Elon Musk, CEO of SpaceX, visits the VivaTech technology startup and innovation fair at the Porte de Versailles exhibition center in Paris in June 2023. [AFP]
Elon Musk, CEO of SpaceX, visits the VivaTech technology startup and innovation fair at the Porte de Versailles exhibition center in Paris in June 2023. [AFP]

With Elon Musk's SpaceX on the verge of listing on the Nasdaq, a wave of leveraged and inverse exchange-traded funds is expected to flood the market almost immediately after shares begin trading. Products tracking two and three times the daily return are already in the pipeline, signaling the start of a full-blown Wall Street scramble for SpaceX exposure.

According to Bloomberg, major ETF providers — including ProShares, Leverage Shares, Defiance ETFs, GraniteShares, REX Shares and Direxion — plan to launch roughly 12 SpaceX-related ETFs on Monday, the first trading day after Friday's listing.

The products will center on leveraged and inverse ETFs that track either twice SpaceX's daily share price return or twice the inverse of that return.

"Few companies have captured investor attention the way SpaceX has, and this listing is one of the most anticipated market events in years," said Will Rhind, CEO of GraniteShares. "Through the GraniteShares 2X Short and Long SpaceX Daily ETFs, investors will be able to take a two-times leveraged or inverse position in SpaceX — a company at the forefront of aerospace, satellite communications and space technology innovation."

Market observers say competition is intensifying to capture a first-mover advantage in the roughly $15 trillion global ETF market. Because the products are structurally similar, providers are trying to differentiate themselves through distribution networks, marketing and launch timing.

"Being first to market, or as close to first as possible, matters enormously," said James Seyffart, an ETF analyst at Bloomberg Intelligence. "Issuers will pull out all the stops to be the first to launch a leveraged ETF right after the IPO."

In the United Kingdom, a triple-leveraged product is set to debut on the day of the listing itself, Friday.

Leverage Shares, a specialist exchange-traded product provider, will list a 3x leveraged SpaceX ETP on the London Stock Exchange on Friday. The dollar-denominated product will trade under the ticker "ELON" — named after Musk — while the pound-denominated version will use "MUSK."

However, even if large sums flow in on the first day of trading, the product price will in effect remain flat. The provider will hold the day's inflows in cash and build its SpaceX position in a single batch at the close of the US market.

As a result, capital that flows in on Friday will be held in cash, with positions set based on that day's closing price. The full 3x return tied to actual SpaceX share price movements will only kick in from Monday, after the weekend.

"The SpaceX 3x ETP will begin trading on Friday, but funds will remain in cash until the position is established," said Oktay Kavrak, a managing director at Leverage Shares. "Even if buying surges on the first day of listing, the ETP price will not move."


moon@heraldcorp.com