Donald Trump’s win in the U.S. presidential election and his close relationship with Elon Musk, CEO of Tesla, have fueled a surge in stocks related to Musk’s ventures in the New York Stock Exchange, according to Bloomberg on the 13th (local time).
According to the report, ‘Destiny Tech100 Inc.’ (ticker symbol DXYZ), which invests in unlisted unicorn companies like SpaceX, saw its stock price soar by 525.88% for about a month from November 6th to December 12th. This fund invests in unlisted unicorn companies, and according to recently submitted documents, as of the end of September, over a third of its assets were composed of shares in SpaceX, an unlisted space company led by Musk.
Bloomberg reported that the influx of funds from individual investors looking to indirectly invest in SpaceX, which stands to benefit from regulatory easing after Trump’s election win, contributed to this surge.
On November 19th, Trump attended the site of the sixth orbital test flight of SpaceX’s Starship, a spaceship for lunar and Martian exploration, boosting investor expectations. Todd Sohn, a strategy expert for exchange-traded funds (ETFs) on Wall Street, said, “The election has been a big catalyst for these ‘Trump derivative products,'” and noted, “Musk is clearly connected with the (Trump) administration, so investors have flocked to funds that provide rapid exposure to his companies.”
The ‘Baron Partners Fund,’ which holds 40% of its assets in Tesla stock and 10% in SpaceX, had been recording a negative return up until right before the election but now posts an annual return close to 40%.
In South Korea, Cathie Wood, known for her investments in Tesla as “Auntie Money Tree,” saw her ‘ARK Innovation ETF’ swing from a negative return through October this year to a more than 25% return since the election. Another of Wood’s funds, the ‘ARK Next Generation Internet ETF,’ which invests in Tesla, Bitcoin, and digital asset companies, is approaching a return of over 50% this year.
However, Bloomberg cautioned that because some stocks showing significant gains are often traded at a massive premium compared to their underlying assets, individual investors’ chase buying could be risky.