Key Takeaways
Destiny Tech100 (DXYZ), a fund providing exposure to private tech companies, has rallied 44% year-to-date, closing at $54.60 as investor appetite grows for its largest holding, SpaceX.
"He was building EWS [Elon Web Services] all along," Altimeter Capital founder Brad Gerstner said on the All-In Podcast, outlining a strategy that could add $4 billion to $5 billion in new revenue for SpaceX this year.
The fund, which holds 16.2% of its assets in SpaceX, saw its stock jump 13% in recent overnight trading. On the Stocktwits platform, message volumes for DXYZ surged 2,100% over the past week, with retail sentiment rated as 'extremely bullish'.
The sharp premium between DXYZ's market price and its net asset value of $19.97 per share highlights the intense public demand for a piece of high-growth private firms like SpaceX, which is anticipated to be one of history's largest IPOs.
The excitement follows commentary from Gerstner, who detailed SpaceX's evolving business model beyond launches. He described a "five-layer cake" strategy encompassing its core launch business, the Starlink satellite network, hyperscale processing, space data centers, and artificial intelligence applications. This vertical integration could transform SpaceX into a major competitor in the cloud computing space, a market dominated by giants like Amazon Web Services.
Gerstner estimated the AI infrastructure component alone could generate an additional $4 billion to $5 billion in revenue this year, a significant boost to a company already generating revenue in the "mid-20 billions," according to analyst estimates. This new revenue stream could fund the development of xAI's Grok models while reducing pressure on xAI to generate standalone revenue.
Destiny Tech100 is a closed-end fund designed to give public investors access to a portfolio of high-growth, late-stage private technology companies. As of the end of 2023, the fund reported a net asset value of $19.97 per share, a 76% increase from the prior quarter.
SpaceX is the fund's largest position, but its portfolio also includes significant stakes in other prominent private firms, including xAI, Anthropic, OpenAI, and Databricks. This makes DXYZ a proxy trade for investors looking to gain exposure to these companies before they go public. The fund's recent performance underscores a robust demand for such vehicles, even as the gap between the share price and the underlying NAV widens.
This article is for informational purposes only and does not constitute investment advice.
