know and so don't necessarily fun like but like retail is still you know the rich guy who has a JP Morgan adviser and stuff that still counts as retail right and and like when you see

you know and I know it was first about 30% then it was like down to 20% in terms of like retail allocation of it you did still see that

you know at least you know sort of you know half don't like you you you did still see that at the end of the day when these retail allocations happen these days it still mostly goes to the good wealthy customers of the big banks and their wealth management arms first. And that's why you saw like, you know, the like retail brokerages that had some allocation, you know, ended up mostly giving people like one share and stuff. And that is because most of that 20% still went to, you know, the good long-term customer with a very large account of JP Morgan and Merill and whatnot, right? So that is still the reality. And I think the main thing there is really is that um you know the banks who are in most cases also like the ones who are underwriting the IPOs you know

they are kind of managing also their process they will say that to retail allocation etc. Most companies that go public maybe also don't really have the not saying SpaceX but like you know most companies in this city really have the perfect understanding of like the nuances in retail and I think um you know that's why you're still seeing that the the banks who are underwriting are like pushing their weight around and at the end of the day most of that still goes to you know the the wealth management customers and stuff. Can you talk a little bit about uh either the research that you're seeing folks do or maybe the research that you're enabling with public's tools specifically? I I I read a very interesting report in the Financial Times where they visualized over the next year how the lockup will actually play out. It's a very lowflat stock early on gets added to the indices and there's all these different milestones that I mean you could just say it's all priced in already. uh but I imagine that many investors will care and want to buy ahead of uh ahead of a index purchase but after a lockup ends or something like that and I'm just wondering about um how you can actually help a investor understand those dynamics. Yeah, I mean I don't have the perfect schedule in front of me right now, but first off, I think this IPO specifically that the banks lucky have done a pretty damn good job like in terms of the pop was there. It was sizable but it wasn't ridiculous necessarily, you know. Um even now on day two like the the stock clearly is holding up. Um and then the whole orchestration of the kind of multi-stage unlock of the of the float at the same time or or or the lockup at the same time where you know obviously like the whole renegotiation with the you know adding to the NASDAQ 100 and so on which then creates more buy pressure on the other side as the other ones kind of you know get unlocked and I think that orchestration we'll see how it all plays out as it kind of really unwinds but it's clearly very well thought out and if you would judge the performance of that you know orchestration so far throughout this IPO and stuff. I mean

I would argue compared to many other IPOs has been very well executed, right? So my my hunch is that a lot of smart people have done some some some good work there that I don't know if you can really play it like that because you know

there's surely smarter people than you and me that have models that have all figured that out.

So there's clearly continues to be more retail demand than allocation for these blockbuster IPOs. Uh on one hand, Elon has benefited tremendously from like the power of retail, right? It helps to have a bunch of people invest at like you know you know uh uh low twodigit you know billions you know with Tesla and sort of ride that up right. Um, but I feel like one of the challenges for retail to actually get meaningful allocation is just the lack of like reliability and the flipping risk associated with allocating to retail. Uh I'm sure Elon in a perfect world would love to say like yeah we're going to give half of the IPO to uh to uh retail but then uh there's there's going to be that risk that people are like you know not as not as reliable as the big you know institutions and things like that or or certain even clients of the private banks that uh want to make sure they're in the next IPO. So how do you think that that gets solved? Is there a world in the future where like retail has like a true lock up like they they cannot sell versus just saying like hey please don't sell.

What do you think happens? Yeah, I mean so as a broker you you know what what what most brokers do and also what the companies who who IPO kind of ask for is just like what's your flipping policy and is that in most cases if you flip within a certain time frame you basically get restricted from future IPOs and that's like one of the kind of forcing functions from a pure security law perspective you can't create these this notion where you know once this stock is common stock publicly trading like every you know every investor has to be treated equally you can't then suddenly be like or I like I don't trust you retail investor so you can't sell but the other institution I sold it to they they can you know like those things can't like can't really happen um but I think from the retail investor perspect it really depends on obviously like the the the at the end the platform in most cases right so in our space I would also divide it up is like trading platforms where they have their focus right trading platforms or like investing platforms so like trading is basically like your chart based first product technical analysis very heavy options and future and so on. And in that world, you do actually have a flipping culture. Like there's Reddits about it. There's like, you know, uh, like Telegram groups, etc. about, you know, where basically people like try to find multiple access points to an IPO just for the matter of like flipping it. Um, but I would say that that is a small sliver of the retail market. Most people are actually more buying and holding. what we've seen with IPOs in our history um our like net share retention on IPOs is like 125% roughly you know which basically also means that people actually add to their positions afterwards

