By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is that using ETFs to gain exposure to SpaceX (SPCX) is risky due to high volatility, illiquidity, and lack of earnings history. The 'diversification' argument is flawed as ETF weights remain high and could embed significant single-stock risk.
Risk: High volatility and illiquidity of SpaceX, potential rebalancing pressure in ETFs, and reliance on model-based valuations for private proxies.
Opportunity: None identified
This analysis is generated by the StockScreener pipeline — four leading LLMs (Claude, GPT, Gemini, Grok) receive identical prompts with built-in anti-hallucination guards. Read methodology →
It's been about two weeks since Elon Musk's Space Exploration Technologies (NASDAQ: SPCX) debuted in the largest initial public offering (IPO) on record.
As is the case with so many highly anticipated IPOs before it, the reusable rockets company has struggled out of the gate. Following a strong first two trading days, SpaceX is off 23.4% for the week ending June 24. Arguably, that underscores the case for using exchange-traded funds (ETFs) to own SpaceX stock. Using an ETF to access SpaceX helps with diversification, mitigating the extreme volatility typically associated with high-profile direct IPOs.
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The universe of ETFs holding this stock is growing. As of June 24, nearly 110 ETFs held SpaceX shares, with 27 featuring the new stock among their top 15 holdings. There's no shortage of candidates that could rank among the "best" ETF owners of this space equity.
I tried to pare down the landscape of solid SpaceX ETFs by employing some qualifiers, including at least $200 million in assets under management, eliminating dedicated space ETFs, and an emphasis on the ETFs not getting a lot of attention because, in the SpaceX ETF conversation, some funds are commanding significantly more focus than others.
Here are three to consider.
Much has been made of index providers altering rules to swiftly include SpaceX in their gauges, while others didn't follow suit. On that front, what's done is done, but investors have some interesting options for accessing SpaceX broadly, including the Fidelity Nasdaq Composite Index ETF (NASDAQ: ONEQ).
This $10.9 billion fund is Fidelity's first ETF, and a quick primer on it is instructive. This ETF tracks the Nasdaq Composite (NASDAQINDEX: ^IXIC), not the widely mentioned Nasdaq-100. Given that this fund has 1,033 holdings, it's far broader than a Nasdaq-100-tracking fund. The Fidelity ETF also has some, albeit modest (3%), exposure to financial services stocks. Nasdaq-100 trackers don't share that trait.
SpaceX isn't a major holding in this ETF, accounting for only 2.5% of the portfolio. Still, this fund is appropriate for investors who want broad-based growth exposure while enjoying a SpaceX "appetizer." Plus, the annual expense ratio of 0.21%, or $21 on a $10,000 stake, is fair.
Earlier this month, one of my Foolish colleagues did an excellent job explaining why, when sector ETFs open their doors to SpaceX, the stock will head to communication services funds. Still, Musk's company has a prolific track record of sending rockets into orbit, which positions it as an aerospace and defense outfit as well.
The First Trust Indxx Aerospace & Defense ETF (NYSEMKT: MISL) takes that view. This aptly tickered ETF is an aerospace and defense fund, but there's more to the story. The $784 million ETF tracks the Indxx US Aerospace & Defense Index, which has the latitude to include space exploration companies.
Hence, SpaceX makes this ETF's cut and size at that. As of June 23, the stock accounted for 7.4% of the First Trust ETF's portfolio, making it the third-largest holding.
That's a fairly large weight to SpaceX among industry ETFs that aren't dedicated space funds. Still, some of that risk is potentially offset by the fund's heftier allocations to "old school" aerospace and defense names.
Home to 40 stocks, the First Trust ETF charges 0.6% annually, or $60 on a $10,000 investment. That's slightly above the category average.
Ark Invest founder and CEO Cathie Wood is a longtime, vocal supporter of Musk, so it's not surprising that she rapidly purchased shares in the SpaceX IPO, adding the stock to several of her firm's ETFs. One of those funds is the Ark Autonomous Technology & Robotics ETF (NYSEMKT: ARKQ).
As an actively managed fund, this $2.4 billion fund has some flexibility in the themes to which it allocates capital, one of which is reusable rockets. That makes SpaceX a logical inclusion in this ETF, and it's a significant one, commanding a weight of 5.7%, or enough to make it the fourth-largest holding.
This ETF holds some space and next-generation defense equities, and it's up 45% over the past year. However, the fund, which features Tesla as its largest holding, is most appropriate for risk-tolerant market participants due to its emphasis on disruptive technology and themes. Investors should also account for this ETF's active management, meaning the SpaceX weight they see today may differ tomorrow.
The Ark ETF charges 0.75% per year, or $75 on a $10,000 investment. That's above average among active equity ETFs.
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Todd Shriber has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
Four leading AI models discuss this article
"ETF exposure does not meaningfully mitigate SpaceX's idiosyncratic risks; real upside will depend on SpaceX's execution, not ETF diversification."
The article markets ETF exposure to SpaceX as a diversification win, but the math is muddy. SpaceX’s weight remains concentrated in a few funds (MISL ~7.4%, ArkQ ~5–6%, ONEQ ~2.5%), while many ETFs host the name as a minor sleeve. That doesn't meaningfully dilute idiosyncratic risk or IPO volatility. More importantly, SpaceX’s fundamentals—execution risk, regulatory hurdles, capital intensity, and dependence on a single founder—are unsettled post-IPO, and a changing defense/space budget cycle could swing results. The piece glosses over liquidity, rebalancing risks, and the potential drag of high expense ratios. ETF ownership ≠ guaranteed upside.
