Retail investors may soon have a prime gateway to the most anticipated initial public offering in history, as Morgan Stanley’s ETrade platform emerges as the frontrunner to handle SpaceX’s direct-to-consumer share sales.

In a strategic move that could sideline major competitors, the rocket maker is in advanced discussions to grant ETrade a leading role in distributing shares to everyday U.S. investors for its highly anticipated debut later this year. The development signals a potential shake-up in how marquee listings are allocated, with two of Wall Street’s biggest brokerage names—Robinhood and SoFi—now facing the possibility of being excluded from the deal entirely.

• E*Trade is negotiating to become the primary retail distribution hub for SpaceX’s IPO, leveraging its affiliation with lead underwriter Morgan Stanley.

• Robinhood and SoFi, despite actively pitching for participation, risk being cut out of the landmark offering in an unusual departure from their involvement in recent high-profile listings.

• The move underscores a strategic push to concentrate retail share allocations through underwriter-aligned platforms, potentially reshaping access for smaller investors in blockbuster debuts.

According to two people familiar with the private discussions, the talks position E*Trade at the center of a retail allocation strategy that could funnel the bulk of shares set aside for U.S. individual investors through its own platform. The arrangement would capitalize on Morgan Stanley’s role as a lead underwriter for the SpaceX IPO, creating a direct pipeline that may leave rival brokerages on the sidelines. Robinhood and SoFi, which have become go-to venues for retail participation in recent years, have both lobbied for roles in the deal. Yet SpaceX is now considering excluding them altogether—a notable pivot given that both platforms were prominent distributors in recent blockbuster offerings, including Arm Holdings’ $55 billion IPO and Instacart’s $9.9 billion debut in 2023.

The potential exclusion highlights a broader realignment in how retail demand is managed during mega-IPOs. Traditionally, underwriters have channeled small-investor allocations through a mix of their own retail arms and third-party brokerage platforms. By leaning heavily on E*Trade, SpaceX and its lead underwriters could tighten control over the distribution process, prioritizing internal infrastructure over external competitors. While Robinhood and SoFi remain in discussions for a possible reduced role, the current trajectory suggests they may be largely cut out of what is shaping up to be the largest IPO in history.