SpaceX
SpaceX, Elon Musk’s visionary aerospace company, has become synonymous with innovation. From reusable rockets to the Starlink satellite internet network, SpaceX is transforming industries and cementing its place as a leader in space exploration. Unsurprisingly, it has also become one of the most sought-after investment opportunities globally. However, as a privately held company, SpaceX’s stock is not directly available to the public, creating challenges for investors eager to participate in its growth.
Despite this limitation, several indirect paths allow individuals and institutions to gain exposure to SpaceX. These options come with varying levels of accessibility, costs, and risks. This article evaluates the most prominent strategies, emphasizing management fees, liquidity, minimum investment requirements, and the often-overlooked market-to-net asset value (NAV) ratio. Understanding these factors is essential, as some funds price SpaceX shares at up to 10 times their latest estimated value. Here’s a comprehensive breakdown of your options.
1. EntrepreneurShares ETF (Ticker: XOVR)
The XOVR ETF stands out as one of the simplest, most cost-effective, and accessible ways to gain indirect exposure to SpaceX. Unlike funds limited to accredited investors, XOVR is open to all, making it a compelling option for retail investors.
- SpaceX Weight in Fund (% of market cap): 10.41% (highest %).
- Expense Ratio: 0.75% (lowest).
- Liquidity: Daily.
- Minimum Investment: None.
- Market Cap to NAV: 1x (priced at actual value).
- Key Features:
- Over 85% of the fund is invested in the ER30TR Index, which has delivered impressive performance (+142% since December 2022).
- Broad availability across major platforms, including Schwab, Fidelity, Robinhood, and IBKR.
- Drawbacks:
- Limited availability for international investors on non-U.S. platforms. The fund also has exposure to growth stocks that may not be suitable for investors seeking a high dividend yield.
- Conclusion: With its low fees, high liquidity, and the highest SpaceX allocation relative to market cap, XOVR is the best choice for retail investors seeking exposure to SpaceX without excessive costs or complications.
2. ARKK Ventures Interval Fund (Ticker: ARKVX)
ARK Invest, through its ARKK Venture Capital Fund, offers another indirect route to SpaceX ownership. Known for its focus on disruptive technologies, ARKK Ventures invests in both public and private companies, including SpaceX.
- SpaceX Weight in Fund (% of market cap): 9.74% (3rd highest%)
- Expense Ratio: 5.76% (very high).
- Liquidity: Quarterly, with redemptions limited to 5% of fund assets. Excess redemptions are pro-rated.
- Minimum Investment: $500.
- Market Cap to NAV: 1x (priced at actual value).
- Key Features:
- Targets innovative sectors and companies.
- Purchase options available through platforms like Sofi and Titan.
- Drawbacks:
- Liquidity is limited, with redemptions only allowed once per quarter.
- Approximately 48% of the portfolio is allocated to small-cap and micro-cap equities (30% in micro-caps under $300M, 18% in small-caps under $2B), which could lead to significant liquidity challenges.
- Conclusion: While ARKK Ventures offers solid SpaceX exposure, its high fees and restricted liquidity make it less attractive compared to other options.
3. Destiny Tech 100 Closed-End Mutual Fund (Ticker: DXYZ)
The Destiny Tech 100 Fund focuses on high-growth tech companies and includes private equity positions in SpaceX. However, its excessive premium to NAV and questionable valuation practices make it a risky choice.
- SpaceX Weight in Fund (% of market cap):: 3.16% (lowest %).
- Expense Ratio: 5.33%.
- Liquidity: Daily.
- Minimum Investment: None.
- Market Cap to NAV: 10x (excessively high premium).
- Key Features:
- Claims 37% exposure to SpaceX, but the actual weight based on current valuations is closer to 3%.
- Premium pricing implies SpaceX’s valuation is inflated to $3.5 trillion, far exceeding its $350 billion estimated market value.
- Drawbacks:
- Questionable acquisition methods for SpaceX shares, potentially sourced through employee stock ownership plans (ESOPs).
