Demand to invest in SpaceX shares ahead of its initial public offering (IPO) this month has spilled over into the fund market, prompting growing warnings of a "SpaceX-driven overheating" across the global financial investment industry.
According to the Financial Times (FT) on December 31 (local time), three Anglo-American mutual funds and four exchange-traded funds (ETFs) holding SpaceX stakes have attracted a combined $14 billion (approximately 21 trillion won) in net investor inflows since the IPO plan was disclosed last December.
As demand grows for investment exposure to SpaceX, related product launches are following in succession. At least 14 new ETFs offering SpaceX exposure are awaiting listing, the FT reported.
Can't Buy the Stock, So Buy the Fund: Indirect Products Trade at a Premium
Funds with heavy SpaceX holdings are already seeing their valuations climb. Scottish Mortgage Investment Trust, a major UK closed-end fund that has invested 17.9% of its portfolio in SpaceX, has been trading at a premium of about 7% to its net asset value (NAV) in recent months. Investors who find it difficult to buy SpaceX shares directly have flocked to indirect investment products, pushing up fund prices.
Two other SpaceX-related funds, Edinburgh Worldwide and Baillie Gifford US Growth, also shifted to premium trading this year. The two funds' SpaceX allocations stand at 18.9% and 13.8%, respectively.
Jordan Stuart, investment director at U.S. asset manager Federated Hermes, said in an interview with the FT, "Every player in the market is jumping into the scramble for SpaceX stakes." He added, "I get inquiries every day from investors wanting to buy funds that hold SpaceX shares — this kind of fervor is something we haven't seen before."
Leveraged ETFs Emerge: "Red Flags for the Market"
Moves to launch derivative ETFs linked to SpaceX's share price are also accelerating. ETF managers including GraniteShares, Leverage Shares, and Direxion have applied to financial regulators to launch leveraged and inverse ETFs tracking SpaceX shares.
These products are designed to track multiples of SpaceX's stock movements or move in the opposite direction. While they offer potential for high short-term returns, they also carry proportionally higher risks of principal loss when volatility increases.
Related Stocks Rally: "Resembles the 2021 IPO Boom"
SpaceX is a space industry company founded in 2002 by Tesla CEO Elon Musk. It has grown into a flagship of the private space industry through reusable launch vehicles and Starlink, its low-orbit satellite internet network. In February this year, it expanded into artificial intelligence (AI) by merging with xAI.
SpaceX is currently regarded as the world's most valuable private company, surpassing OpenAI and Anthropic. Through this listing, it is reportedly targeting a valuation of at least $1.8 trillion (approximately 2,700 trillion won).
Anticipation for the SpaceX listing is also lifting share prices of related stocks. Redwire, a U.S.-listed manufacturer of satellite and spacecraft components, has emerged as a stock drawing attention from local retail investors following news of the SpaceX IPO.
UK-based Filtronic and Korea's Sphere, both known as SpaceX suppliers, have each more than doubled in share price since the start of the year. EchoStar, the U.S. telecommunications firm that sold spectrum bands to SpaceX last year and received SpaceX shares in return, also saw its stock surge more than 500% over the same year.
Lenos Shavides, head of equity capital markets (ECM) at global asset manager Neuberger Berman, said, "A company like SpaceX is the kind of case you might encounter only once in your entire career." But he added, "The market sentiment is similar to the situation in 2021–2022, when a record IPO boom was followed by a slump, and I'm worried that the current IPO frenzy may be a strong signal of a market peak."
Concerns are mounting in the financial investment industry that the SpaceX investment fervor has already entered an overheated phase. Critics point in particular to the so-called "spaghetti cannon" phenomenon, in which firms launch a flood of ETFs tailored to popular themes and keep only the products that survive in the market.
Barry Glavin, head of equities at Amundi, Europe's largest asset manager, said, "All of these phenomena should be seen as red flags for the market." He added, "The argument that 'bold investing without hesitation wins' is gaining traction. This approach may produce good returns for a while, but we all know how it ultimately ends."
Christopher Barrett, head of global equities at French asset manager Carmignac, also assessed the current situation as "a speculative mania," saying, "Investors are piling in with their money without considering fair value."
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