Explainer: From filing to first trade: Inside the US IPO process

• Companies can file confidentially with the SEC, submitting initial drafts privately before public disclosure via S-1 (U.S. companies) or F-1 (foreign issuers) registration statements
• The roadshow phase allows executives and underwriters to pitch investors and gauge demand, with companies able to adjust offering size up or down based on investor interest
• Company insiders face lock-up periods of 90 to 180 days post-IPO that restrict share sales, while underwriters may exercise 'greenshoe' options to sell additional shares if demand is strong

Summary: Understanding the U.S. IPO Process

Reuters provides a comprehensive overview of the U.S. initial public offering process, triggered by reports that SpaceX has confidentially filed for what could be a record-breaking listing. The article outlines the multi-step journey from filing to market debut.

Timeline and Key Stages:

The IPO process typically takes three to six months, depending on regulatory review and market conditions. The U.S. Securities and Exchange Commission (SEC) permits confidential filings, allowing companies to keep sensitive information private initially.

Initial Filing Phase:

Companies hire underwriter banks to manage the process, gauge demand, and determine offering size. They enter a quiet period with restricted public communications. High-profile issuers typically file confidentially through an S-1 form (U.S. companies) or F-1 (foreign issuers), which includes a prospectus detailing business operations, risk factors, and major stakeholders.

Marketing and Roadshow:

Once offering size is determined, companies file amended statements (S-1/A or F-1/A) disclosing share numbers. The raise amount equals shares multiplied by price. Company executives conduct roadshows to pitch investors. Based on demand, issuers may adjust share quantities in subsequent filings.

Pricing and Debut:

Underwriters finalize pricing after closing books and allocate shares to investors. They may exercise the "greenshoe option" to sell additional shares. Some offerings include cornerstone investors—large institutional buyers committing to significant purchases.

Post-IPO:

Company insiders face lock-up periods of 90 to 180 days, restricting share sales. Market watchers monitor stock performance beyond just the first-day trading.

The explainer provides essential context as major IPOs, including SpaceX's potential listing, prepare to test market depth despite volatility.