Morgan Stanley E*Trade in Talks to Lead SpaceX IPO Share Sale to Small Investors - Business Remarks

Morgan Stanley's E*Trade is in talks with SpaceX to take the lead in selling the rocket maker's shares to everyday U.S. investors in its highly anticipated IPO later this year, giving it an edge over rival brokerages Robinhood Markets and SoFi, according to two people familiar with the matter.

The SpaceX IPO is shaping up to be the biggest in history, but two of Wall Street's biggest brokerages may not get a piece of it. Robinhood and SoFi have both pitched for roles on the deal but SpaceX is considering cutting them out altogether, the people said, asking not to be identified because the talks are private. It's an unusual omission for platforms that have become fixtures in marquee listings, including the $55 billion IPO for Arm Holdings and the $9.9 billion debut of Instacart in 2023, even as underwriters are expected to funnel retail demand through their own channels.

Morgan Stanley, which is a lead underwriter on the deal, is expected to route a significant portion of shares set aside for smaller-ticket U.S. retail investors through its own brokerage platform E*Trade, potentially crowding out rival brokerage firms Robinhood and SoFi, according to the two people familiar with the matter. The two firms, which aren't tied to any of the banks underwriting the deal, remain in discussions to handle some of the sales, both people said. All three platforms primarily handle smaller-ticket retail orders.

The sources, who requested anonymity as the discussions are confidential, cautioned that the plans are not final and could change as SpaceX nears its IPO in a few months.

Mutual fund company Fidelity is also vying for a chance to distribute some of the shares on its trading platform, one of the people said.

Robinhood, Morgan Stanley, SoFi and Fidelity declined to comment. SpaceX did not respond to a request for comment.