These ETFs surged thanks to early SpaceX stakes. What happens to them after the IPO?

MW These ETFs surged thanks to early SpaceX stakes. What happens to them after the IPO?

By William Gavin

Investors have recently flocked to ETFs that already have SpaceX exposure. But those funds are about to lose 'whatever scarcity value' they once had, one expert warns.

SpaceX's stock is expected to begin trading later this week. The initial public offering is so large that 23 investment banks are serving as underwriters.

SpaceX's upcoming initial public offering has been a major boon for exchange-traded funds touting pre-IPO exposure to SpaceX. But soon those funds will be left to entice investors in a period when access to SpaceX isn't so tough to get.

Three ETFs that advertised pre-IPO SpaceX $(SPCX)$ stakes saw a combined $4.12 billion in combined net inflows in May. Another $645 million flowed into those funds across the first five trading days of June, according to FactSet data.

Jeffrey Ptak, the managing director of Morningstar Research Services, warned in a report last week that the momentum may not be sustainable. It's possible, he wrote, that investors could "bail" on the funds after SpaceX shares start trading and "whatever scarcity value" those ETFs derived from pre-IPO access to the company expires.

One of these funds is the ERShares Private-Public Crossover ETF XOVR, which counts its exposure to SpaceX, through a special-purpose vehicle, as its top holding. The fund first got exposure to SpaceX in late 2024, just a few days before the company was reported to be valued at $350 billion.

On May 21, just a day after SpaceX filed for its IPO, ERShares upped its exposure to SpaceX by $35 million, for a total of $281 million. At the time, the firm said it had already generated $41 million in appreciation over the past month. Its exposure to SpaceX has since grown to $291.6 million.

"Until XOVR, exposure to companies like SpaceX was structurally out of reach for the everyday investor," Joel Shulman, the fund's portfolio manager, recently said in a statement. "We changed that."

ERShares last week said it would create a "protection plan" for shareholders to help reduce turbulence from SpaceX's public listing, which is scheduled for Friday. The Elon Musk-led company is seeking to raise around $75 billion at a $1.75 trillion market capitalization. Due to the significant scale of and demand for SpaceX's IPO, volatility is expected to be high.

ERShares said it plans to exercise its right to reject large creation orders that could negatively impact investors in the Private-Public Crossover ETF. The firm also plans to implement a fee of up to 2% on the ETF's stock redemptions as SpaceX shares begin trading.

"Retail investors should not be disadvantaged by large, short-term trading flows around a major IPO event," Shulman said.

See more: Elon Musk needs the cultish support of everyday investors to pull off the massive SpaceX IPO

There's also the Baron First Principles ETF RONB, which Baron Capital launched in December with exposure to SpaceX. The firm and its founder, Ron Baron, are staunch supporters of Musk and have been major investors in his companies since at least 2014. The ETF has a roughly $38.5 million stake in SpaceX.

Baron last week said he expects SpaceX's Starlink business alone to generate "about a trillion dollars" in annual revenue, as well as earnings before interest, tax, depreciation and amortization of $800 billion, within 10 years. He added that Starlink could be worth $14 trillion in 12 to 15 years.

As of 2025, SpaceX as a whole had annual revenue of $18.7 billion and adjusted earnings before interest, taxes, depreciation and amortization of $6.6 billion. The connectivity business, driven mainly by Starlink, was a major contributor and generated revenue of $11.4 billion and adjusted Ebitda of $7.2 billion last year.

"We believe you are going to make a huge amount of money because the earnings of this company are going to be explosive in the next five or 10 years," Baron said in a webinar hosted by Baron Capital. He added that Baron Capital plans to buy another $1 billion worth of shares in SpaceX's IPO.

Opinion: This mutual fund lets you buy SpaceX stock before the IPO - but what are you actually getting?

Another fund that's shown massive SpaceX-fueled growth is the Tema Space Innovators ETF NASA, which launched in late March as a "pure play" on the space industry. An SPV with exposure to SpaceX is the fund's fourth-biggest holding, behind shares of space-technology company MDA Space (CA:MDA), satellite-communications company EchoStar $(SATS)$ and launch provider Rocket Lab (RKLB).

EchoStar itself is also a play on SpaceX, thanks to a spectrum deal set to give the firm a nearly 3% stake in the soon-to-be-public company. Its stock is up nearly 600% over the last 12 months and is up slightly in early trading on Tuesday.

The Tema Space Innovators ETF fund has $2.6 billion in assets under management, more than double the amount managed by the Procure Space ETF UFO, according to FactSet data. Just a day before SpaceX officially filed its IPO paperwork, the Tema Space Innovators ETF managed just $877 million worth of assets, according to FactSet.

"You never see a new launch immediately usurp a category - usually takes years," Bloomberg Intelligence ETF analyst Eric Balchunas wrote on X last week, comparing the Tema ETF's rapid growth to that of the Procure Space ETF and other space ETFs.

The difference between the Tema ETF and the Procure Space ETF or the Roundhill Space & Technology ETF MARS is exposure to SpaceX, he said. Balchunas added, however, that some of the flows to the Tema ETF will likely exit after SpaceX goes public.

Yuri Khodjamirian, chief investment officer at Tema ETFs, told MarketWatch over email that investors have been drawn to the Space Innovators ETF for several reasons and that "there is no doubt" SpaceX exposure is among them. But he thinks interest in the space industry will help maintain demand even after access to SpaceX becomes more common.

"We also believe the space theme offers meaningful opportunity to differentiate across the rest of the portfolio," Khodjamirian said, noting that Tema has differentiated itself from other space-focused ETFs by investing in companies along the industry's supply chain.

The payoff investors get from early access to SpaceX through the ETFs will likely vary. According to Ptak, that will hinge on the SpaceX position's weighting in a given ETF and where each ETF values their stake ahead of the public listing.

Data from all three ETFs offering pre-IPO exposure to SpaceX as of May 29 imply that they currently value the company at less than the IPO's $1.75 trillion target, according to Morningstar. The lower a fund's mark, the greater the potential upside, Ptak wrote.

It's more difficult for a fund to adjust exposure to private firms as the fund's size increases, which can dilute the weighting of exposure to SpaceX. This means that, at least through the IPO, other holdings will be largely driving performance, Ptak said.

ERShares' ETF also includes holdings in major technology firms such as Nvidia (NVDA) and Alphabet $(GOOG)$ $(GOOGL)$. The Baron ETF's top holding, with a 14% weight, is Tesla $(TSLA)$.

Read more: Looking to buy into the SpaceX IPO? This scary chart might make you think twice.

-William Gavin

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June 09, 2026 11:04 ET (15:04 GMT)

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