The SpaceX IPO pays Morgan Stanley twice: record wealth revenue, $232 billion of new client money
Morgan Stanley beat forecasts on a 41% equities surge tied to the Fed and the US-Iran war, and the stock still fell. The durable quarter is record wealth revenue and $232 billion of inflows, half of it IPO money, booked alongside a $141 million credit provision where last year's quarter had none.
Vincent Jiang · 3 min read
The windfall lands at the wealth desk
Yahoo Finance's earnings panel spent as much time on SpaceX−3.13% — SpaceX, down 3.13 percent today as on the bank. Morgan Stanley−3.85% — Morgan Stanley, down 3.85 percent today pulled in $232 billion of net new assets, client money moved into its accounts, in a single quarter, and the panel, which called the bank one of the lead bankers on the SpaceX float, pictured newly rich employees of the rocket company asking it to "manage my new billions" 1.
That float, Elon Musk's SpaceX, now trading as SPCX, was the largest IPO in American history: priced in June near a $2 trillion valuation, then down roughly a third 2. The payment arrives twice: fees for pricing and running the listing, then ongoing wealth-management fees on the proceeds that stayed in the bank's accounts 1.
A beat built on war and the Fed
The firm earned $3.03 a share on $20.34 billion of third-quarter revenue, up about 12%, ahead of estimates on both lines 4. The stock still fell about 2% in premarket trading, from Tuesday's $186.64 close 4, and was down about 3.6% by late morning 5.
Equities trading did the lifting: revenue up 41% to $5.8 billion, roughly $909 million above estimates, a surge Reuters tied to investors realigning portfolios around the Federal Reserve's rate decision and the US-Iran war 34. Goldman Sachs−2.67% — Goldman Sachs, down 2.67 percent today beat a day earlier on the same trade, collecting the boom's banking fees while the debt sits on other balance sheets 3.
Wells Fargo analyst Mike Mayo called the quarter "good, but not great" 4. The market had already repriced the strength: the shares trade at 14.6 times forward earnings, down from July's 19.1 peak, after bank stocks fell in the third quarter on a surge in Treasury yields 4.
The floor, and the first crack
Wealth Management, the brokerage arm, posted record revenue of $9.1 billion, up 10%, at a 30.4% pretax margin 57. Net new assets came in nearly three times the $81 billion of a year earlier, and the company said just over half of the haul was IPO-related; the durable piece, fee-based flows, nearly doubled to $80.5 billion 57.
The crack sits in lending. Morgan Stanley provisioned $141 million for credit losses, money set aside for loans expected to go bad, against zero a year earlier, driven by growth in corporate and secured lending; $105 million of corporate and commercial-property loans was charged off, written off as lost 5. Institutional Securities, the trading-and-banking arm, fell to $10.0 billion of revenue from $11.04 billion in the second quarter 4.
Wealth Management out-earned every desk that carried the headlines
Data
| Value | |
|---|---|
| Wealth Management | $9.1B |
| Equities trading | $5.8B |
| Investment banking | $2.16B |
| Fixed income trading | $2.01B |
| Investment Management | $1.5B |
What the fourth quarter decides
The bear case is on the record too. Zacks, a stock-research firm, keeps a Sell rank on the shares, and Investment Management revenue fell 12% as performance fees swung to a loss 65. Underneath, the wealth machine holds $8.43 trillion of client assets, up 19.5%, and the firm bought back $1.5 billion of stock in the quarter 67.
One published valuation model still lands near 6% a year through 2030 with a trading decline built into 2027 4. The fourth-quarter report carries the two numbers that decide it: wealth revenue near $9 billion keeps the floor in place, and a second provision on the secured-lending book says the credit cycle has turned.
Deepdive
AI-generated from this story and its cited sources. Not investment advice.
