Investing
SpaceX Is the Hottest Stock to Own. Here's How to Invest In This Private Company
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Investors seeking to benefit from Elon Musk’s ties to Donald Trump post-election face limited options. Of course, there’s always Tesla (NASDAQ:TSLA) as a primary option for those looking to bet on Musk (and bet they have, with the stock recently making new 52-week highs as the Trump trade remains strong for this top U.S. EV maker.
However, most of Musk’s endeavors are actually privately-traded, with the likes of SpaceX, StarLink, xAI and others not trading on public markets. For most investors, this means that gaining exposure to such companies is difficult or impossible, outside of a few funds that offer exposure to privately-traded companies such as SpaceX.
One such fund I’ve pointed out in the past is the Destiny Tech100 ETF (DXYZ), an exchange traded fund that is uniquely concentrated in its SpaceX holdings. In fact, this ETF’s holdings include a 37% weighting to SpaceX, meaning investors who are looking to put capital to work in this private company have a very direct means of doing so.
Let’s dive into this ETF, SpaceX’s future prospects, and what to make of this fund’s incredibly volatile moves of late.
Key Points About This Article:
- Investors looking to gain exposure to Elon Musk-led private companies like SpaceX do have options available to them.
- Here’s why the DestinyTech 100 ETF is gaining so much attention right now, and where this ETF could be headed from here.
- If you’re looking for some stocks with huge potential, make sure to grab a free copy of our brand-new “The Next NVIDIA” report. It features a software stock we’re confident has 10X potential.
Riding the Trump Wave
In one of my previous DXYZ articles, I mentioned how DXYZ has been a clear beneficiary of riding the optimism around the Trump election victory to incredible highs. With key holdings including SpaceX and OpenAI, this particular ETF is heavily concentrated in high-growth private companies that can benefit from a Trump presidency, or at least the market is certainly pricing in a significant valuation boost over time as SpaceX potentially sees larger and larger government contracts over time.
Of course, the fact that we’re talking about a private company means that valuing this ETF and its core holdings becomes much more difficult than with the average diversified fund. Marks tend to happen every few years as these companies raise capital, but with rumors that Musk may sell off another piece of SpaceX now circling following the recent decision by a judge to shut down his Tesla pay package, it’s possible we could get an idea of how overvalued shares of DXYZ are relative to its core holdings.
I say overvalued because there’s currently a massive market premium priced into this ETF relative to the value of its shares as of the time of the last capital raise made by companies like SpaceX. Despite a net asset value of $5.15 per share, shares of DXYZ reached $42 this week, far above its actual portfolio value of $56.4 million. Analysts have called the spike “insane,” cautioning investors unfamiliar with closed-end funds against speculation.
That said, if Elon Musk’s space exploration company can get a massive valuation boost in its next funding round, this may be a moot point, and investors are forward looking (so maybe on a forward basis this valuation can somehow make sense). But for now, this ETF remains a very speculative investment vehicle for those looking for exposure to companies like SpaceX in particular.
What the Experts Think
The Destiny Tech100 fund saw a surge following Trump’s election, as did many other related companies and those tied to the so-called “Trump trade.” This near-term momentum has provided what can only be described as euphoria for many retail investors who continue to pile into this name and drive shares higher. The ETF’s CEO has continued to highlight the fund’s appeal to long-term investors looking to buy a slice of the future, before it trades publicly. But there are many others who believe this trend is shockingly similar to the SPAC trade we saw play out during the pandemic, which ultimately fizzled over time.
That said, there are no shortage of bulls on this name, with Cathie Wood’s Ark Venture Fund also invested in SpaceX, OpenAI, and other holdings in this ETF. These positions have driven shares of a number of associated funds higher, though the number of publicly-traded stocks holding exposure to SpaceX is limited (and DXYZ has among the most direct exposure to this private company relative to the other options out there).
The Momentum Is Real
DXYZ continues to surge following the president’s election and Elon Musk’s prominence, and is up again at the time of writing to more than $42 per share. By the time you’re reading this, that number will likely have changed. But it’s clear that at least on a short-term and technical basis, there are solid reasons why investors are piling into this particular ETF over others.
The momentum is real.
That said, how long this momentum can last, and how high the fund’s valuation premium relative to its NAV can last, are key questions investors ought to be asking. I’m not sure this is an ETF most rational value-conscious investors can buy. But for traders and those factoring in momentum into their models, this is a particularly interesting ETF to follow right now.
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