Investors looking for ways to profit from Elon Musk’s close relationship with Donald Trump after his election seemingly have few ways of doing so.
nextstayCCSettingsOffArabicChineseEnglishFrenchGermanHindiPortugueseSpanishFont ColorwhiteFont Opacity100%Font Size100%Font FamilyArialText ShadownoneBackground ColorblackBackground Opacity50%Window ColorblackWindow Opacity0%WhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%200%175%150%125%100%75%50%ArialGeorgiaGaramondCourier NewTahomaTimes New RomanTrebuchet MSVerdanaNoneRaisedDepressedUniformDrop ShadowWhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%0%WhiteBlackRedGreenBlueYellowMagentaCyan100%75%50%25%0%WhileTesla(NASDAQ:TSLA) is the most obvious, as the electric vehicle manufacturer should benefit from Trump cracking down on so-called green subsidies, which would hurt other EV makers more than Tesla, there may be better, perhaps not so obvious ways of doing so.
SpaceXalso stands to gain from the relationship as more NASA contracts flow to the rocket maker, but as it is a privately held company, you can’t buy any shares of the business.
That’s whereDestiny Tech100(NYSE:DXYZ) comes in.
24/7 Wall St. Insights:
- As a privately held company, investors are walled off from investing in Elon Musk’sSpaceX, just as it prepares to benefit from a Trump presidency.
- Yet through the closed-endDestiny Tech100(DXYZ) ETF, which has a large position in SpaceX that represents over 37% of its portfolio, it provides a backdoor way to invest in the rocket company.
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A backdoor investment into SpaceX
The Destiny Tech100 ETF has the lion’s share of its portfolio invested in SpaceX
Destiny Tech100 is a closed-end exchange-traded fund (ETF). That means it raised money for its investments at its initial public offering held in March, so its shares can be bought and sold on a stock exchange (theNYSEin this case), but no new shares are issued and new money doesn’t flow into the fund.
While it is seeking a portfolio of 100 companies, up from its 22 existing positions, the ETF is betting big on the space race.
Destiny invests in gaming, fintech, and artificial intelligence and machine learning companies, but none compare to its positions in the space industry. Its largest holding by far is SpaceX, which represents 37.6% of the total portfolio. It also owns a position inAxiom Space, a provider of spaceflight services for the International Space Station. It represents 9.1% of Destiny’s portfolio.
Beware volatility
The opportunity to gain access to still-private tech unicorns is driving investors to Destiny Tech100’s stock. Since Trump’s election last week, DXYZ stock has tripled in value.
That’s a nice runup but pales in comparison to the surge it saw soon after going public when shares rocketed 1,000% higher. But at $43 today, it is still up 500% from its $8.25 per share price at its IPO open. Yet DXYZ stock remains one of the best ways of investing in SpaceX.
Unlike some other stocks Destiny owns, such asStripe,Plaid, andOpenAI, there is little likelihood Musk will ever take SpaceX public. That means investors have to use roundabout methods like buying DXYZ if they want to capitalize on the potential gains of the space company.
Potential for big gains in space
According to USASpending.gov, a service of the Treasury Dept.’s Bureau of the Fiscal Service, Space X receives the vast bulk of its contracts from NASA, or $1.7 billion, but gets another $505 million from the Defense Dept. Smaller contracts have been awarded by the Commerce Dept., National Science Foundation, and elsewhere.
It’s hard to argue that it doesn’t deserve them, as Musk has pioneered the use of reusable rockets, catching rockets mid-flight with robots, and other advances that were previously the realm of science fiction. It seems likely SpaceX will benefit from its technology offerings during Trump’s presidency.
While Destiny Tech100 will undoubtedly be a volatile investment, it remains arguably the best way to cash in on the future of space, whether it is to the ISS or to occupy Mars.
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