NEW YORK: Shares of the Fundrise Innovation Fund fell sharply for a second straight day last Friday, though they remain well above the underlying value of its holdings in private tech firms including the potentially initial public offering (IPO)-bound SpaceX and Anthropic PBC.
The closed-end fund sank 34% to US$173 in New York, extending the prior day’s 31% slump.
The pullback capped a wild week of trading since shares listed on the New York Stock Exchange on March 19.
Gains in each of its first five sessions saw the stock price explode to as high as US$575 last Wednesday, or about 3,000% above its estimated net asset value per share of US$18.97.
The past two days’ reversal, which coincided with a short call from Citron Research, was almost as spectacular. A representative for Fundrise Innovation didn’t immediately respond to a request for comment.
Yet with a current market value of slightly more than US$6bil versus net assets in the fund of US$679mil, investors are still paying up for the shares at prices equivalent to more than nine times the combined value of its private company holdings based on their last funding rounds.
This hefty and some say unsustainable premium is not solely due to a rush by small investors to get a slice of the hottest private tech companies.
It also reflects a trading squeeze created by provisions that restrict most of Fundrise Innovation’s 100,000-plus investors from selling in the first six months after the listing are another factor.
The fund is just one of a proliferating number of public investment options for investors that want to secure a liquid exposure to companies such as SpaceX, Anthropic, OpenAI and Anduril.
SpaceX is readying to file for a potential US$75bil IPO in the coming days, Anthropic is eyeing a potential debut raising as much as US$60bil as soon as October and OpenAI is also mulling a plan to list as early as this year, Bloomberg and other media outlets have reported.
Getting stakes in these private companies well before they go public or stay private for longer has long been a challenge for small investors, given their funding rounds are typically confined to large investment firms able to write big checks or that require access to special purpose vehicles.
Though less extreme than Fundrise Innovation, Destiny Tech100 Inc, a venture-focused closed-end fund whose largest holding is in SpaceX, sparked a frenzy of its own when it debuted in 2024.
Notably, its shares now trade at US$28.03, down nearly three quarters from their peak.
“Trading at a massive premium and then seeing the premium quickly collapse is not unique to Fundrise Innovation, as we saw the same pattern occur with Destiny Tech100,” said Jack Shannon, equity strategies principal at Morningstar Inc. — Bloomberg
