What Goldman’s lead role in SpaceX’s IPO means for investors

Goldman Sachs is bullish after taking a key role in SpaceX's historic IPO. Elon Musk's rocket company has chosen the bank for its record-breaking initial public offering, according to a prospectus filed Wednesday. The deal is a financial windfall that will see Goldman's deal-making division potentially gain leading roles in other major IPOs expected in the near future, including OpenAI and Anthropic. "This is a big win for Goldman Sachs and proof positive that Investment Club shares rank first among all the majors," Jim Cramer said. Goldman's shares rose nearly 6% on Wednesday. SpaceX's IPO is expected to be the largest ever, following a recent acquisition that valued the company at $1.25 trillion. In the highly coveted "leader left" position, Goldman will likely lead final share allocation, pricing and valuation, and receive the largest share of related fees, according to the IPO prospectus. Goldman Sachs declined CNBC's request for comment. "This will be a huge revenue generator," said Jay Ritter, a University of Florida professor known as "Mr. IPO" for his extensive industry research, adding that Goldman will share revenues with other syndicate members: Morgan Stanley, Bank of America, Citigroup and JPMorgan. A deal of this size could be difficult to execute, according to Matt Kennedy, senior IPO strategist at Renaissance Capital. "Pricing IPOs is often more art than science. The relationships the bank has, the reputation of the equity research team, the ability to execute the IPO with institutions, the ability to price the deal appropriately and handle any post-IPO trading," he said, adding: "This can be difficult to do." It also appears to be very lucrative. SpaceX's IPO is expected to be at least twice the size of Alibaba's $25 billion IPO in 2014, sources told CNBC's Leslie Picker. The Chinese e-commerce company paid $300.4 million as commitment commission to banks; This amounts to roughly 1.2% of the total deal. Other major IPOs, such as Facebook major Meta Platforms in 2012 and Uber in 2019, also charged just over 1%. Applying the same math, SpaceX's IPO could generate more than $500 million in underwriting fees to be split among participating banks. For reference, Goldman reported total equity underwriting revenue of $535 million last quarter. GS YTD Mountain Goldman Sachs (GS) year-to-date performance These types of deals are central to our investment thesis at Goldman. We initiated a position in January 2025 in hopes of a rebound in mergers and acquisitions and IPOs during President Donald Trump's second term. So far, Goldman's deal-making style has improved. Investment banking fees rose 48% last quarter to $2.84 billion; That's about $340 million more than analysts expected. But some deal activity stalled at the beginning of the year due to volatility caused by the US-Iran war. But CEO David Solomon said during the company's April earnings call that "while market conditions may hinder the implementation of IPOs, activity levels will recover once conditions stabilize." This could include two more massive IPOs. The Wall Street Journal reported Wednesday that OpenAI is preparing to file a draft of its IPO prospectus confidentially on Friday. Goldman and Morgan Stanley are reportedly working with the AI startup, sources familiar tell CNBC. In March, OpenAI announced a record-breaking $122 billion funding round with a post-money valuation of $852 billion. Anthropic raised $30 billion in February, giving Claude's creator a post-money valuation of $380 billion. Echoing Jim's earlier words, Kennedy said SpaceX could give Goldman an advantage over rival investment banks. “If they can pull this off, it will definitely help their reputation, especially if they are bidding for OpenAI and Anthropic deals.” (Jim Cramer's Charitable Trust is long GS and META. See here for a full list of stocks.) When you subscribe to the CNBC Investing Club with Jim Cramer, you will receive a trade alert before Jim makes a trade. Jim waits 45 minutes after sending a trading alert before buying or selling a stock in his charitable foundation's portfolio. If Jim talked about a stock on CNBC TV, he waits 72 hours after issuing the trading alert before executing the trade. THE ABOVE INVESTMENT CLUB INFORMATION IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY, TOGETHER WITH THE DISCLAIMERS. NO CIVIL OBLIGATIONS OR DUTIES EXIST OR SHALL BE RESULTING FROM YOUR RECEIVING ANY INFORMATION PROVIDED IN CONNECTION WITH THE INVESTMENT CLUB. NO SPECIFIC RESULT OR PROFIT CAN BE GUARANTEED.