SpaceX’s Record IPO Plan Pushes Obscure ETF Into the Spotlight
(Bloomberg) — A bid by retail investors to snap up a piece of SpaceX before it goes public has thrust a niche ETF into the spotlight, underscoring retail enthusiasm for Elon Musk’s business empire and the scramble for private company exposure.
ERShares Private-Public Transition ETF (ticker XOVR) has gained more than $470 million since Dec. 8, or more than half of its total assets; Investors are trying to get into what could become the largest IPO ever.
Catalyst: A Bloomberg News report this month said Musk’s rocket company is targeting a listing in 2026 that could generate more than $30 billion in revenue and be valued at about $1.5 trillion. And this exchange-traded fund is drawing attention because it holds a small piece of SpaceX through a special purpose vehicle, potentially making it the only U.S.-listed ETF, according to an analysis of data compiled by Bloomberg Intelligence by Breanne Dougherty of Bloomberg Intelligence.
This brings XOVR, which was launched in 2017, to Musk Inc. turned it into a speculative package for
“This increase is likely related to SpaceX stating a 2026 IPO target,” BI’s Dougherty and Charles Bond wrote. “Now even the lightly worded hint of a SpaceX IPO for late 2026 has hit the trifecta of investors’ obsessions: breakthrough innovation, a private venture valued at more than $10 billion, and a resurgent IPO pulse.”
The ETF gained access to the Musk-led company through a special purpose vehicle in December 2024, providing rare access to the private company, especially for a publicly traded fund.
According to a press release, ERShares, the issuer of the ETF at the time, had a total investment of over $20 million in SpaceX, representing approximately 12% of the ETF’s assets.
SpaceX became XOVR’s first private holding after the fund firm changed its name in August 2024 and added private entities to its investment mandate, which also includes public entrepreneurial ventures. But as money was poured into the fund, the SpaceX holding shrank to about 4% of its assets, according to data compiled by Bloomberg, leaving SpaceX with Nvidia Corp., Meta Platforms Inc. and Maplebear Inc., making it XOVR’s fourth-largest holding.
Representatives for ERShares did not respond to a request for comment on whether it plans to increase its SpaceX stake, how it values and marks the position, or what would happen if the rocket company went public.
SpaceX’s position has become such a small part of the portfolio that even if the issuer marks it higher — as many investors expect — its impact on overall performance will be marginal, according to Jeffrey Ptak, Morningstar’s managing director. Since the holding remains unchanged while the fund continues to withdraw cash, a large portion of that inflow is likely to be allocated to publicly traded stocks, further diluting SpaceX’s share of the portfolio, he said.
Dave Nadig, president and director of research at ETF.com, says he values the ETF’s current holdings at $185 per share, well below recent secondary market prices. This low valuation keeps the position artificially small, which previously helped the ETF stay below concentration limits. However, it is no longer possible to add to the position without revising the marked price.
So if SpaceX goes public at around $420 per share, which is the price set in this month’s secondary public offering, the fund’s stock will see a significant increase. Marking the market position will increase net asset value (the fund’s value per share) by about 4%, according to Nadig.
Even so, investors won’t be able to reap that full gain, he said, because anyone who rallied recently on the ETF would run the risk of seeing much of the rise wiped out as sellers emerge after the IPO.
“This is all a long way of saying there is no free lunch,” Nadig said. “The more this looks like ‘free money,’ the less likely it is that it will actually happen.”
Although proponents insist that ETFs can hold anything, Morningstar’s Ptak says some assets may be better left out.
“It is inappropriate to keep such instruments in a daily liquidity tool such as an ETF,” he said. “It’s rife with the confusion that you’re seeing a lot of right now, with people diving into XOVR in the belief that they’re going to make a huge profit from SpaceX.”
–With help from Emily Graffeo.
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