“The ick”, a term popularised by Gen-Z daters, refers to the loss of romantic interest after a trifling but embarrassing behaviour by a crush. Admirers of American high finance may be feeling it.

Ahead of the initial public offering (IPO) of SpaceX, scheduled for June 12, high finance looks desperate trying to woo Elon Musk, the rocketry firm’s boss and the world’s first soon-to-be trillionaire. Fidelity, an asset manager, has lowered its minimum account balance for small investors to participate in the listing from $US100,000-500,000 to $US2000. Nasdaq and FTSE Russell will fast-track SpaceX into their popular stockmarket indices.

Few people are abasing themselves more than America’s investment bankers. Decorative spacecraft and banners fill the lobbies of Goldman Sachs and Morgan Stanley. The spire of Bank of America’s midtown headquarters has been lit up in the image of a rocket in lift-off. The boss of JPMorgan Chase, who once feuded with SpaceX’s hot-headed CEO, has hosted him for a chummy interview in front of wealthy clients.

If that feels icky, what the bankers are telling investors about SpaceX’s business is cringe. Goldman Sachs is said to expect revenue from SpaceX’s xAI division, today an also-ran in the artificial-intelligence race, to surge from $US3 billion in 2025 to $US322 billion in 2030.

Morgan Stanley apparently thinks that by 2040 SpaceX could be raking in $US3.4 trillion in sales and $US2.7 trillion in operating profit (before depreciation and amortisation), respectively up from $US19 billion and $US7 billion last year.

Sycophancy seems a small price to pay for fat fees. SpaceX reportedly aims to offer advisers perhaps 0.75 per cent of the deal’s proceeds. If it sells $US75 billion in stock at a valuation of $US1.8 trillion, this will net its bookrunners over $US500 million. That is equal to more than 20 per cent of all such proceeds American banks earned last year.

Anthropic and OpenAI, the two leading AI labs which have just filed paperwork for similarly sized listings, can expect similar flattery.

The bankers’ fees are a pittance, though, compared with the size of the deals. Giant listings generally command lower fees than the long-term average of 7 per cent for all IPOs. Still, anything less than 1 per cent is puny. When Goldman Sachs agreed to a 0.75 per cent fee for relisting General Motors in 2010, this was seen as a favour to the American government, which was ridding itself of the carmaker after a bail-out.

Worse, SpaceX has neutered its bankers by reserving up to 30 per cent of the offering for retail investors and setting its own take-it-or-leave-it price of $US135 per share. This reduces the advisers’ discretion in handing out shares and turns them from power-brokers to utility providers. Who wants to date one of those?

This is quite a change from past IPO waves, when bankers were the masters of the universe. This let them flagrantly underprice IPOs, allowing their hand-picked buyers to benefit from the first-day pop in the value of the shares. The average pop since 1980 has been 19 per cent. In 1999, at the height of the last tech boom comparable to today’s AI-fuelled one, it reached a record 71 per cent. Issuers had no choice but to lump it.

Despite the Chinese walls between the banks’ rainmakers and analysts, a cheap IPO was often on Wall Street seen as a way for them to buy bullish coverage (and for issuers’ executives to secure early access to other underpriced listings).

The investment banks maintain their tight grip on IPOs. Alternatives such as selling shares directly to buyers without an underwriter have proved messy. After Coinbase, a cryptocurrency exchange, went public that way in 2021, its shares traded choppily and no similar large “direct listings” have occurred since then.

But, as their treatment of SpaceX shows, today it is increasingly Wall Street having to lump it. Companies stay private far longer than they once did, denying banks advisory fees and gatekeeping power. Whizzy trading firms chew away at their market-making revenues. Private-credit behemoths eat into business lending.

If SpaceX’s debut flops — one big research firm’s analysis of SpaceX’s discounted future cashflows arrives at half its target valuation — the investment banks will face scrutiny, despite their limited control of the process.

Yet even a success will leave them something to think about — and not just because of the icky monuments to Anthropic and OpenAI that will soon loom in lobbies like the Colossus of Rhodes. They will have surrendered control and shown themselves to be less important than they thought. “The ick” is putting it mildly.