ETF Issuers Are Running Their Own SpaceX Race Ahead of Blockbuster IPO

Space is so nice, they’re going twice.

SpaceX is scheduled to go public on the Nasdaq tomorrow in the largest initial public offering ever, targeting a valuation of $1.8 trillion. Already a handful of asset managers who deal in leveraged products have filed for 2x funds tracking the stock. Plus, the issuers are trying to launch the same day as SpaceX’s IPO. It’s a signal of how quickly and aggressively issuers will move when a high-profile name hits public markets, a trend that might ramp up as companies like Anthropic and OpenAI work to go public this year as well. 

“When you’re a 2x issuer, you throw a lot against the wall, and you’re not sure if it’s going to be popular,” said Matt Tuttle, CEO of Tuttle Capital Management, one of the firms launching a leveraged product. “But there are certain names you know are going to be hot, and SpaceX is one of them.”

If You Ain’t First, You’re Last 

Other issuers expected to launch leveraged SpaceX funds the day of the IPO include Defiance, Direxion, ProShares, Leverage Shares and GraniteShares, according to the firms’ websites. “These proposed funds are a step into the unknown,” said Zach Evens, Morningstar analyst, adding that they’re “not for the faint of heart” and should be used as trading tools only, if at all.

Can the funds actually hit markets the same day SpaceX does? It’s going to be difficult for a few reasons:

• A 2x ETF relies on calls and puts to rebalance and create leverage throughout the day, but options rarely exist on a stock’s launch day.
• There’s also the issue of price history: There isn’t any. With significant demand for shares, prices may be distorted for a time before the market balances out and trading volume subsides, Evens said.

“Nobody has ever launched a 2x fund on an IPO’s launch day,” Tuttle told Advisor Upside. “But just because it’s never been done before doesn’t mean it’s not doable.” However, he also admitted his fund and the rest could end up launching first thing Monday morning instead of Friday.

What’s the Difference? With so many issuers launching essentially the same product all at once, who’s going to be the winner? Your guess is as good as his, Tuttle said. “Unfortunately, you can’t really differentiate yourself,” he explained, adding that bigger asset managers will have more to spend on digital marketing, but that might not be much of a needle-mover. “We don’t know where the chips are going to fall.”