Key facts
- SpaceX's IPO has triggered a surge in trading activity, particularly in leveraged ETFs and options.
- Over $1 billion in trading volume was recorded on the first day for leveraged bets on SpaceX.
- Three ETFs with pre-IPO SpaceX exposure saw combined net inflows of $4.12 billion in May and an additional $645 million in early June.
- The ERShares Private-Public Crossover ETF (XOVR) and Baron First Principles ETF (RONB) hold significant stakes in SpaceX.
- ERShares plans measures to mitigate volatility around the IPO, including rejecting large creation orders and imposing redemption fees.
- SpaceX aims to raise approximately $75 billion at a $1.75 trillion valuation, with 23 underwriters involved.
SpaceX's upcoming initial public offering has triggered a significant surge in investor activity, particularly in exchange-traded funds (ETFs) and options trading. Newly launched leveraged ETFs are experiencing heavy inflows as investors seek amplified exposure to the company's anticipated debut. Leveraged bets on SpaceX's IPO generated over $1 billion in trading volume on the first day alone, highlighting a substantial retail appetite for the company's stock.
Three ETFs that advertised pre-IPO stakes in SpaceX saw a combined $4.12 billion in net inflows in May, with an additional $645 million flowing into these funds in the first five trading days of June. The ERShares Private-Public Crossover ETF (XOVR), which holds SpaceX through a special-purpose vehicle, has seen its exposure grow to $291.6 million after a $35 million increase on May 21. Similarly, the Baron First Principles ETF (RONB) holds approximately $38.5 million in SpaceX.
However, experts caution that this momentum may not be sustainable. Jeffrey Ptak, Managing Director of Morningstar Research Services, warned that the "scarcity value" these ETFs derived from pre-IPO access could diminish once SpaceX shares begin trading publicly. In response to potential volatility surrounding the IPO, ERShares plans to implement measures such as rejecting large creation orders and imposing a fee of up to 2% on redemptions.