Can revenue traders get in on the approaching SpaceX IPO earlier than the inventory goes public (and ideally with out overpaying?) Let’s discover out.
No announcement of an IPO has been made, however SpaceX’s latest acquisition of Starlink and Musk’s xAI agency sign that an providing is within the pipeline.
Though the corporate nonetheless feels comparatively new, SpaceX efficiently launched its first rocket 18 years in the past. Since then, it has reportedly earned roughly $20 billion in authorities contracts, with Morningstar not too long ago reporting that it posted about $8 billion of earnings on $15 billion of income in 2025.
If these numbers arise—and there’s no means for us to substantiate them—that’s a revenue margin above 50%. The corporate’s success with Starlink will possible assist maintain its margins excessive.
Which brings us again to the query I simply requested: Can we get in, say, now, earlier than the inventory trades publicly? The reply is sure, there are a few routes.
Each run by way of funds—both an ETF or a closed-end fund (CEF)—with publicity to the corporate. Listed below are two choices, with a 3rd (my most well-liked selection) on the finish.
Possibility 1: The ETF Play
The ERShares Personal-Public Crossover ETF (NASDAQ:) holds SpaceX not directly, by way of a “particular function car”—a kind of personal fund centered on personal securities.
XOVR then balances its SpaceX publicity with public tech corporations like NVIDIA (NASDAQ:), Meta Platforms (NASDAQ:) and Palantir Applied sciences (NASDAQ:). There’s additionally a splash of healthcare in its top-10 holdings, with medical-device maker ResMed (NYSE:), and finance, within the type of Interactive Brokers Group (NASDAQ:), a trading-services agency.
That looks like a fairly good combine from a risk-management perspective, proper? Sadly, it has nonetheless led to a fairly tough long-term efficiency:
XOVR Lags the Tech Sector and the NASDAQ
As you’ll be able to see above, because the inception of XOVR (in purple), the fund has returned lower than a 3rd of the return of the State Road Expertise Choose Sector SPDR ETF (NYSE:), in blue and benchmark for the tech sector as an entire. XOVR was nowhere close to the NASDAQ-focused Invesco QQQ Belief (NASDAQ:), in orange, both.
May the SpaceX IPO reverse this efficiency? In truth, most likely not.
An even bigger concern for XOVR is that, in a nutshell, rules require that the fund have not more than 15% of its property in a single personal firm, and its SpaceX publicity is now 37% of its portfolio, in keeping with the fund’s web site.
That, because the Monetary Instances not too long ago wrote, is a threat for XOVR traders, because the fund might be pressured to promote the shares to adjust to that rule, and the timing of that sale may reduce off any earnings from the IPO.
Possibility 2: The CEF Strategy
CEFs are structured in another way than ETFs, and importantly not have the 15% requirement ETFs do, in relation to investing in personal corporations. CEFs carry one other profit, too: They pay excessive dividends, with the typical yield sitting at 9.3% throughout the house, in keeping with information tracked by my CEF Insider service.
Just one CEF has a major slice of its portfolio dedicated to SpaceX: a fund referred to as the Future Tech100 (NYSE:). One factor leaps out about this one: Though it’s a CEF, it doesn’t pay a dividend. Its efficiency previously 12 months hasn’t been promising, both, down about 24%:
SpaceX Can’t Cease DXYZ’s Tailspin
In the meantime, the is up about 22% and XLK, the tech-benchmark ETF we talked a couple of second in the past, has gained 27%.
We’ve been watching this fund for a couple of 12 months. I wrote in a February 27, 2025, article that:
“With DXYZ’s big markup, we’re overpaying to take a position on the long run, particularly if earthly financial woes exchange moonshot optimism among the many technorati within the subsequent few months. There’s simply no purpose to take that threat.”
The “earthly financial woes” are a mixture of fears round what AI means for the financial system, fears that DXYZ’s holdings aren’t value a premium (particularly in mild of its 0% yield), and fears that DXYZ received’t seize the financial worth of a SpaceX IPO.
And even with that 24% drop in its complete return, the fund nonetheless trades at a 41% premium to web asset worth (NAV, or the worth of its underlying portfolio). That’s quite a bit even for a solidly performing CEF. For one with hard-to-value personal property, it leaves little or no margin for error.
So the place does this go away us?
Our Finest Play: NASDAQ Publicity With an 8.9% Payout
At this level, getting publicity to SpaceX pre-IPO is a tall order for normal traders like us. Nonetheless, one method to get diversified publicity post-IPO might be the Nuveen NASDAQ 100 Dynamic Overwrite Fund (NASDAQ:).
It’s an 8.9%-payer that, like its cousin QQQ, holds the shares within the NASDAQ, which SpaceX will possible be a part of. Tesla (NASDAQ:) is already listed right here.
The distinction between QQQX and QQQ is that the previous sells covered-call choices on its portfolio, a wise technique designed to generate revenue. (Utilizing lined calls, QQQX sells rights to traders to purchase its holdings at a set worth and date sooner or later—this strategy is extra worthwhile in unstable instances.)
That’s helped QQQX outperform QQQ over the past six months—which included AI-driven panics round software program and IT shares—whereas delivering that top payout (QQQ yields simply 0.5%). The fund has additionally fallen much less sharply than QQQ because the outbreak of the battle in Iran.
QQQX Outperformed Amid Latest Uncertainty
We do, nevertheless, have to remember that the choice technique does cap upside in a powerful market, because the fund’s greatest shares are offered away. Nonetheless, the truth that QQQX trades at an 8.9% low cost to NAV, decrease than the 7.8% at which it began the 12 months, provides upside—and a few draw back insulation, too.
Total, high-yielding QQQX is a greater strategy to tech than making an attempt to chase pre-IPO corporations like SpaceX. And it nonetheless places us in place to get publicity to that high-margin agency when its shares hit the general public markets, too.
Disclosure: Brett Owens and Michael Foster are contrarian revenue traders who search for undervalued shares/funds throughout the U.S. markets. Click on right here to learn to revenue from their methods within the newest report, “7 Nice Dividend Progress Shares for a Safe Retirement.”