and so they get shares allocated they didn't get everything that they wanted in obviously you know so far always and then uh but then they add to it as it starts trading in the public markets and I think most cases what you're seeing because like normal retail investors like the way we're not traders we're people who like build up portfolios for the livelihood and stuff like they are mostly people that are cold stocks, right? That's what you've seen also with like the dieh hard Tesla crew like in the past. You know, these people were people who were tweeting out pictures of, you know, their monthly DCA, their monthly dollar cost average into their Tesla stock because they got a new paycheck, you know, and I think that is the much more normal behavior, I think, than this jewel flipping thing. So, I think it's yes, it exists, but I think it's a little bit maybe the fear is a little overstated. I would argue

there were a lot of people that were upset about SpaceX's inclusion in indices. They maybe they don't like Elon for political reasons. Maybe they don't like the stock because of the revenue multiple. There's a variety of of gripes that people have. But uh I saw Jason Calakanis fire back say hey you can create a synthetic uh index that you know you want to own the S&P 499 uh just go do that. And it seemed a little complicated. How complicated is it actually to do that today if you're genuinely so bearish on SpaceX that it can't touch your portfolio? Because you could go short or you could just buy everything else in equal proportion, but then there's reweing that happens and it's sort of complicated. But where are we from someone being able to just do that with a prompt or a click these days? Well, I love the question because I can perfectly now do a put an ad in here. Um, so the simplest way is we just go to public.com, sign up, and there's something called

public.com. There's

something called direct indexing. There you go.

There you go.

Fantastic. So, and there's direct indexing, which basically means you can buy the S&P, you can customize it. You can be, you know what, I want to have the S&P 500 without this and that stock. You can have rebalancing built in even Texas harvesting built in which means you can actually you know save some money just on you know take the the just on taxes there as well

to selling the losers you know and um rewaiting over time

and so um that

is super easy now at least on public

um and is is something that that a lot of people do. I think the main thing that really was I think what a lot of people got upset with was that um people have trust in these indices because of the rigid frameworks that they have.

Yep. Have to be profitable for a certain amount of quarters have to be a certain size. Yeah, totally makes sense. I understand the critique.

And so and so and so the minute

it was basically like oh now we make an exemption suddenly. I think a lot of people were just getting upset with that that basically been like hey what the [ __ ] like I put my my life savings into this yeah

because of these frameworks and I have basically like you know agreed to them or whatever I believe in however you structure it and I think that was mostly what kind of came

yeah and also like when I think about the S&P 500 I think most people mentally think okay I'm going to have 02% in every company but of course it's cap weighted and when you see a two trillion behemoth come into the index you're like well that could be like 3% % of my portfolio, maybe 5% of my portfolio if it runs and and I don't want that index exposure necessarily. Of course, everyone has different risk tolerances, different preferences, but good to know that there's an alternative out there. Jordy, anything else?

I was going to say if if you have 30 more seconds to answer, how do you think the SpaceX IPO impacts how, you know, bankers and companies are thinking about, you know, potentially other IPOs this year? Obviously, retail's quite strong. They want exposure and uh it's at a level that is pretty unprecedented

and also the market I felt like there was one narrative was like if SpaceX wins everyone else loses because there's going to be so much rotation out of everything else but the market's performed well today and stuff and that was that's not what's happened at all.

Yeah. I don't know. I would argue there's so much money in the world that it's totally fine. kind of thing when you if you look at the big institutions that put multi-billion dollar checks into the SpaceX, a lot none of those were even like existing investors and so on that kind of double down their positions and stuff like

you know and so I I I wouldn't necessarily think of that argument. Um I do think that um because this IPO at least so far has been really executed quite well

that it makes everyone very confident on the next ones.

Yeah. And so, you know, if I would be now anthropic or open air or something, I I would I would like look at this one now and be like,

"Okay, fantastic. The market is ready and the bankers seem to be ready as well."

Um, so I would say this I like I would argue it's a it's a very good sign of general confidence and so

white pill on a suit day.

There you go.

What else? Sorry, I cut you off.

Whatever.

Thank you so much on the show. Always great to see you.