Key insights
- The upcoming SpaceX IPO is generating significant buzz in the ETF market, with potential inclusion in major indices like the Nasdaq 100. This event is expected to drive interest and potentially volatility in space-themed and leveraged ETFs. While offering potential rewards, leveraged single-stock ETFs on SpaceX are highlighted as risky due to expected price swings. Diversified ETFs, including space-focused ones, may offer a more stable way to gain exposure.
In the latest installment of Yahoo Finance's ETF Report, TMX VettaFi head of research Todd Rosenbluth outlines what SpaceX's (SPAX.PVT) imminent IPO could mean for space ETFs, broader market indexes, and investors' portfolios.
SpaceX is expected to go public on the Nasdaq this Friday, June 12, under the ticker SPCX, with the space operator aiming to price its IPO at $135 per share.
The ETF market is set for liftoff as SpaceX goes public. Space themed funds and single stock ETFs offerings are set to surge ahead of Friday's IPO and on the day itself, there'll be a launch of a number of leveraged ETFs, which I believe is a first on on that single stock. Joining me now, Todd Rosenbluth, Vettafi's head of research for this week's ETF report brought to you by Pimco. Todd, um, you said in anticipation of us talking, the SpaceX IPO is impacting the ETF market more than anything I have seen in my 20 plus years in the industry.
what we're seeing is that index providers have gone through a consultation to determine whether or not to add SpaceX in to their index strategies. Some of them are doing so. uh, the Russell 1,000 ETF, uh based products will soon have a small slice of SpaceX, the Nasdaq 100, which is the Qs, will have an even larger slice of it. We at Vetify are an index provider and it will be part of our broad benchmark as well as the Vetify space index.
So single stock leverage ETFs are risky. They can be rewarding also, but they are risky for people to be investing in. A single stock leverage ETF on a company that just became public and that is going to have some volatility is going to also be risky. There'll be some potential rewards. So anybody that's considering these uh these pending products because they haven't yet launched, should just be aware, they're going to move in the right or the wrong direction depending upon on how SpaceX ultimately moves.
Whereas broadly diversified ETFs, like a space ETF or a broad market ETF, you're going to get the benefits of diversification across other individual companies.
Is this good for the ETF business on balance, this this whole juggernat or is it not?
So I think it's a good thing. I think more people are going to be excited about this individual company that's coming public. It's not going to be that big a waiting in most of the ETFs. So, even though this is going to be a trillion dollar plus valuation company in all likelihood when it comes to market, based on a limited float, it's only going to be the size of General Motors within diversified portfolios. I know you were talking about GM earlier in the show. So, having exposure to SpaceX as part of a broader portfolio makes a lot of sense.
I'm excited that it's coming to market. You do need to be mindful that any individual company if it's too large a waiting in a portfolio, is going to move your overall portfolio, good or bad.