The dream of owning a piece of Elon Musk's SpaceX before its historic public listing has triggered a massive rush of capital from individual investors into a previously obscure exchange-traded fund (ETF). This surge highlights the intense retail euphoria surrounding Musk's ventures and the scramble for exposure to high-value private companies.
The SpaceX Catalyst and the ETF Inflow
The ERShares Private-Public Crossover ETF, known by its ticker XOVR, has pulled in more than $470 million since December 8. This remarkable influx represents over half of the fund's total assets. The driving force behind this move was a Bloomberg News report indicating that SpaceX is targeting a stock market debut in 2026. This potential initial public offering (IPO) could raise over $30 billion and value the rocket company at a staggering $1.5 trillion, positioning it to be the largest IPO ever.
XOVR has become the centre of attention because it holds a small stake in SpaceX through a special-purpose vehicle (SPV). An analysis by Bloomberg Intelligence's Breanne Dougherty suggests this makes it potentially the only US-listed ETF with such exposure. This unique access has transformed the fund, launched in 2017, into a speculative wrapper for investors betting on Musk's empire.
Inside the ETF's SpaceX Holding
The ETF gained its exposure to SpaceX in December 2024 via an SPV, a rare feat for a publicly traded fund. At that time, the ETF's issuer, ERShares, had invested over $20 million in SpaceX, which constituted roughly 12% of the fund's assets. This was XOVR's first private holding after the fund firm rebranded and expanded its mandate in August 2024 to include private entrepreneurial companies alongside public ones.
However, as massive amounts of new money flooded into the ETF, the SpaceX holding has been diluted. Data shows it now represents only about 4% of the fund's assets, making it the fourth-largest holding after giants like Nvidia Corp., Meta Platforms Inc., and Maplebear Inc. Representatives from ERShares did not comment on whether they plan to increase the SpaceX stake, how they value it, or what happens when the company goes public.
Expert Analysis: The Reality Check for Investors
Financial experts urge caution amidst the frenzy. Jeffrey Ptak, a managing director at Morningstar, notes that the SpaceX position is now such a small part of the portfolio that even a sharp upward revaluation would have only a marginal impact on the fund's overall performance. He explains that as the fund attracts more cash without buying more SpaceX shares, the new money is allocated to other publicly traded stocks, further diluting the SpaceX stake.
Dave Nadig, president of ETF.com, points out a critical detail: the ETF values its existing SpaceX stake at $185 per share, far below recent secondary-market prices. This artificially low valuation previously helped the fund stay within concentration limits but now prevents it from adding to the position without revising that price. If SpaceX were to go public at around $420 per share—the price from a recent secondary offering—marking the position to market would boost the fund's net asset value by roughly 4%.
However, Nadig warns that recent buyers may not capture that full gain. "The more this looks like 'free money' the less likely it actually will be," he said, explaining that sellers could emerge after the IPO, erasing much of the initial boost. Morningstar's Ptak adds that holding such illiquid, private instruments in a daily-traded ETF is incongruous and creates confusion, which is evident in the current rush of investors expecting a huge payoff.
This episode serves as a stark reminder that in the high-stakes game of pre-IPO investing, especially through complex vehicles like ETFs, there is no guaranteed free lunch for retail investors.
