Goldman Sachs (GS 0.87%) stock closed Wednesday trading up 5.8% -- and within a few bucks of $1.000 a share! -- after The Wall Street Journal reported that Goldman will be named the lead underwriter on SpaceX's upcoming mega-IPO in June.
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What the SpaceX IPO means for Goldman Sachs
Even for a bank as famous as Goldman Sachs, this is quite a feather in the cap -- a PR coup, and a finger in the eye of archrival Morgan Stanley (MS 1.43%) -- which will also be a lead underwriter, albeit it will occupy a less prestigious place on the right side of SpaceX's IPO prospectus.
Prestige value aside, it's also going to be richly rewarding for Goldman. According to a MarketWatch report earlier this week, the SpaceX IPO could be "the biggest underwriting payday ever for an IPO in terms of the total dollar amount."
NYSE: GS
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What the SpaceX IPO means for Goldman Sachs... in dollars and cents
Underwriters often receive fees for conducting IPOs ranging from 4% to 7% of the total monies raised -- although the bigger the IPO, the smaller the fee usually is as a percentage. Historically, the very biggest IPOs have tended to yield percentages closer to 1% to 2%. Still, with the $80 billion that SpaceX intends to raise (giving the company a $2 trillion valuation, even a 1% fee would yield $800 million, and a 2% fee, twice that.
Granted, Goldman Sachs won't get the whole fee. With 20 other investment banks participating, it will have to be share and share alike. Still, as the lead underwriter, a sizable portion of the fee will go to Goldman.
Combine that with top billing on the prospectus, and Goldman investors have reason to cheer today.