If SpaceX delivers on milestones and defense budgets accelerate, ETF inflows could trigger momentum-driven re-ratings, meaning the stock could outperform even if fundamentals remain uncertain. ETF coverage may amplify upside in a winner-take-all space.
"The premise of the article is factually incorrect as SpaceX has not conducted an IPO, making the 'best ETFs' list misleading and potentially dangerous for retail investors."
This article is fundamentally flawed because it discusses a SpaceX IPO that never happened. As of mid-2024, SpaceX remains a private company. The ticker 'SPCX' mentioned is not a public equity, and any 'ETF holding' of it is likely a derivative or a private-market proxy fund, not direct common stock. Investors should be extremely wary of the 'IPO' narrative presented here, which appears to be a hallucination or a highly misleading marketing piece. Relying on ETFs like ONEQ or ARKQ for SpaceX exposure is effectively buying a synthetic derivative of a private company, which carries significant liquidity and valuation risks that the article completely ignores.
If we assume the author is referring to a future hypothetical or a private-equity-backed trust, the core argument for using ETFs to mitigate the volatility of a high-profile space launch remains valid for retail investors who lack access to private secondary markets.
"The article celebrates ETF distribution as diversification when it's actually just spreading a speculative bet across passive vehicles with no disclosed valuation anchor."
This article conflates two separate stories: ETF inclusion (mechanically bullish for price) and SpaceX fundamentals (unclear). The piece notes SPCX is down 23.4% post-IPO yet frames ETF access as risk mitigation—but owning a falling stock through an ETF doesn't change the underlying volatility. More concerning: the article provides zero valuation context. We don't know SPCX's forward P/E, revenue growth rate, or path to profitability. Cathie Wood's enthusiasm (ARKQ holds 5.7%) is presented as validation, but ARKQ is up 45% YoY largely on Tesla momentum, not proven aerospace thesis. The 110 ETFs holding SPCX after two weeks suggests passive index inclusion, not active conviction.
ETF inflows do create real demand that can support prices regardless of fundamentals, and SpaceX's government contracts (NASA, DoD) provide revenue visibility that traditional IPO specs lack—making it structurally different from typical high-volatility debuts.
"Active thematic ETFs like ARKQ embed high fees and shifting SpaceX allocations that amplify rather than mitigate post-IPO downside risk."
The article frames ETFs like ONEQ, MISL, and ARKQ as prudent diversification vehicles for SpaceX (SPCX) after its weak post-IPO showing, yet overlooks that weights of 2.5-7.4% still embed material single-stock risk in a company with no earnings history and extreme volatility. ONEQ's 0.21% fee is reasonable for broad Nasdaq exposure, but MISL (0.60%) and ARKQ (0.75%) add premium costs for thematic tilts that can shift quickly under active management. The piece also ignores potential liquidity constraints and index inclusion rule changes that could force rebalancing pressure on these holdings.
Even modest SpaceX weights could deliver outsized upside if reusable rocket contracts accelerate, offsetting fees and volatility as Cathie Wood's prior Tesla bets have shown.
"If SPCX is a synthetic/private proxy rather than a straightforward public equity, tracking errors and liquidity drag could dwarf any diversification benefit from ETF exposure."
Gemini's claim that SPCX isn't a public equity and that ETF exposure is synthetic hinges on an important distinction the article omits. If SPCX is a private proxy or synthetic, tracking errors, liquidity gaps, and valuation smears amplify risk far beyond domestic equities. Even assuming some public listing, the larger risk is ETF rebalancing/liquidity drag in a post-IPO, high-volatility name—far bigger than the article acknowledges.
"The article's reliance on 'SPCX' as a public equity masks the structural danger of using private-market proxy funds that lack real-time price discovery."
Gemini’s correction is vital: we are discussing a phantom IPO. If this is a private-market proxy fund, the risk isn't just volatility—it's the 'valuation lag.' These funds often mark private assets to model-based estimates rather than real-time market clearing prices. This creates a false sense of security for retail investors who believe they are buying liquid, mark-to-market exposure. The 'diversification' argument is a trap; you're buying opaque, illiquid assets disguised as daily-traded ETFs.
"Before debating risk, we must settle whether SPCX is a listed equity or a private-market proxy—the article provides no clear evidence either way."
Gemini and Claude both flag a critical gap: we need to verify SPCX's actual listing status before debating ETF mechanics. If it's synthetic/private-proxy, the entire 'diversification through ETFs' thesis collapses—you're buying marked-to-model exposure, not liquid equity. But if SPCX is genuinely public, Gemini's phantom-IPO claim needs evidence. The article's 23.4% post-IPO decline suggests real trading, not synthetic pricing. This factual ambiguity undermines every downstream argument here.
"Rebalancing rules in thematic ETFs could force sales and amplify SPCX downside regardless of listing status."
Claude's point on the 23.4% drop implying actual trading exposes the flaw in Gemini's phantom-IPO stance, yet this still leaves unaddressed how index rebalancing rules could trigger forced sales in volatile names like SPCX. Even modest weights in ARKQ or MISL would then transmit liquidity shocks directly to retail holders, especially if defense spending cycles shift. The diversification thesis weakens further under real-time mark-to-market pressure rather than model valuations.
The panel consensus is that using ETFs to gain exposure to SpaceX (SPCX) is risky due to high volatility, illiquidity, and lack of earnings history. The 'diversification' argument is flawed as ETF weights remain high and could embed significant single-stock risk.
None identified
High volatility and illiquidity of SpaceX, potential rebalancing pressure in ETFs, and reliance on model-based valuations for private proxies.