Shares of Destiny Tech100 Inc. (DXYZ) skyrocketed 21.33% to close at $54.60 on Friday, extending a powerful rally driven by retail investors' hunger for exposure to high-profile private technology companies like SpaceX and OpenAI. The stock touched an intraday high of $54.98 before settling, with after-hours trading showing the shares at $54.77, according to StockAnalysis data.
Massive Volume and Premium
Trading volume surged to approximately 6.7 million shares on Friday, following gains of 10.27% on Thursday and 6.41% on Wednesday, as reported by Investing.com. The fund's last reported net asset value (NAV) stood at $19.97 per share for the quarter ending December 31, meaning the stock now trades at a staggering 173% premium above its underlying portfolio value.
SpaceX IPO Catalyst
The primary driver behind the frenzy is growing anticipation of a SpaceX initial public offering. Reuters reported this week that Elon Musk's space company is considering a June debut that could value it at approximately $1.75 trillion. The same report mentioned a proposed $55 billion semiconductor plant in Texas, further fueling investor excitement. A SpaceX IPO would allow public investors to buy shares for the first time, making Destiny Tech100 a popular proxy for gaining pre-IPO exposure.
Fund Structure and Portfolio
Destiny Tech100 operates as a closed-end fund, meaning its shares trade on the New York Stock Exchange and can deviate significantly from the actual value of its holdings. The fund focuses on investments in venture capital-backed private technology firms. Its shares began trading in March 2024. According to its annual report, the fund holds substantial positions tied to SpaceX and OpenAI, including DXYZ SpaceX I LLC valued at about $54.5 million and DXYZ OAI I LLC, connected to OpenAI Global LLC profit participation units, worth approximately $9.0 million.
CEO's Vision and Capital Raising
CEO Sohail Prasad described the fund's mission as one to “unlock access to the world’s most ambitious private companies,” according to a company statement. Destiny Tech100 is also running an at-the-market share sale program, with a February SEC prospectus outlining plans to offer up to $1 billion in common stock via Jefferies. While this could bring in additional capital, it also risks diluting existing shareholders if the shares are sold.
Competition and Risks
Investors are also drawn to similar vehicles like Ark Venture Fund and Fundrise's listed private-tech offerings, though these have different structures. ARK's Cathie Wood has criticized Destiny's setup, saying its fees and structure saddle investors with “a much higher price point” for the perk of daily liquidity, as quoted by Reuters. Morningstar's Jack Shannon, in a 2024 note highlighted by Reuters, warned that “investors would be wise to stay on the sidelines,” noting that hefty premiums can evaporate when buying interest dries up, leading to sharp drops even if the underlying assets are solid.
Market Structure and Regulatory Concerns
Index firms are considering faster inclusion of mega-cap IPOs into headline benchmarks, which could force passive funds to buy shares of SpaceX or Anthropic if they debut directly into major indices. Baird's Rich Lee flagged to Investopedia that such fast-tracked stocks “may not get the time and proper vetting” they would typically receive. Meanwhile, an investor group has called on the SEC to scrutinize SpaceX's disclosures, adding another layer of uncertainty for DXYZ holders.
