How to Invest in SpaceX
What Is SpaceX?
SpaceX (full name – Space Exploration Technologies Corporation) is an American private company engaged in the production of space technology. It was founded in 2002 by entrepreneur Elon Musk, who was fascinated by the idea of exploring the universe. He managed to get funding from NASA, and subsequently became a major contractor for the American space agency.
SpaceX has developed the Falcon 1, Falcon 9 and Falcon Heavy launch vehicles and the Dragon spacecraft, designed to send cargo to the International Space Station.
The first space launch attempt was made by SpaceX in March 2006 and ended with the Falcon 1 accident. The successful launch of the launch vehicle and the launch of the payload into orbit took place in September 2008. In 2010, the company sent a Falcon 9 and a Dragon cargo ship into space, and a year and a half later, the “space truck” docked to the ISS for the first time and became the first private ship that managed to do this.
SpaceX originally set out to make its rockets reusable. The first stage of the Falcon 9 can land on a floating platform after the flight, and then be reused for new launches. The first successful landing took place in December 2015.
All SpaceX rockets are equipped with engines of their own production. The company has several developments: the Kestrel engine for the Falcon 1 second stage, Merlin for the Falcon 1 first stage and both stages of the Falcon 9 and Falcon Heavy, Draco for thrusters for the Dragon spacecraft, and SuperDraco for the emergency rescue system.
SpaceX is also developing a program to provide access to high-speed satellite Internet Starlink. As of 2023, the company is the largest satellite operator in the world.
In December 2022, SpaceX offered insider shares of the company for $77 each. In May 2022, SpaceX sold its shares on the secondary market at a $125 billion valuation.
In February 2020, the word got round that SpaceX could transform Starlink into a separate business and list its shares on the stock exchange.
SpaceX has not yet gone public: it manages to raise funding outside the public arena. For investors, this is a big disappointment, because many would like to buy shares in a promising brand right now. But Elon Musk has repeatedly said that SpaceX's listing won't happen until they start making regular flights to and from Mars.
In the summer of 2022, Musk said that Starlink would not go public until 2025 or later. The project, according to him, needs investments of $20-30 billion to maintain a competitive position.
While other tech companies are lowering their valuations, SpaceX continues to forge ahead. In 2022, without spending much on marketing, the company quadrupled the number of users.
Given this growth, it can be assumed that the company received $ 1 billion in revenue from satellite Internet services in a year – and this does not include income from rocket launches into space. But Musk's purchase of the social network Twitter, which he made private, does not say for sure whether SpaceX will rush to disclose its numbers to stock investors.
As of spring 2023, the company was valued at $140 billion. In April 2023, it became known that SpaceX was in talks with investors to raise $1 billion by selling its shares for $270 apiece. According to Bloomberg sources, the negotiations could last several months.
How Can You Buy SpaceX Shares?
Thus, SpaceX is a private company, so its shares cannot yet be bought on the exchange through a regular broker. Perhaps in the future it is possible, but for now, alas.
In addition, according to the company, there is a possibility that SpaceX will remain a private company for a long time, and only Starlink, the division responsible for launching and managing satellites, will go public.
Since SpaceX is a private company, it is theoretically possible to buy its shares in one of four ways:
- Be an investment fund and take part in the next round of financing. If you have a fund, you may qualify to invest in the next round along with other large funds;
- Buy shares of one of SpaceX's public investors. As you know, Google is one of the big investors in SpaceX;
- Buy shares directly from SpaceX employees who received them as a result of exercising their options. This can be done directly by finding a seller, or through the platform.
- Invest through one of the platforms that sells allocations in their investments. Such platforms work as follows: they form their own micro-funds for each investment and then resell the fund's shares on their platforms to other micro-investors, thus acting as a “single window”.
There is one big “BUT”: in order to invest in such a fund, you need to obtain the status of an accredited individual investor in accordance with US law and after that – access to specialized investment platforms that organize the purchase of shares of private organizations (EquityZen, Microventurers, etc.).
To do this, you need to prove that:
- your net worth is in the amount of at least $ 1 million;
- or you have: (a) incomes in excess of $200,000 in each of the last two years, or (b) joint income with your spouse in excess of $300,000 in the same period.
Let's say you have proven that you are an accredited investor – then what?
- First, the minimum check for investment in SpaceX through such a platform is at least $10,000.
- Secondly, the platform takes its commission and not a small one.
- Third, funding rounds occur irregularly.
As an alternative investment option for ordinary investors, one can consider the acquisition of Alphabet shares.The corporation is one of the co-investors of SpaceX, according to estimates, it owns a share in the project of about 9%. The profits it receives from SpaceX activities are accumulated in the general income fund of Alphabet.
At the moment, the only public company of Elon Musk, traded on the stock exchange and available for investment by every individual, is Tesla.
What Are the Prospects?
Perhaps, after some time, investors will have another opportunity to invest in SpaceX. This will happen if the aerospace brand's sister project Starlink spins off into a separate company and goes public. Such a scenario is quite likely.
The Starlink direction appeared in 2015, it was then that SpaceX started creating a global satellite system to provide high-speed Internet access from anywhere in the world. To date, about 2,500 Starlink satellites are already orbiting in low Earth orbit. The satellite constellation covers almost the entire surface of the planet. The plans are to bring the number of devices to 12 thousand units by the mid-2020s.
The prospects for separating into a separate company and placing shares on the stock exchange in Starlink were discussed back in 2020. However, Elon Musk in his speeches made it clear that Starlink's IPO will take place only after the company manages to fully commercialize its activities and achieve stable and predictable revenue.
According to him, it will take several years. In the summer of 2022, Musk told SpaceX employees about the possibility of an initial public offering of satellite Internet provider Starlink no earlier than 2025.
In the meantime, ordinary investors can only observe the success of the satellite Internet service from the outside or become its users.