Fundrise Innovation Fund LLC (VCX) plummeted 19.85% in pre-market trading on Friday, extending recent losses for the closed-end fund that invests in pre-IPO technology companies.

The sharp decline follows Citron Research's disclosure of a short position in the company, citing regulatory issues after Fundrise Advisors LLC was fined by U.S. securities regulators for paying financial influencers to promote products without proper disclosures. Additionally, the fund has been trading at unsustainable valuations, having reached a peak of 31 times its net asset value earlier in the week, creating an extreme premium that analysts consider unwarranted.

Further pressure came from an insider selling plan, with an officer proposing to sell approximately $23.71 million worth of shares. Market observers note the trading action reflects a broader cooling of IPO mania and speculative frenzy around pre-IPO investments, with the fund's significant holdings in companies like SpaceX contributing to volatility as investors reassess underlying value.