SpaceX just had the biggest IPO in market history on Friday, and by Monday, the ETF industry was already racing to offer leveraged bets on the stock. Direxion was first out of the gate with the Direxion Daily SpaceX Bull 2X ETF (LOFF), a single-stock leveraged fund that aims to deliver twice the daily return of SpaceX shares (SPCX).
The fund's objective is straightforward: before fees and expenses, it seeks 200% of the daily performance of SpaceX. That means if SpaceX stock goes up 5% in a day, LOFF should go up about 10% (minus expenses). Of course, the reverse is also true—a 5% drop in SpaceX would translate to a roughly 10% loss in the ETF. Leverage cuts both ways.
Direxion is no stranger to this game. The firm is already the largest issuer of single-stock ETFs in the U.S., with products like the Direxion Daily TSLA Bull 2X ETF (TSLA) among the most popular. Mo Sparks, Direxion's Chief Product Officer, summed up the rationale: “Few companies have been tracked as fervently as SpaceX. With LOFF, active traders can act on that conviction from the start of public trading.”
But Direxion won't have the SpaceX leveraged ETF market to itself for long. A handful of other issuers are lining up similar products:
- Defiance ETFs is expected to launch the Defiance Daily Target 2X Long SpaceX ETF (SPCU). Defiance has been one of the most aggressive players in the single-stock leveraged space over the past two years.
- ProShares is set to roll out the ProShares Ultra SpaceX ETF (SPCF), also targeting 2x daily returns. ProShares says the fund is for investors who want amplified exposure without using margin.
- GraniteShares is planning the GraniteShares 2x Long SpaceX Daily ETF (SPAL), adding to its lineup of leveraged single-stock products focused on high-growth names.
- REX Shares and Leverage Shares have both indicated they will offer SpaceX-linked leveraged exposure as well.
All these funds are designed for active traders with a short-term horizon. Because they reset daily, their performance over longer periods can deviate significantly from simply multiplying SpaceX's return by two. That's a feature, not a bug, for day traders, but it means these aren't buy-and-hold vehicles.
The rapid proliferation of SpaceX leveraged ETFs underscores the intense investor interest in the aerospace company, which has long been a private-market darling. Now that it's public, the financial industry is wasting no time creating tools for traders to bet on—or against—its stock with extra firepower. Whether that's a good idea is another question, but for now, the race is on.
