SpaceX is moving closer to what could become the largest IPO on record, and early indications suggest Robinhood and SoFi may not play the retail role many had expected. According to Reuters, Morgan Stanley’s E*Trade is in talks to lead the sale of SpaceX shares to smaller US investors, while Fidelity is also seeking a role in retail distribution. Robinhood and SoFi remain in discussions, but SpaceX is considering excluding them from the offering. That shift matters because SpaceX is reportedly weighing an unusually large retail allocation. Reuters said the company may set aside as much as 30% of the IPO for retail investors, far above the normal 5% to 10% range seen in many large listings. A major share of that allocation is expected to go to high-net-worth and private wealth clients served by underwriting banks, while the remaining self-directed retail slice is now the focus of competition among brokerages. The decision appears tied to deal structure rather than customer demand alone. Morgan Stanley is a lead underwriter on the SpaceX IPO, and ETrade is part of Morgan Stanley’s brokerage platform. That gives ETrade a direct advantage because underwriters often route retail demand through their own channels. Reuters reported that this in-house structure could crowd out Robinhood and SoFi, even though both firms have become regular participants in high-profile IPOs. Why E*Trade Has the Inside Track ETrade’s position comes from its link to Morgan Stanley, which acquired the platform in 2020. Reuters reported that Morgan Stanley is expected to direct a large portion of smaller-ticket US retail orders through ETrade, following a model it has used in earlier deals. That arrangement would allow the lead underwriter to keep more of the retail flow within its own network. Fidelity also has an established retail base and remains in talks for a distribution role, according to Reuters. That creates added pressure on Robinhood and SoFi, which are not tied to the underwriting banks. While those firms continue to seek a place in the offering, their position appears weaker because SpaceX is prioritizing brokers connected to the deal’s core banking group. This structure helps explain why Robinhood stock came under pressure after the report. If Robinhood loses access to a retail role in a listing of this size, it would miss a visible market event that could have driven trading activity and customer engagement. SoFi faces the same challenge, as both firms had sought a place in one of the most anticipated public offerings in years. SpaceX IPO Scale Raises the Stakes The retail battle is happening against the backdrop of a very large proposed listing. Reports indicate that SpaceX is targeting a $75 billion raise at a valuation of about $1.75 trillion. If completed on those terms, the listing would exceed Saudi Aramco’s $29 billion IPO and rank among the largest public offerings in financial history. Such a valuation would also place SpaceX among the most valuable public companies immediately after listing. That makes retail access more important than usual because brokerage participation in a deal of this size can influence client growth, order flow, and brand visibility. SpaceX is also expected to attract strong demand due to Elon Musk’s large retail following and the company’s profile across the launch, satellite, and defense markets. The company is reportedly targeting a listing later this year, with some reports pointing to a possible filing in April and a June debut window. Reuters noted that the retail allocation plans are not final and could still change, so Robinhood and SoFi have not been formally excluded. Nasdaq Rule Change Could Add More Demand Another factor supporting interest in the IPO is a new Nasdaq rule that could fast-track very large listings into the Nasdaq 100. Under the change, companies with market capitalizations ranking among the top 40 Nasdaq-100 members can be added within 15 trading days of listing. That is much faster than the earlier timeline of about three months. For SpaceX, that matters because index inclusion can trigger forced buying by index funds and ETFs that track the Nasdaq-100. If SpaceX lists near the reported $1.75 trillion valuation, it would likely qualify quickly under the new rule. That prospect adds another reason why the brokerage roles are attracting close attention. Robinhood and SoFi have not been formally ruled out, and Reuters said plans are not final. Both firms remain in talks with SpaceX and could still receive part of the retail sale. Even so, the current direction suggests that underwriter-linked channels may dominate the smaller-ticket allocation.
