Alphabet Inc (NASDAQ:GOOGL)(NASDAQ:GOOG) could be heading for another earnings tailwind — and investors in ETFs may feel this before they realize why.
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SpaceX, a closely held rocket and satellite technology firm established by Elon Musk, is in the process of completing a tender offer, which takes the total company value to approximately $800 billion, based on a Bloomberg report.
As part of this offering, insider shares are being valued at $421 each, thereby leading to a dramatic increase in the existing investment in the firm by Alphabet, which had a lower secondary stock value.
Though SpaceX is not available to public investors, a revaluation in this company can have a direct transfer into Alphabet-dominated ETFs, hence bringing back a common phenomenon where private markets have a silent impact on public market performance.
ETFs With Exposure To “The Hidden” SpaceX Upside
Alphabet does not break out individual private investments in its filings, but private valuations of SpaceX have appeared in its earnings statements before, especially in ETFs with heavy investments in Alphabet.
Nasdaq 100 index-tracking funds, such as the Invesco QQQ Trust (NASDAQ:QQQ), are major beneficiaries since Alphabet is one of the top components. A new accounting gain related to SpaceX may go a long way in ensuring Alphabet's bottom line is stronger without necessarily moving much in the advertising and cloud segments.
Communication Services ETFs have exposure as well. The Communication Services Select Sector SPDR Fund (NYSE:XLC) holds Alphabet among its top stocks, with around 20% exposure to both Class A and Class C shares. Also, a broader index such as the Vanguard Communication Services ETF (NYSE:VOX) will benefit from any profit surprise with respect to non-operating gains. VOX holds almost 15% in Alphabet across both types of shares.
On the other hand, equal-weight investment in S&P 500 or communication services sector ETFs will be less affected, which illustrates how concentrated exposure in mega-cap stocks can have a magnified impact on accounting-driven increases in earnings.
Also Read: SpaceX Worth $1.5 Trillion In 2026 IPO? Here’s How You Can Invest Ahead Of Public Offering
Why Alphabet’s Earnings Suddenly Matter
Alphabet has been a SpaceX investor since at least 2015, when it participated in a $1 billion funding round with Fidelity Investments, with both investors acquiring a collective interest of approximately 10%, according to Bloomberg.
Back in early this year, Alphabet reported an $8 billion gain on what is widely believed to be SpaceX, based on a tender offer in late last year when it was valued at $350 billion. As a result, Alphabet reported a net income in the March quarter above market expectations despite a mixed performance in its main businesses.
Alphabet categorizes such gains into “unrealized gains on non-marketable equity securities,” which are reflections of private valuations being able to affect earnings without any stock being sold.
What Investors Will Be Watching
As a continuation of this trend in the latest tender with a valuation over double last year's level, market players are expecting Alphabet's next earnings report to show another accounting increase, with resulting ETF flows.
During the last week of April this year, after Alphabet revealed the “unrealized” gains, there was a spike in inflows into XLC worth more than $102 million, according to data compiled by VettaFi.
For ETF investors, the episode is a reminder that exposure to mega-cap tech isn't just about AI, advertising or cloud growth. Sometimes, the real surprise comes from a private rocket company quietly lifting reported profits.
In this case, owning Alphabet through an ETF may turn out to be the closest thing to owning SpaceX.
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