Investing in SpaceX: How Trump’s Second Term Could Change the Game
The recent electoral victory of Donald Trump in the 2024 presidential election has led to a seismic shift in market dynamics, notably benefiting companies in the space sector. One of the key players in this cosmic arena is Elon Musk, whose support for Trump was pivotal during the campaign.
As CEO of Tesla and X, Musk’s influence is considerable. However, it is his space exploration company, SpaceX, that has captured the attention of Wall Street following the election results.
A Stellar Rise in Destiny Tech100 ETF
While the prices of conventional aerospace stocks have nudged higher post-election, a lesser-known exchange-traded fund (ETF) named Destiny Tech100 (DXYZ) has experienced a dramatic increase, soaring by 37% in just one day. Remarkably, this ETF has more than doubled in value within a week of Trump’s victory, primarily due to its substantial investment in SpaceX, which is valued at around $200 billion.
Trump’s pro-space platform and SpaceX’s ambitious goals, which span from manned missions to Mars to the global rollout of Starlink, have created a compelling narrative that has catalyzed DXYZ’s performance. This ETF provides opportunities for retail investors to participate in what was once an exclusive market dominated by billionaires.
DXYZ’s Recent Performance
Following Trump’s election victory, DXYZ’s stock has shown remarkable momentum, tripling in value over the month. Notably, the ETF’s trading volume spiked from an average of around 275,400 shares to a jaw-dropping 20.2 million shares traded on a single day. This surge is attributed to renewed enthusiasm in the space sector and the completion of SpaceX’s 100th launch of 2024, both fueling increased interest in space-related investments.
The U.S. space economy, which contributes approximately $131.8 billion to GDP, is growing at a pace that surpasses general economic growth. DXYZ stands out as one of the few vehicles providing access to private space ventures, notably as a top contractor for NASA through SpaceX.
Investment Structure and Portfolio Exposure
DXYZ operates as a closed-end fund with a concentrated portfolio of 22 elite private technology companies, with SpaceX comprising the largest stake at 37.6%. The fund is also diversified with stakes in other notable companies such as OpenAI (3.5%) and Axiom Space (9.1%), alongside established names like Stripe and Discord.
DXYZ employs a flexible investment strategy that allows participation in both primary funding rounds and secondary market purchases, ensuring optimal entry points. With an annual management fee of 2.5%, DXYZ’s fee structure is competitive compared to traditional private investment vehicles.
The portfolio aims to expand to 100 companies, capitalizing on both established tech giants valued above $10 billion and promising firms in the $750 million to $10 billion range. The fund operates with strict investment criteria, focusing on well-backed firms that exhibit strong financial health.
Political Momentum Fuels Space Sector Growth
The space industry is increasingly vibrant, perfectly positioning itself for expansion. With SpaceX achieving its 100th launch and employing innovative capture techniques for its Starship booster, excitement is building. Concurrently, OpenAI secured substantial cloud computing partnerships worth $12.5 billion in Q4.
The alignment of Trump’s return to the White House with the capabilities of the space and AI sectors is no coincidence. The former administration’s pro-business focus and potential easing of FAA regulations on rocket launches present fresh opportunities for SpaceX, especially as it aims to broaden its satellite network with Starlink.
As commercial space ventures thrive, reductions in launch costs and technological advancements are unlocking new possibilities. Trump’s discussions about government efficiency positions suggest there may be further opportunities to integrate AI into space operations.
Conclusion
The future looks bright for investments in space technology, particularly through DXYZ. With shares soaring due to unique exposure to SpaceX, the ETF provides retail investors with an avenue to tap into the burgeoning “unicorn” economy. The anticipated policies from Trump’s administration, SpaceX’s record launch achievements, and the merging of AI with space tech present a compelling investment landscape for those eager to explore opportunities beyond the stratosphere.