When a significant initial public offering occurs, as will happen this month with SpaceX, Wall Street’s focus typically is on the fees investment banks will garner from leading such sales.
As InvestmentNews reported earlier today, mega-IPOs are back and advisors are preparing their clients for takeoff.
The projected June 12 IPO for SpaceX is potentially the largest in history with the company looking to sell shares in the neighborhood of $80 billion. The lead underwriters will be Goldman Sachs and Morgan Stanley.
But the latter’s ability to touch clients’ portfolios in a variety of ways is likely to benefit Morgan Stanley down the road, beyond the immediate flush of fees generated by the IPO, according to one analyst.
Morgan Stanley’s stock plan administration business, along with lucrative securities lending, will be accretive to the firm, according to Steven Chubak, an analyst with Wolfe Research who covers the broad wealth management and financial advice industry.
“We continue to see meaningful upside to street estimates for Morgan Stanley, with the anticipated SpaceX IPO reinforcing the benefits of [the firm’s] integrated model, highlighting multiple revenue touchpoints,” Chubak wrote Monday morning in a research note.
“As a lead bookrunner, Morgan Stanley will earn a large underwriting fee – but beyond that, we expect [the firm] to benefit from its role as stock plan administrator, converting SpaceX employees into Morgan Stanley advisory clients,” he wrote, adding that the firm does not disclose details about specific workplace clients.
Press reports, however, indicate Morgan Stanley has offered SpaceX employees stock-based loans, suggesting a preexisting relationship with Shareworks, according to Chubak.
In 2019, Morgan Stanley acquired the Canadian stock plan business Solium Capital and rebranded it as Shareworks. It then acquired ETrade in 2020, increasing the number of employees with stock plans it works with.
Morgan Stanley Shareworks offers software and services that help private and public companies simplify share plan management, provide disclosures and support tax and legal compliance.
Chubak noted that an additional benefit to Morgan Stanley could be an increase in securities lending fees given potentially high short interest and limited supply of SpaceX shares to be lent out post-IPO.
“Lastly, while SpaceX is drawing more investor attention given the sheer size of the deal and significant press coverage, we expect Morgan Stanley to benefit from multiple revenue touchpoints in future IPOs,” the analyst wrote.
Proposition 40 wealth tax could raise $30 billion, not $100 billion, as departures erode the base and voters remain split
Jump is piping FMG marketing content into post-meeting workflows as Zocks opens its platform to more than 32,000 LPL financial advisors
Trevor Uhls pleaded guilty to one count of wire fraud and one count of money laundering.
Osaic and LPL Financial routinely square off in recruiting advisors from other firms as well as from each other.
Meanwhile, Wealthspire's Ground Control business picks up a $1B private wealth firm in London, and Modern Wealth deepens its presence in California.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
