The author is a Reuters Breakingviews columnist. The opinions expressed are his own. Corrects to say “Cerebras” not “Cerebas” in the chart.

By Stephen Gandel

NEW YORK, June 11 (Reuters Breakingviews) - When the goal is to colonize Mars, even a quarter of a trillion dollars might end up sounding tame. Bankers working on SpaceX’s initial public offering have received some $250 billion of orders from investors, more than 3 times the $75 billion of shares on offer, Reuters reported. Such talk is typical in the run-up to a big listing, and Elon Musk’s rockets-to-chatbots company might be the most hyped in recent history. What’s surprising is that the claimed imbalance pales next to other high-profile deals.

IPO watchers often sneer at pre-launch reports of a market debut's oversubscription rate, or the multiple of bids to buy shares available. Order books are never fully disclosed, making such claims hard to scrutinize. Besides, excess requests don’t automatically convert into frenzied buying. Instead, the more trusted predictor of a new stock’s opening performance is usually where the offering price ends up compared to an initially proposed range. In this case, though, SpaceX went with a single, fixed price before even hitting the road to convince investors, leaving supply-demand mismatch as the only gauge.

The often-overlooked metric nevertheless may have some predictive power. To tease it out, sift through pre-debut news reports proffering oversubscription multiples and compare them to first-day trading. Crypto company Circle's CRCL.N IPO was 25 times oversubscribed, Bloomberg reported, and the stock jumped 168% on its opening day. Red-hot AI chipmaker Cerebras CBRS.O experienced a 20-times imbalance, according to Jim Neesen, managing partner of consultancy Connor Group, before the share price leapt 68%.

Across 15 notable listings, Breakingviews found that a higher oversubscription rate does tend to precede higher first-day gains. The magic number is around 5 times: cross that threshold, and the price rises. SpaceX sits below the line, which in this crude dataset suggests disappointing performance.

Musk’s orbital empire, however, is following an unusual trajectory on the way to a targeted $1.75 trillion equity valuation, making comparisons harder. Money manager BlackRock BLK.N alone has asked for $5 billion of SpaceX stock, the Wall Street Journal reported, while retail investors are being invited to take up to 30% of shares for sale. Such everyday punters have put in more than $70 billion of orders, according to Bloomberg, which would roughly track with an overall oversubscription multiple north of three times. For such a lofty offering, such claims are oddly down to earth.

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CONTEXT NEWS

SpaceX is expected to begin its public trading debut on June 12. The company is ​aiming to raise $75 billion in an initial public offering valuing it at $1.75 trillion. The company's underwriters have received more than $250 billion in orders for the IPO, Reuters reported, indicating the offering will be nearly 4 times oversubscribed.