DXYZ outperforms TSLA, Worth The Hype ?
A quick recap before jumping into today’s post.
On 01 Sep 2024, I have shared about closed end fund (CEF) - $Destiny Tech100 Inc(DXYZ)$. Click here ! to refresh your memory.
At the time of writing, its price was $13.03 per share.
Fast forward to post US president election, $Tesla Motors(TSLA)$ is getting a Trump bump.
It has gained nearly +41.59% in the stock price since Wed, 6 Nov 2024. (see above)
It is now trading above its 25 August 2022, stock split price of $300 for the very first time.
Surprisingly, it is the Destiny Tech 100 fund with a 38% stake of its portfolio in private shares of SpaceX, Mr Musk’s other high-profile company that has fared better than Tesla.
The closed-end fund :
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Is valued at approximately $18.4 million as of 31 Dec 2023.
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Has more than doubled its shares’ price in the past few days, surging from about $11.60 a share to just above $30. (see above)
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On Fri, 8 Nov 2024 alone, shares were up +65%. This is crazy !
What’s The Logic?
(1) Traders may be speculating that SpaceX could get more business from the Federal government, including the National Aeronautics and Space Administration going forward, due to the fact that Musk was a vocal supporter of Donald Trump.
(2) Wall Street is also likely betting that Trump will be more market-friendly than Vice President Kamala Harris would have been if she had won the presidential race.
(3) In April 2024, Barron’s profiled the fund, which invests in so-called unicorns through later-stage rounds of venture capital financing and by purchasing pre-IPO shares from existing investors.
The Destiny Tech100 fund also has stakes in other tech and fintech ventures, namely:
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OpenAI.
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Fintech companies eg. (a) Revolut, (b) Stripe & Chime.
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Gaming company eg. Epic Games, the developer of Fortnite.
If Wall Street rally continues, this may open up the floodgates for private companies to go public in 2025, that would benefit Destiny Tech100 greatly, given the companies makeup in the portfolio.
Investors need to be ultra cautious though because a similar movie have been seen before.
March 2024.
Destiny Tech100 stock immediately went parabolic when the fund began trading in late March, surging from about $9 to above $100 in a matter of days.
But the hype quickly subsided, partly because most Wall Street experts were skeptical that SpaceX will ever go public.
Mr CEO has also been fairly adamant that an initial public offering isn’t in the cards.
It’s unclear if SpaceX would ever spin off its Starlink satellite unit though.
SpaceX, which is worth $210 billion, is the 2nd-most valuable private company on the planet after China’s ByteDance, (owner of TikTok), that is valued at $225 billion.
In April 2024, Destiny Tech100 fund, CEO, Sohail Prasad has told Barron’s, that the fund is a “reflection of how people really want this access and exposure to companies shaping the future”.
It is more difficult for investors to buy stakes in companies that aren’t yet public.
So far, D/XYZ wasn’t immediately available for comment about the fund’s price surge last and this week.
Ms Cathie Wood.
Another closed-end fund, Cathie Wood’s Ark Venture Fund, also has a big stake in SpaceX, making up just under 13% of the portfolio.
Ark Venture has gained only a little more than 1% this week.
Investors making a huge & speculative bet on Destiny Tech100, may see shares come falling back to Earth if the market excitement about Trump fades.
The fund’s moonshot rise could be fleeting, as it was back in April 2024.
My viewpoints: (mine only)
I think the current rally is transient and will tapers off eventually.
This is especially true for Tesla (currently) because the stock price is not the true reflection of its underlying value.
His ‘governmental’ role in the next administration is yet to be put to the test; hence the current ‘feel good’ effect about Tesla may fall when Q4 2024 earnings comes around.
As for DXYZ CED, its first April 2024 rally started on 02 Apr 2024 ($21.22) and peaked on 08 Apr 2024 ($99.79) before it peters out gradually.
In all, it lasted a total of 6 days.
Applying the same logic to current rally that started on 06 Nov 2024, realistically it should “last until” 13 Nov 2024 endday.
What do you think of the nervous US market on Tues, 12 Nov 2024 — eve of October CPI report to be published ?
Despite a massive single-day fall of -28.35% on Tue, 12 Nov 2024, DXYZ’s gains still outweighs Tesla’s. (see above)
Pre-market indicator for Wednesday shows a slight recovery of +2.96% or +$0.90.
From this angle, it certainly looks like inflation is calling the shots going into Wednesday trading. WoW!
Will DXYZ be able to attract interest from investors seeking high-growth opportunities in the tech sector this week? Certainly hope so ! Make hay while the sun shines right !
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Do you think the positive market sentiments permeating US stock market will drive DXYZ higher this week until Wednesday ?
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Do you think SpaceX and/or Starlink will IPO in 2025 ?
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