SpaceX IPO speculation draws retail funds into space ETFs

2026-05-30

Front-running on Musk appeal

Retail investor money is flowing rapidly into exchange-traded funds (ETFs) that hold space-related stocks ahead of SpaceX's initial public offering (IPO). With the roadshow for institutional investors expected to start as early as next week, interest in related products is already rising in the U.S. stock market.

Elon Musk has strong support among retail investors, and Tesla, where he serves as chief executive officer (CEO), also has a high proportion of individual shareholders. SpaceX is said to be considering a plan to allocate 30% of any shares sold in an IPO to retail investors, riding on this 'Musk appeal'. The usual allocation is said to be 5% to 10%, and U.S. retail investors may have an early chance to buy shares through online brokers such as Robinhood and Charles Schwab.

Pre-emptive demand for ETFs

While SpaceX is expected to become popular, it will not be easy to buy the company's shares directly at the time of the IPO. Some investors are therefore moving money ahead of time into space-related ETFs. One standout is the Tema Space Innovators ETF, which listed only at the end of March and uses the ticker symbol 'NASA'.

The Tema Space fund's net assets reached $2.274 billion as of May 28, 8.5 times higher than at the end of April. According to QUICK-FactSet, it ranks among the top 600 of more than 5,000 ETFs listed in the U.S., making for an unusually fast expansion for a fund listed for less than two months.

Space-related ETFs aimed at a SpaceX listing are also being launched one after another. According to U.S. brokerage Strategas Securities, six ETFs including Tema Space have listed since February, and three have already filed for listing. The reason money is flowing so heavily into Tema Space is that it holds SpaceX shares through a special purpose vehicle (SPV).

Index inclusion and spillover to related stocks

In connection with SpaceX's IPO, multiple index providers are reviewing their inclusion rules and moving early to add the company. Its free float at listing is expected to be less than 5%, making it likely that buying, including from ETFs, will concentrate heavily. Todd Sohn of Strategas Securities said, 'It is difficult to predict the market's reaction, but volatility could increase.'

Expectations for a listing are spilling over to space companies beyond SpaceX. Shares of Rocket Lab and Firefly Aerospace have more than doubled from the end of last year, but related stocks were sold across the board in U.S. trading on the 29th.

Bloomberg reported on the 28th that SpaceX had lowered its target valuation from $2 trillion to $1.8 trillion. On the 29th, a rocket from Blue Origin, led by Amazon.com founder Jeff Bezos, exploded during a combustion test, but no injuries were reported. The incident underscored once again how difficult the space business can be.

Investors' hopes are swelling as if the next theme after artificial intelligence (AI) is space. However, many space-related companies have managed to grow revenue without turning a profit. It still remains to be seen whether the sector will establish itself as the next growth area.

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