SpaceX IPO: What Happens to ETFs That Own Pre-IPO Shares?

Imagine being able to buy shares of SpaceX before anyone else could. That's exactly what some special investment funds (ETFs) have been offering — and investors have poured over $4.7 billion into them recently.

What's happening? SpaceX, Elon Musk's rocket company, is about to go public (meaning anyone can buy its stock). Before now, only special funds could own SpaceX shares. Three ETFs (funds that trade like stocks) advertised they owned SpaceX: • ERShares Private-Public Crossover ETF — owns $291.6 million of SpaceX • Baron First Principles ETF — owns $38.5 million of SpaceX • Tema Space Innovators ETF — also has SpaceX exposure

Why it matters These ETFs were like exclusive clubs — the only way regular people could invest in SpaceX. But once SpaceX goes public on Friday, anyone can buy SpaceX stock directly. This means these ETFs lose their special advantage.

Experts worry investors might "bail" (sell quickly) from these funds once they can buy SpaceX shares directly. Jeffrey Ptak from Morningstar warns these ETFs will lose "whatever scarcity value" (extra worth from being rare) they had.

What's next? SpaceX aims to raise $75 billion and be worth $1.75 trillion (that's $1,750,000,000,000!). The ERShares fund is trying to protect investors by charging fees to prevent big traders from disrupting prices. Ron Baron, whose fund owns SpaceX, believes the company's Starlink internet service alone could generate $1 trillion yearly within 10 years.

The big question: Will investors stick with these ETFs after SpaceX goes public, or will they abandon ship?

This is an AI-generated summary. Read the original article at: https://www.marketwatch.com/story/these-etfs-surged-thanks-to-early-spacex-stakes-what-happens-to-them-after-the-ipo-96a2a8f8?mod=mw_rss_topstories