ERShares has implemented a shareholder protection plan for its ERShares Private-Public Crossover ETF (NASDAQ: XOVR) to mitigate volatility and protect long-term investors ahead of the highly anticipated SpaceX IPO. The asset manager aims to shield existing shareholders from potential trading surges and liquidity pressures that often accompany major market debuts. The fund currently holds roughly $50 million in unrealized appreciation from its SpaceX exposure, a value reflected in its net asset value (NAV).

To preserve this value, ERShares plans to restrict certain large creation orders before the IPO. Additionally, the firm may impose redemption fees of up to 2% on creation-unit redemptions starting on the day SpaceX begins trading. These measures are designed to reduce transaction costs, liquidity pressures, and potential dilution resulting from short-term inflows and outflows around the listing event.

"SpaceX is a long-term conviction holding for XOVR, and as the IPO approaches, our priority is simple: protect long-term shareholders from short-term flows that may create unnecessary costs or potential dilution," said Joel Shulman, CEO and CIO of ERShares.

SpaceX IPO Details

SpaceX is scheduled to begin trading on June 12 under the ticker SPCX. Reports indicate the company aims to raise approximately $75 billion at a valuation of around $1.75 trillion. This event is expected to be the largest IPO in history, potentially placing Elon Musk's rocket and satellite company among the world's largest publicly traded firms immediately upon listing.

The IPO is expected to trigger significant demand from index-tracking funds. MSCI confirmed that SpaceX would likely qualify for early inclusion in its global indexes shortly after listing, potentially attracting billions of dollars in passive investment flows.

Fund Structure and Risks

XOVR was among the first ETFs to adopt a private-public crossover structure, combining publicly traded growth stocks with exposure to select private companies. The fund obtains its SpaceX exposure indirectly through a special-purpose vehicle (SPV), which ERShares considers a core long-term holding.

ERShares acknowledged that its protection measures could result in XOVR trading at a discount to NAV or experiencing unusual secondary-market price movements once SpaceX goes public. However, the firm stated these steps are intended to support fair treatment of existing shareholders during the expected volatile period.

Tesla, Inc. shares dropped about 1.5% Tuesday morning, after surging 4.59% on Monday to close at $408.95, as investors attempt to price in the imminent arrival of Elon Musk’s second trillion-dollar public company. SpaceX is set to begin trading on the Nasdaq this Friday, pricing 555.6 million Class A shares at a fixed $135 each. The raise of $75 billion would dwarf Saudi Aramco’s 2019 record and land SpaceX at a roughly $1.75 trillion implied valuation, creating a dynamic of promise and peril for Tesla shareholders.

NYU professor Scott Galloway warned that a wave of upcoming AI IPOs could trigger an 80% collapse for one new market debut, with potential aftershocks hitting already-public AI names like Nvidia Corp and Tesla Inc. "I got to think that in the next 12 to 24 months, one or two of these three companies is off 60 or 80%," Galloway said, comparing the AI buildout to the railroad and dot-com booms. He noted that Cisco Systems Inc lost more than 90% of its value between 1999 and 2001 and never recovered.

Capital Rotation Risks

Co-host Ed Elson estimated the upcoming raises may collectively demand around $400 billion in fresh equity, including anticipated $100 billion debuts from Anthropic and OpenAI, and Alphabet Inc’s $84.75 billion equity offering. BNP Paribas analyst James Piccolo flagged the capital rotation dynamic, warning it could split Tesla’s famously loyal retail base. Multi-strategy growth funds operating under hard "Musk exposure" caps face a forced choice: buy SpaceX or hold Tesla, but not both at full weight.

Bull and Bear Cases for Tesla

In the bull case, a blockbuster SpaceX debut forces the market to reassess the premium attached to Tesla’s AI stack, including Dojo supercomputing and Full Self-Driving. A public SpaceX also gives Musk a liquid equity stake, reducing the risk that he sells Tesla shares to fund other ventures. Tesla disclosed a $2 billion equity investment in SpaceX in its Q1 earnings, and the two companies are jointly building "the largest chip foundry in the U.S." at the Gigafactory Texas campus.

Allianz Global Investors strategist Stefan Rondorf argued the IPO wave will result in reallocation rather than disruption, noting the $400 billion figure represents less than 1% of U.S. equity market capitalization. DataTrek Research estimates institutional reallocation takes roughly three months to register in share prices, meaning the Tesla trade that matters most will be written over the summer. Polymarket traders give SpaceX an 81% chance to be 2026’s largest IPO by market cap.