SpaceX went public just days ago, and Wall Street already rolled out a dozen ETFs that let investors bet 2x on the stock in either direction.
The stock has been on a tear since pricing the biggest IPO ever, and the new funds give traders a way to boost both sides of the move.
These are leveraged ETFs - funds built to deliver double the daily move of a stock, up or down.
Day one volume topped $1 billion, making it one of the busiest debut sessions for single-stock leveraged ETFs on record.
The $1 Billion Day
About a dozen leveraged and inverse SpaceX ETFs started trading Monday, according to Bloomberg.
The standout was a fund called SPCH from Leverage Shares, which gives 2x daily exposure to SpaceX.
SPCH traded over $280 million on day one, which one ETF strategist called possibly a record for the leveraged single-stock space.
The fee is 75 basis points - or 0.75% per year - among the cheapest in the group.
We break down the stories actually moving markets every morning in Market Briefs - five minutes a day, plus a free investing masterclass when you sign up.
Inverse ETFs Drop 20% on Day One
The inverse ETFs are built to go up when SpaceX goes down, with the 2x versions delivering twice that opposite move.
At least four of them fell about 20% on Monday as the stock kept climbing.
SpaceX then surged as much as 17% on Tuesday, sending the long 2x funds up roughly 20% at one point and pushing the inverse funds down for a second day.
The stock's market value is now near $3 trillion, putting it on track to pass Microsoft and Amazon as the fourth-largest public company in the world.
ETF Launches Are Getting Faster
The biggest IPO in history priced just days ago, and by Monday investors already had a dozen leveraged products to pick from, plus options and crypto derivatives tied to the stock.
Leveraged single-stock ETFs are a new product, with the SEC clearing the way for them in 2022 and the category exploding since to include funds tied to Tesla, Nvidia, and Apple.
A blockbuster IPO used to mean investors buying shares, but now it spins up a whole product lineup within days.
And retail traders are eating it up - Vanda Research said SpaceX has become the dominant focus for individual investors, eclipsing almost everything else in the market.
Asset managers say they're meeting demand, while critics warn that regular traders gloss over the fine print on 2x products - the kind of fine print that matters a lot when the stock moves 17% in a single day.
Worth Noting
Leveraged single-stock ETFs reset daily, which means holding them longer than one session introduces decay - a quirk where returns can erode even when the stock moves the right way.
A 2x ETF held through a week of big swings up and down can leave investors with a loss even if the stock ends the week flat.
The 20% moves in both directions on day one showed exactly why these products carry warnings.
More than $1 billion changed hands anyway, split between funds betting the rocket keeps climbing and inverse funds that were already down 20% out of the gate.
If you want this kind of read on the market every morning, join 350,000+ investors reading Market Briefs - you also get a 45-minute investing course as a bonus.
