E*TRADE Is in Talks With SpaceX to Take the Lead in Its Upcoming IPO

Key Points
If E*TRADE does handle the retail portion of the SpaceX IPO, clients of some other popular retail brokers may be disappointed.
E*TRADE is owned by Morgan Stanley, one of the lead underwriters for the IPO.
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SpaceX finally filed plans for what's expected to be the largest initial public offering (IPO) in history, doing so in a confidential Securities and Exchange Commission (SEC) document on Wednesday, April 1.
Elon Musk's satellite company is one of the most awaited IPO stocks in recent memory because the firm is reportedly looking to raise an astounding $75 billion, or more than double the amount raised by the current IPO record holder, at a valuation of $1.75 trillion.
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Speaking of big numbers, SpaceX, which is expected to list on the Nasdaq stock exchange, will reportedly set aside up to 30% of the shares offered to the public for retail investors. That's way more than the typical 90% professional/10% retail split, implying big business for the broker running the retail slice of the SpaceX offering. Reportedly and to the surprise of some market observers, it's going to be E*TRADE from Morgan Stanley (NYSE: MS) managing that tranche, not Robinhood Markets (NASDAQ: HOOD) or SoFi Technologies.
Theories abound on E*TRADE's role
Given the expected popularity of SpaceX stock among retail investors, it's not surprising the E*TRADE talk is stirring up a lot of chatter.
For those who love a good conspiracy theory, Morgan Stanley is one of 21 banks participating in the institutional side of the SpaceX IPO. However, Musk's company hasn't said that's why the retail portion is being tilted to E*TRADE. SpaceX hasn't even confirmed that's happening, and companies aren't legally obligated to tell investors why one bank is chosen over another to be involved in an IPO.
There are some clues as to why SpaceX may be opting for E*TRADE over, say, Robinhood, and it boils down to simple math. As of last June, the average account size on Robinhood was $10,528. That's more than quadruple the $2,533 average seen in 2018 but still dwarfed by the $69,000 average on E*TRADE when Morgan Stanley bought the broker six years ago.
It's not a stretch to assume that number is higher today simply because the S&P 500 posted gains over that period. In other words, SpaceX gains access to a more affluent clientele with E*TRADE than it would with some retail-centric digital brokers.
Age might matter
Robinhood's client base is young, which might be a consideration for SpaceX. As of March 2025, the average Robinhood customer was 35 years old, with a significant share of customers younger than 43. Many of the firm's clients are 27 or younger.
On the other hand, E*TRADE's clients are more "seasoned." By some estimates, typical E*TRADE account holders are older millennials and Gen Xers, with decent penetration among baby boomers.
To reiterate, SpaceX hasn't even confirmed that it's tapping E*TRADE for the retail slice of the IPO. Still, the broker's demographics may be appealing to Musk's company for a simple reason: Experienced investors are less likely to dump the stock amid the first rally.
With age comes experience. It's well documented that age and affluence affect investor behavior, and these factors may be considerations for SpaceX. After all, Musk likely wants a devoted investor base for SpaceX.
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool recommends Nasdaq. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.