Recent market activity shows investors linked to Elon Musk engaging heavily in speculative trades, including acquiring stocks like Destiny Tech100 Inc. (DXYZ, Financial) and cryptocurrencies such as Dogecoin. This surge in interest aligns with the re-election of Donald Trump, an event believed to inspire market optimism and risk-taking.
Since Trump's victory, Destiny Tech100 Inc. (DXYZ, Financial), which holds stakes in private companies like SpaceX and OpenAI, has seen its stock price soar by approximately 280% over the past week. On Monday, this spike caused multiple trading halts, with the stock jumping 38% following a 64% rise on the previous Friday. Similarly, Dogecoin experienced a significant increase of nearly 20% amid a broader cryptocurrency rally, further fueled by Musk's promotion on social media.
Musk's strong support for Trump's campaign has turned his companies into key interest areas for retail investors. Destiny Tech100 offers an opportunity for small investors to gain exposure to SpaceX, with 38% of its net asset value tied to the private aerospace company. The fund's net assets were valued at $56 million as of the end of June.
Additionally, any asset associated with Musk's expansive business empire is experiencing heightened demand. Despite Trump's skepticism towards electric vehicles, Tesla's (TSLA) stock rose by 42% over the week. Tesla, the sole publicly traded company in Musk's portfolio, saw its market capitalization rebound to over $1 trillion, after a challenging start to the year.
Vanda Research highlights Tesla's (TSLA) status as a popular meme stock and one of the most traded stocks among retail investors over the past few years. Its valuation first surpassed $1 trillion during the post-pandemic market boom in 2021, which also boosted other tech stocks.
However, SpaceX remains the primary draw for retail investors. Destiny Tech100's valuation has surpassed $400 million, the highest since April, trading at nearly 10 times its net asset value. This premium positions it as a standout among closed-end funds, which are typically less known due to declining returns and liquidity issues.
The fund's popularity has raised concerns about the risks associated with investing in private assets. Bloomberg Intelligence ETF analyst James Seyffart noted that the post-election rally, particularly related to Musk's companies, poses challenges. As a closed-end fund, Destiny Tech100 lacks the mechanisms ETFs have to align stock prices with net asset values. The fund's significant holdings in private entities like SpaceX, lacking public valuations, further complicate the scenario.
