Key facts
- The Tema Space Innovators ETF (NASA) has seen its share price decline significantly after SpaceX's IPO.
- NASA's value was driven by its indirect pre-IPO stake in SpaceX, which has now lost its scarcity premium.
- SpaceX's IPO on June 12 led to a surge in its stock price and a subsequent sell-off in other space-related equities held by NASA.
- NASA's top holding is SpaceX, but its overall performance has been dragged down by the broader space sector's decline post-IPO.
- Other ETFs like XOVR and RONB also held pre-IPO SpaceX stakes and are facing similar challenges.
The Tema Space Innovators ETF (NASA), which gained significant traction by indirectly holding pre-IPO shares of SpaceX, is now facing its worst month in six years following SpaceX's public debut. Investors are witnessing the reality of holding volatile space stocks as the ETF's value erodes after SpaceX's successful IPO.
NASA, launched on March 31, attracted over $3 billion in inflows by leveraging its unique position as the first ETF to indirectly hold equity in SpaceX through a special purpose vehicle provided by Charles Schwab's Forge. This structure allowed retail investors access to the highly valued private company. However, with SpaceX listing on the Nasdaq on June 12 and surging approximately 50% in its first three trading days, the scarcity premium that benefited NASA has rapidly diminished.
The ETF's share price has fallen to $31.98 from a late May high of $42.68, experiencing a more than 9% drop on the first day after SpaceX's IPO. Many investors are confused why NASA's value declined when SpaceX's stock soared. This is attributed to the fact that new capital previously flowed into NASA, forcing investment into other space stocks like Rocket Lab due to limited access to SpaceX. Once SpaceX became publicly tradable, it drained liquidity from the broader market, causing other space stocks, which constitute nearly 88% of NASA's portfolio, to suffer a 'sell-the-news' sell-off. Furthermore, a 180-day lock-up period prevents NASA from selling its SpaceX shares at their peak, leaving its net asset value constrained by the overall sluggish performance of the space sector.
Other ETFs, such as the ERShares Private-Public Crossover ETF (XOVR) and the Baron First Principles ETF (RONB), also benefited from early SpaceX stakes. ERShares, which had $291.6 million invested in SpaceX post-IPO filing, is implementing a 'protection plan' to mitigate volatility, including rejecting large creation orders and potentially charging a 2% fee on redemptions. Baron Capital, a staunch supporter of Elon Musk, holds a $38.5 million stake in SpaceX through its RONB ETF, with founder Ron Baron projecting significant future revenue from SpaceX's Starlink business.
Despite the current struggles, the overall analyst consensus for the stocks held by NASA is a 'Moderate Buy,' with an average 12-month target price suggesting potential upside.