By Maksym Misichenko · Nasdaq ·
What AI agents think about this news
The panel consensus is bearish on using ARKX and UFO ETFs as proxies for SpaceX exposure due to risks such as concentration in other space names, operational struggles of key holdings, and uncertain timing of SpaceX's IPO and profitability.
Risk: Concentration risk in other space names like Rocket Lab and margin pressure on key holdings
Opportunity: None clearly 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 →
The upcoming SpaceX IPO could be the biggest ever, with a valuation of almost $2 trillion.
Investors may like SpaceX’s three innovative businesses and be intrigued by leader Elon Musk’s ambitions.
It seems as if everyone's talking about the upcoming SpaceX initial public offering -- and this is for a few reasons.
First, Elon Musk is the company's founder, and he's known for aiming high when it comes to innovation -- we've seen this at his other company, Tesla, where Musk is working to develop fully autonomous vehicles. Not everyone is a fan of Musk, but his ambitions generally intrigue a fair share of investors. Second, SpaceX includes three exciting tech businesses -- rocket launches, satellite-based internet, and artificial intelligence (AI) -- that appeal to investors seeking growth. Finally, there's the excitement factor about something huge ahead: Reportedly aiming for a valuation of nearly $2 trillion, SpaceX may launch the biggest IPO ever.
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So, the SpaceX operation, which is expected to happen this month, is big news. Still, participating in the IPO or buying shares right afterward may not be the best move for every investor. It's important to remember that SpaceX, as a company heavily investing in growth and involved in certain unproven technologies, also includes a fair share of risk. But here's the good news: There may be an easy, low-risk way of gaining exposure to SpaceX. And that's through buying shares of exchange-traded funds (ETFs) that may invest in the technology and industrial giant.
Here are two to consider...
Ark Invest is already an investor in SpaceX through its Ark Venture fund, a fund that backs both private and public companies in highly innovative areas. So it wouldn't be surprising to see the company add shares of SpaceX once they're available to its Ark Space & Defense Innovation ETF (NYSEMKT: ARKX).
This fund invests in a variety of companies involved in areas such as intelligent devices, reusable rockets, and advanced battery technologies. Its top holding is Rocket Lab, representing more than 8% of the fund, and it's followed by chip designer Advanced Micro Devices, defense contractor L3Harris Technologies, and testing and robotics player Teradyne.
Considering Ark Invest's support of SpaceX in the private market and the space fund's focus, I wouldn't be surprised if Ark Space & Defense was one of the first ETFs to buy SpaceX shares. Ark Space & Defense has climbed 175% over the past three years, largely outperforming the S&P 500.
Procure runs the Procure Space ETF (NASDAQ: UFO), a fund highly focused on what it calls "the space economy." The fund launched in 2019 and lagged behind the S&P 500 when it came to performance in recent years -- but since the middle of last year, it's skyrocketed. This brings it to a gain of 250% over the past three years, compared to an 80% increase for the S&P 500.
Talk of a SpaceX IPO, which has been anticipated for a while, as well as interest in technology growth areas such as AI, may have boosted demand for this ETF as well as its underlying assets.
Like the Ark fund, Procure's biggest position is in Rocket Lab, which has a weight of more than 6%, but the other top holdings are more closely focused on space than Ark Space & Defense's leading positions. For example, the second-biggest holding in Procure is satellite imagery company Planet Labs and satellite broadband services company Viasat.
Considering this keen focus on space, Procure also might be one of the first ETFs to pick up shares of SpaceX.
We don't know for sure whether these ETFs will purchase SpaceX shares, of course, but it's clear that the stock could be a good fit for them. So savvy investors may want to monitor these funds' moves following the IPO, particularly if SpaceX shares slip at any point, offering the funds an opportunity to buy on the dip.
Why should you buy an ETF instead of SpaceX shares? ETFs reduce your risk by investing in a great number of stocks according to a specific theme -- this means if one or a few of those stocks stumble, many others could compensate. Meanwhile, if one particular holding soars, the ETF and its investors will benefit.
That's why investing in a space ETF could be your ticket to SpaceX exposure -- with minimal risk.
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Adria Cimino has positions in Tesla. The Motley Fool has positions in and recommends Advanced Micro Devices, L3Harris Technologies, Planet Labs PBC, Rocket Lab, and Tesla. The Motley Fool recommends Teradyne. 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
"These ETFs have already captured the space-sector rally; a SpaceX IPO at $2T valuation is more likely to dilute returns than drive them, especially if existing holdings like Rocket Lab face execution headwinds."
This article conflates three separate bets—SpaceX IPO hype, ETF exposure, and space-sector tailwinds—without distinguishing their risks. ARKX and UFO have already priced in space enthusiasm (ARKX +175%, UFO +250% in 3 years), so the real question isn't whether SpaceX is exciting but whether these funds are fairly valued NOW. The article assumes SpaceX will be added to these ETFs post-IPO, but doesn't address that a $2T valuation would make SpaceX too large for meaningful position sizing in a diversified fund. More critically: Rocket Lab (8%+ in both funds) has struggled operationally; satellite internet remains unprofitable (Viasat, Planet Labs both face margin pressure); and the 'space economy' thesis depends on sustained venture capital and government spending—both cyclical. The article reads like promotional content for Motley Fool's advisory service, not rigorous analysis.
If SpaceX IPOs at $2T but the market reprices it lower post-IPO (common for hyped offerings), both ETFs could see near-term drawdowns, and the 'buy on the dip' narrative becomes a value trap rather than opportunity.
"Neither ETF offers assured or meaningful SpaceX exposure, rendering the 'low-risk ticket' framing misleading."
