SpaceX stock, the riskiest of all, had a big first week of trading

SpaceX’s IPO not only marked the biggest debut in market history — it also spawned a historic land grab for leveraged ETFs.

within days of spacex Going public, competing fund firms launched 11 leveraged exchange-traded funds linked to the stock, with trading volumes that blew past expectations. More than $10 billion was traded in leveraged ETF trading during SpaceX’s first week on the stock market, a shortened holiday trading week that included four days through Thursday. This was one of several notable market figures revealed about the deal.

Leveraged single-stock ETFs are designed to deliver a multiple of a stock’s daily return that is typically two times, either long or short. Since these funds reset daily, their returns may be meaningfully lower than the underlying stock.

Leveraged stocks led the gains, with more than $1 billion in volume over the three days in its long SpaceX ETF from Tuesday to Thursday, and also significant volume in its short SpaceX ETF.

Todd Sohn, chief ETF strategist at Strategas Securities, says the pattern is familiar, even if the scale is unusual. When a heavyweight name like Nvidia or Tesla has a leveraged ETF built around it, demand is visible. SpaceX not only brought the biggest IPO in the history of the market, but also got Elon Musk’s name associated with it.

Trading volume of $4.2 billion in the leveraged SpaceX ETF on Tuesday was the peak day of the week.

SpaceX Leveraged ETF, First Week Trading Volume

• Leveraged Shares 2X Long SPCX Daily ETF (SPCH): $4 billion
• Leveraged Shares 2X Short SPCX Daily ETF (SSPC): $2.56 billion
• GraniteShares 2x Short SpaceX Daily ETF (snk): $765 million
• ProShare Ultra SpaceX (SPCF): $607 million
• Defiance Daily Target 2X Long SpaceX ETF (SPCU): $557 million
• GraniteShares 2x Long SpaceX Daily ETF (SPAL): $516 million
• Direxion Daily SpaceX Bull 2X ETF (Loaf): $378 million
• Defiance Daily Target 2X Short SpaceX ETF (SPCQ): $345 million
• Trader 2X Short SpaceX Daily ETF (SPCG): $339 million
• T-Rex 2X Long SPCX Daily Target ETF (SPAX): $332 million
• Trader 2X Long SpaceX Daily ETF (SPCM): $251 million

Source: Strategas Securities, Bloomberg

The SpaceX IPO attracted a high level of interest from retail investors, but many had limited access to shares. Major issuers of ETFs caution that these portfolios are designed for sophisticated self-directed traders, hedge funds and proprietary trading desks. The products are not designed for retail investors to buy and hold.

Paul Marino, chief revenue officer of Leveraged Shares, said that a stock moves in one direction, “adds up and performs really well”, but when the stock becomes more volatile it reverses rapidly, and that will be the real test for investors with these products. SpaceX started the week with two consecutive days of gains, which contributed to Tuesday’s peak volume, but turned negative in the second half of the week.

After a two-day decline in shares, many investors who bought SpaceX shares after the IPO were left in the dark.

Even though leveraged ETFs aren’t prime long-term stock or bond market holdings, where lowest costs often win, fees can still be a differentiator in a crowded market.

Leveraged Shares’ expense ratio of 0.75% is lower than most of its competitors, which may be a factor in its early volume lead.

Marino said, “If you’re finding a similar product, I don’t care if it’s daily traded or if it’s for long-term investing. The fees matter.”

But GraniteShares CEO Will Rhind, whose SpaceX ETF has an expense ratio of 1.50%, pushed back at that argument, saying that for traders holding a position for a few days, the fee difference is irrelevant. “If you’re holding it for a few days, as an investor it’s practically free,” Rhind told CNBC.

Disobedience depends on time. Its fund was the only leveraged product that was actually traded on the day of the IPO.

“Defense will always be interested in being the market leader in terms of new single stocks,” said Sylvia Jablonski, co-founder and CIO of Defense ETFs. He said the SpaceX ETF is a natural extension of the series of leveraged single-stock funds tied to such names strategy And Rocket Labs.

It’s still an open question whether investors will remain in these trades after the record pace of IPOs subsides.

Leveraged Shares is betting on “a sustainable base of users” regardless of the potential volatility in the stock from day to day. Meanwhile, Anthropic and OpenAI are expected to have IPOs later this year, which could create more competition in the single-stock ETF universe. ETF executives said their companies will be interested in traders taking exposure to these stocks once they hit the market.

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