(Bloomberg) -- Elon Musk’s day-trading fan club is on a buying spree in some of the most speculative parts of the market, from the joke cryptocurrency Dogecoin to a controversial closed-end fund that counts SpaceX among its key holdings — all in hopes that Donald Trump’s election will release more animal spirits.
Destiny Tech100 Inc. (ticker DXYZ), which holds shares of private-market unicorns like SpaceX and Sam Altman’s OpenAI, has already surged roughly 280% over the past week since Trump recaptured the presidency, data compiled by Bloomberg show. The rally triggered multiple volatility halts Monday, and sent its shares up as much as 38% after a 64% jump Friday. Meanwhile, Dogecoin was up nearly 20% in Monday trading amid a broad crypto rally.
Musk was one of Trump’s biggest supporters and a key voice during the closing days of the election. Now that Trump is president-elect, Musk’s companies are hot properties among the retail investing crowd.
While investing in SpaceX is anything but simple for individuals, Destiny Tech100 gives small traders a way to get a piece of the popular private firm. The fund, which reported $56 million net asset value, had about 38% of its holdings in SpaceX as of end of June, according to its filing.
Beyond the closed-end fund, pretty much anything tangentially related to Musk’s vast business empire is catching a bid. Shares of Tesla Inc. are up 42% in a week despite Trump’s well-known skepticism of electric vehicles. Dogecoin has more than doubled over the same time after Musk touted it on his social-media platform X.
“Musk made a huge bet on Trump, and this is the payoff,” said Steve Sosnick, chief strategist at Interactive Brokers.
A Victor’s Spoils
Indeed, Trump’s win is considered as a boon for Elon Musk’s companies, as the founder aggressively backed the “Make America Great Again” ticket. Tesla, which is the only publicly traded entity of Musk’s empire, climbed back over $1 trillion in market value last week after slumping badly through the first four months of the year.
Often referred to as the original meme stock, Tesla has consistently been one of the most heavily traded names among the mom-and-pop investor crowd over the past several years, according to data from Vanda Research. The first time it crossed $1 trillion in market value was part of a retail-trading frenzy that lifted other technology stocks as well, in the midst of 2021’s post-pandemic euphoria.
But it’s SpaceX that may be the real prize for retail investors. While its soaring premium makes it a dramatic case in point, Destiny Tech100 is becoming a go-to vehicle for a cohort of day traders. The fund’s more than $400 million valuation is the highest since April, and it’s trading at almost 10 times its NAV, a premium that puts it among the highest of similar closed-end funds, typically obscure vehicles whose asset values are usually overlooked due to sagging returns and a lack of liquidity.
Now, its popularity is raising concerns about the risk of investing in private assets.
“This is definitely part of the post-election rally, particularly as it relates to Elon’s companies,” said Bloomberg Intelligence ETF analyst James Seyffart. “The issue with DXYZ is that it’s a closed-end fund, which means there’s no mechanism to bring the share price in-line with the NAV like there is for ETFs. Compounding things for this particular fund is that it holds a lot of private assets like SpaceX, which don’t even have a publicly traded price or valuation.”
Since the fund’s debut in March, it has gone through stretches of extreme volatility. At one point in April, it skyrocketed over 1,000% only to fall back flat again in weeks.
--With assistance from Esha Dey and Denitsa Tsekova.
