SpaceX Is Targeting a $2 Trillion IPO. Why Isn't XOVR Benefiting?

Late last week, Bloomberg reported that SpaceX was targeting a valuation of $2 trillion in its IPO this year. That's up massively from the $1.25 trillion it was valued at in February when it merged with Elon Musk's AI company xAI, and the $800 billion valuation it carried in December.

You would think a 60% jump in valuation in just a couple of months would be great news for an ETF with nearly half its portfolio in SpaceX.

But no.

The ERShares Private-Public Crossover ETF (XOVR) gained 1.6% on Thursday and 1.3% on Monday (Friday markets were closed for Good Friday). That's nothing to write home about with the S&P 500 up 0.4% and 0.9% on those days.

XOVR remains deep in the red for the year with a loss of 15.3% versus 3.1% for the S&P 500 through April 6. 

The fund’s website says about 42% of its portfolio is tied to SpaceX through an SPV.

Why No Pop?

Perhaps the fact that XOVR didn't skyrocket on the SpaceX news shouldn't be a surprise. An ETF holding private companies doesn't necessarily update its marks based on every rumor or report. If the issuer holds the SpaceX valuation where it is for now, NAV doesn't change and there's no reason for the price to jump.

But if investors believed the SpaceX stake had truly increased in value, they could rush into the fund hoping to buy a bargain, paying today's stale NAV for a portfolio that's actually worth more.

That's essentially what happened last December, when over a billion dollars flowed into the ETF after news that SpaceX's valuation had doubled to $800 billion from $400 billion in July 2025. Investors piled in hoping to ride the markup.

Fool Me Once

But despite ERShares eventually increasing the value of SpaceX on its books, investors never benefited. 

Morningstar analyst Jeffrey Ptak speculated that the SPV arrangement may have prevented SpaceX's gains from flowing through to shareholders, possibly due to fees, dilutive ownership terms, or other structural factors. 

Once it became clear the markup wasn't going to benefit shareholders, money flowed out and SpaceX's weight in the portfolio ballooned as the fund offloaded public holdings to meet redemptions.

Given that history, investors aren’t exactly rushing in this time. At least not yet.

And you can't blame them. XOVR has basically not benefited at all from holding a substantial SpaceX stake since December 2024, despite the company's valuation surging from around $350 billion to potentially $2 trillion. 

Since initiating the position, the fund has lost 8.7% while the S&P 500 gained 11%.

A Self-Defeating Trade

About $29 million has flowed into the ETF over the past week, so maybe some investors are tentatively nibbling, hoping it plays out better this time and they can buy a dollar at a steep discount. 

But even if they're right about the valuation, the trade is self-defeating. The more money that flows in, the more the bargain gets watered down. New cash either has to buy more SpaceX at a much higher valuation than what existing shareholders paid, raising the fund's average cost, or it goes into public stocks, diluting the SpaceX exposure that investors came for. 

Each investor's eventual upside depends on what other investors do, which is impossible to predict.

None of this even touches the SPV issues, which haven't gone away. ERShares still hasn't disclosed the terms of the vehicle, and the track record suggests gains may not flow through regardless.

It’s remarkable that a company’s valuation can surge this much and a fund holding so much of it can barely benefit. It’s another reminder of the gap between what ETFs holding private assets promise and what they actually deliver.