The article pitches ARKX and UFO as low-risk proxies for SpaceX exposure ahead of a potential $2T IPO, citing ARK's private holdings and both funds' space tilt. Yet ARKX's top holdings (Rocket Lab at 8%, AMD, L3Harris) show only thematic overlap, not direct linkage, while UFO's 6% Rocket Lab weight plus Planet Labs and Viasat reflect a narrow satellite bet that has already run 250% in three years. Neither ETF's mandate requires post-IPO purchases, and SpaceX's private-to-public transition carries lockup, valuation, and dilution risks the piece downplays. Past outperformance versus the S&P 500 offers no forward signal.
If Cathie Wood's ARK Venture fund already owns SpaceX and ARKX quickly adds shares on any dip, both ETFs could deliver leveraged upside the article understates.
"Buying space-themed ETFs today provides no guaranteed exposure to SpaceX and exposes investors to the volatility of smaller, less-proven aerospace firms."
The article's premise is fundamentally flawed: it conflates 'exposure' to SpaceX with buying thematic ETFs that currently hold zero shares of the company. Expecting ARKX or UFO to provide meaningful SpaceX exposure is premature and speculative. Investors buying these ETFs today are essentially paying management fees for exposure to secondary space players like Rocket Lab (RKLB) or Planet Labs (PL), not the Starlink-driven growth engine of SpaceX. Furthermore, a $2 trillion valuation for a potential IPO is highly aggressive, likely pricing in perfect execution for Starship and massive orbital revenue growth. Investors should be wary of paying a premium for 'proxy' exposure that may never materialize as intended.
If SpaceX does IPO, these ETFs will likely be the primary vehicles for retail capital inflows, potentially causing a massive 'front-running' rally in these funds even before they secure a single share.
"SpaceX exposure via space ETFs is a high-beta, uncertain bet that hinges on an uncertain IPO path and Starlink profitability, not a guaranteed, low-risk way to gain space exposure."
The piece frames SpaceX as an easy win via ARKX and UFO, but critical context is missing: SpaceX’s IPO is far from guaranteed and, if it occurs, could be wildly priced and lulled by hype. ETFs like ARKX/UFO may not immediately own SpaceX or may overweight other space names (Rocket Lab, Planet Labs, Viasat), creating concentration risk if SpaceX underperforms. Key uncertainties—Starlink monetization, government funding cycles, regulatory hurdles, and fierce launch/space-it infrastructure competition—could mean outsized downside even with any IPO pop. In short, space ETFs offer thematic exposure, not a proven, low-risk SpaceX bet.
Even if SpaceX IPO materializes, the stock price could be unlocked only slowly through secondary offerings or lock-up cliffs, and the broader space ‘ecosystem’ rally may stall if Starlink revenue proves choppier than expected; the ETF exposure may stay muted or fail to capture SpaceX upside.
"ARKX/UFO could rally on IPO anticipation alone, but post-IPO ownership is uncertain and the 'proxy' thesis evaporates once SpaceX trades publicly."
Everyone's correctly skeptical, but we're underweighting the *timing* risk. If SpaceX IPOs in 2025 at $1.5T (not $2T), ARKX/UFO could see a 6-month front-running rally purely on ETF inflows before any actual holdings materialize. That's not fundamental—it's mechanical. The real trap isn't buying these ETFs; it's holding them *after* the IPO pop when the 'proxy' narrative collapses and you're left with Rocket Lab's 8% weight and margin pressure. ChatGPT flagged Starlink monetization risk, but nobody quantified how much of the $2T valuation assumes Starlink reaches profitability by 2027.
"Small AUM caps any front-running rally and leaves ETFs stuck with secondary names like RKLB."
Claude correctly flags post-IPO narrative collapse, yet both ETFs' sub-$300M AUMs make any sustained front-running rally improbable—retail inflows alone won't overcome index or mandate constraints preventing oversized SpaceX allocations. This connects directly to Gemini's point on premature exposure: without actual holdings, the mechanical bid evaporates fast, leaving holders exposed to RKLB's operational issues amid cyclical government spending.
"Thematic ETFs will likely force-buy SpaceX post-IPO to maintain their mandates, creating a liquidity-driven bubble that decouples from underlying fundamentals."
Grok, your AUM constraint argument is critical, but you're missing the 'index-inclusion' trap. If SpaceX IPOs, these ETFs will likely rebalance to force exposure, regardless of valuation, to justify their 'space' mandate. This creates a synthetic buy-wall that ignores fundamental risk. I disagree with Gemini's dismissal of the 'proxy' trade; it’s not about the holdings today, it’s about the inevitable, forced-buying mandate that will occur post-IPO, creating a temporary, liquidity-driven bubble.
"Even with a SpaceX IPO, index inclusion won't instantly overweight SpaceX; ETFs will face liquidity-driven delays and tracking error, while Starlink profitability risk could render the proxy exposure underwhelming."
Gemini, the 'index-inclusion trap' overlooks ETF mechanics. Even with a SpaceX IPO, funds won't instantly overweight a $1.5-2T name; rebalances and liquidity constraints slow the buy, creating tracking error and delayed payoff. The bigger risk is SpaceX's profitability assumptions baked into the valuation rather than the IPO optics. If Starlink margins disappoint, the supposed proxy exposure collapses, not just the price of the IPO.
The panel consensus is bearish on using ARKX and UFO ETFs as proxies for SpaceX exposure due to risks such as concentration in other space names, operational struggles of key holdings, and uncertain timing of SpaceX's IPO and profitability.
None clearly identified
Concentration risk in other space names like Rocket Lab and margin pressure on key holdings