Tech Fund’s Bold Investment in SpaceX Leads to Massive Surge, OpenAI Left in the Dust

Tech Fund SpaceX: Shares Plummet as Investments Decline
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  • Tech Fund Destiny Tech100 Inc., holding shares of private tech firms like SpaceX and OpenAI, sees a 23% decline, losing over 80% from peak
  • Fund trading at $18.83, valued four times above reported net asset value of invested tech companies
  • President of Smead Capital Management likens investing in DXYZ to gambling, as volatility persists
  • Fund’s fair net asset value of $54.3 million contrasts with implied market capitalization of over $200 million
  • Company plans to raise money by selling up to $1 billion in stock to invest in a portfolio of 100 companies, aiming to dilute investors’ shares

Tech Fund SpaceX: A Rollercoaster Ride in the Stock Market

In the fast-paced world of stock trading, Destiny Tech100 Inc., a closed-end fund that has investments in private technology firms such as Elon Musk’s SpaceX, OpenAI, and Epic Games Inc., has been making waves. The fund, trading on the New York Stock Exchange as DXYZ, experienced a significant surge in value shortly after its debut, only to plummet by 23% recently, marking losses of more than 80% from its peak. With current trading at $18.83, Destiny Tech100 is still valued at a staggering four times the reported net asset value of the tech companies it holds, which stood at $4.84 by the end of 2023.

OpenAI Sinks: The Downfall After a 1,000% Surge

Cole Smead, the president of Smead Capital Management, likened investing in Destiny Tech100 to gambling, particularly in today’s volatile market environment. The fund’s fair net asset value of $54.3 million pales in comparison to its implied market capitalization of over $200 million, highlighting the speculative nature of the stock. Despite experiencing a surge of over 1,000% at one point in April, the recent downturn has left investors wary.

Investment Prospects and Risks: Navigating the Tech Fund Landscape

The allure of gaining exposure to private tech unicorns enticed many investors, including meme traders, to jump on the Destiny Tech100 bandwagon. However, the recent sell-off indicates a shift in sentiment, with the stock no longer trending in popular chatrooms and absent from Fidelity’s top 30 traded assets. The company’s filing to sell up to $1 billion in stock further complicates the investment outlook, as this move could potentially dilute existing investors’ shares.

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Future Outlook: Challenges and Opportunities in Tech Investment

Despite the recent turbulence, Destiny Tech100 remains committed to expanding its portfolio, aiming to invest in a diversified range of 100 companies, up from its current holdings of over 20 firms. The fund’s ability to navigate the dynamic tech landscape will be crucial in determining its long-term success. As the stock market continues to evolve, staying informed about the latest developments and trends in the tech sector will be essential for investors looking to capitalize on emerging opportunities while mitigating risks.

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