- A history of significant write-downs on other positions (19 out of 23 portfolio holdings were written down by an average of 59%).
- The fund’s appreciation of over 600% YTD raises concerns about flawed perceptions of SpaceX ownership and naivete regarding the premium to NAV.
- Conclusion: Destiny Tech 100’s high fees, extreme NAV premium, and questionable valuation practices make it unsuitable for most investors.
4. Baron Partners Fund (Ticker: BPTRX)
The Baron Partners Fund has been an early investor in SpaceX and offers a more traditional mutual fund structure for those seeking indirect exposure.
- SpaceX Weight in Fund (% of market cap): 9.8% (second highest %)
- Expense Ratio: 2.44%.
- Liquidity: Daily.
- Minimum Investment: None
- Market Cap to NAV: 1x (approximate pricing to actual value).
- Key Features:
- A large fund with over $8.3 billion in assets under management.
- Available on major platforms like Schwab and Fidelity.
- Drawbacks:
- Heavy reliance on Tesla, which accounts for 52.5% of the portfolio. This concentration creates significant daily volatility and exposes the fund to valuation risks.
- The Tesla weighting far exceeds diversification guidelines for institutional investors.
- Conclusion: While it offers meaningful SpaceX exposure, Baron Partners’ over-reliance on Tesla makes it more volatile and risky.
5. Become a SpaceX Employee
Joining SpaceX as an employee provides the most direct path to owning SpaceX equity. The company offers stock options and equity grants as part of its compensation package.
- Conclusion: For those qualified and passionate about space exploration, working at SpaceX offers a rewarding way to contribute to its mission while gaining ownership.
6. Invest in Alphabet (Ticker: GOOGL)
Alphabet, Google’s parent company, invested $900 million in SpaceX in 2015. However, this stake represents a negligible portion of Alphabet’s $2.4 trillion valuation (less than 0.04%).
- Conclusion: While owning Alphabet shares provides a fractional connection to SpaceX, it is not a practical strategy for meaningful exposure.
7. Secondary Markets
Platforms like Forge Global, EquityZen, Hiive, and Zanbato facilitate secondary market transactions for private shares, including SpaceX. These platforms, however, cater to accredited investors and come with significant costs.
- Drawbacks:
- High brokerage fees (2–10%) and extensive legal requirements.
- Limited liquidity and significant premiums over primary valuations.
- Exit transactions are subject to similar high fees and often face liquidity challenges.
- Conclusion: These platforms are impractical for most retail investors and best suited for high-net-worth individuals or institutional buyers.
8. Wait for a Public Offering
Many investors are eagerly anticipating a SpaceX IPO, which would provide the most direct path to owning its stock. However, there is no confirmed timeline for this potential IPO, and importantly, the value has been rising appreciably in recent years without the benefit of retail investor participation. It is quite possible that by the time the company goes public, if it ever goes public, that much of the appreciation will already be consumed by accredited investors.
- Conclusion: A speculative but potentially rewarding option for patient investors.
Final Thoughts
Investing in SpaceX requires creativity, diligence, and an understanding of the risks involved. Of all the options, the XOVR ETF stands out for its low fees, high liquidity, and substantial SpaceX exposure. Funds like Baron Partners Fund and ARKK Ventures provide alternatives but come with higher fees and risks. Options like Destiny Tech 100 or secondary market platforms are less attractive due to extreme premiums and limited liquidity.
For those willing to wait, a SpaceX IPO may eventually provide the most straightforward opportunity to own a piece of one of the most innovative companies of our era. However, it is unclear when or if the company will ever go public. Meanwhile, the company has appreciated in recent years without the participation of retail investors. Investors who are eager to own a piece of ownership now, have a growing list of options, with appreciably different terms. As always with any investment, investors should always weigh their options carefully and conduct their own due diligence in seeking the optimal investment path.
Past performance is no guarantee of future results. Please refer to the below disclosures: https://lnkd.in/e29X6rN
