Investors are piling into SpaceX (NASDAQ: SPCX), one of the most anticipated IPOs in recent market history. Since debuting at $150 per share, the stock has surged to more than $203, pushing its valuation above $2.5 trillion as investors bet aggressively on the company’s artificial intelligence, cloud computing, and data center growth potential.
While SpaceX’s valuation has sparked debate due to its lack of profitability and premium revenue multiple, Wall Street remains focused on its long-term growth prospects, fueled by major customer agreements and ambitious revenue targets outlined by CEO Elon Musk. It’s also now trading at 100x 2025 revenues, with no profits to speak of. In 2025, the company generated less than $20 billion in revenues and is expected to stay unprofitable for a while, which makes its current valuation a bit hard to stomach.
The Buying Frenzy Continues
That’s especially true after Elon Musk said the company’s revenue could eventually grow to about $1 trillion by 2030. If that were to happen, the company’s current $2.52 trillion market cap doesn’t seem so far from reality. “I would be surprised if revenue is not greater than $1 trillion in 2031,” added Musk, as quoted by Reuters.
Fueling more upside, SPCX just signed an agreement with Google to provide cloud services for $920 million a month over the next 32 months. It also signed an agreement with Anthropic “to rennet compute capacity at its Colossus data center for $1.2 billion per month over three years,” as reported by MarketWatch.com.
So far, investors are doing okay with the new IPO. Those that chose to trade the IPO a bit safer with exchange-traded funds (ETFS) are also doing quite well.
FPX Offers a Diversified Alternative
With an expense ratio of 0.61%, the First Trust US Equity Opportunities ETF (NYSEARCA: FPX) tracks hot IPOs, giving investors access to new stocks during their initial, most crucial days on market. By buying it, not only can you avoid paying gobs of money for IPOs that may or may not work out, but you’re also being exposed to multiple hot IPOs at the same time at lesser cost.
When we first mentioned the FPX ETF, it traded at around $185 on May 15. Today, it’s up to $199.27 and could rally even higher on the current strength of the SPCX IPO.
Looking Beyond a Single IPO
With an expense ratio of 0.6%, the Renaissance IPO ETF (NYSEARCA: IPO) provides “investors with the largest, most liquid US-listed newly public company stocks in one security, reducing the risk of single-stock ownership while avoiding overlap with major core indices for optimal diversification across markets and time,” as noted by Renaissance Capital.
Since May 15, it has rallied from about $49; it’s now up to $58.05 and gaining momentum.
Key Takeaways for Investors
While SpaceX has captured investors’ attention with its explosive post-IPO performance, the stock’s lofty valuation and lack of profitability may not be suitable for every investor. That’s where IPO-focused ETFs such as FPX and IPO can offer an appealing alternative. Rather than betting on a single high-profile company, investors can gain diversified exposure to some of the market’s newest and fastest-growing public companies.
If the enthusiasm surrounding SpaceX continues, both ETFs could benefit from the broader momentum in newly public stocks. At the same time, their diversified approach may help reduce some of the volatility that often comes with owning a single hot IPO. For investors who want exposure to the next generation of market leaders without taking on as much company-specific risk, these ETFs may be worth a closer look.
