If You Want to Buy SpaceX Before the IPO, This ETF Makes It Easier Than You Think
Key Points
Retail investors looking to own SpaceX before its IPO may have to settle for buying an ETF with exposure.
The ERShares Public-Private Crossover ETF (XOVR) currently has 23% of its assets invested in a special purpose vehicle (SPV) with exposure to SpaceX.
This is the best and easiest way to get exposure to SpaceX, even though it's only part of a broader equity portfolio.
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In an unexpected twist, S&P Dow Jones Indices, the overseer of the S&P 500 (SNPINDEX: ^GSPC), announced that it won't fast-track any of the big artificial intelligence (AI)-linked initial public offerings (IPOs) into the index. That means SpaceX, OpenAI, and Anthropic will have to wait at least a year before inclusion.
But just because mega-IPOs like SpaceX won't get early access to S&P 500-linked investors doesn't mean the enthusiasm for the stock is diminished, or that early access in other ways isn't on their minds. Investors hoping to take a position in SpaceX prior to the expected June 12 IPO actually have an easier time than they might think.
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One way is to buy shares of the ERShares Private-Public Crossover ETF (NASDAQ: XOVR). It takes positions in innovative public and late-stage privately held companies. The fund's largest position right now is through special purpose vehicle (SPV) exposure to SpaceX. This SpaceX SPV position is currently 23% of the entire portfolio.
Image source: Getty Images.
A couple of things to keep in mind:
- First, ERShares acknowledges that the SpaceX IPO is unprecedented territory and could quickly become volatile. Due to this, it's implementing a "shareholder protection plan" to mitigate the risks of adverse shareholder outcomes. This includes early redemption fees and the ability to restrict buy/sell activity that could have a damaging effect on the fund.
- Second, ERShares announced that its SpaceX position is marked at a $1.55 trillion market cap. That means shareholders are unlikely to see a huge jump in the ETF's value following the IPO because the SpaceX position is essentially fully valued at the moment.
- Third, remember that 77% of the portfolio is invested in companies other than SpaceX. Its influence will be relatively modest compared to owning the stock outright.
For investors looking to own a piece of SpaceX prior to its IPO, this is still a great early way in.
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David Dierking has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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