SpaceX stock is not a company that investors can buy through standard channels. You won’t find it on the New York Stock Exchange (NYSE) or the Nasdaq. SpaceX is not a publicly traded company, it is privately owned.
Therefore, an investor cannot buy or sell SpaceX shares using a brokerage account. The company doesn’t even have a ticker symbol. Therefore, it is not easy for a private investor to own a piece of SpaceX. Most investors in SpaceX are institutional or high net worth investors. If a private investor cannot buy SpaceX shares directly on an exchange, the question remains how to buy SpaceX shares.
What is SpaceX?
Before we answer how to buy SpaceX stock, let’s answer what is SpaceX? It is an aerospace company that designs and builds rockets and communications satellites. It was initially founded in 2002 as Space Exploration Technologies Corp. A major attraction is Elon Musk, the founder, chief executive officer (CEO) and chief engineer of SpaceX. He is one of the richest people in the world and has previously created opportunities for investors.
Its main product is the Falcon 9 rocket, a reusable rocket. These rockets provide cheaper launch services for satellites weighing up to 440 pounds (200 kilograms). Satellite launches generated revenue of approximately $1.6 billion in 2021. Other platforms include the Falcon Heavy, the Dragon spacecraft, and the Autonomous Spaceport Drone Ships (ASDS).
SpaceX is developing a deep space transport called Starship. A prototype awaits Federal Aviation Administration (FAA) approval for an orbital test. Starship is part of NASA’s Artemis project, which aims to put humans back on the moon.
In addition, SpaceX is developing the Starlink project. This project will provide global broadband services from satellites in low Earth orbit. The company launched its first two prototype satellites in 2018 and the first 60 operational satellites in 2019. Since then, SpaceX has launched more than 1,000 satellites for Starlink and started a beta service in North America and the UK.
SpaceX probably won’t go public anytime soon
Despite the hopes of many retail investors, SpaceX is unlikely to have an initial public offering (IPO) anytime soon. Unfortunately, this fact means that retail investors cannot buy or sell stocks on an exchange. There are two reasons for this.
First, Elon Musk is reportedly hesitant about the idea of SpaceX going public. Since he is the founder and CEO, it probably won’t happen. The main reason is that SpaceX’s long-term goal is to colonize Mars. However, Elon Musk has stated that short-term shareholder demands may not allow for SpaceX’s long-term plan.
In addition, SpaceX had little trouble raising private capital, making an IPO less necessary and more likely. According to Crunchbase, the company has raised approximately $7.7 billion in private capital since 2002. The list below shows many of the 56 funding rounds, how much money these rounds raised and the post-money valuation.
The Series A financing round in 2002 raised $12.1 million with a post-money valuation of $18.8 million. F-round brought in about $50.6 million, and the after-money valuation exceeded $1 billion for the first time, turning SpaceX into a unicorn. The Series G funding round in 2015 was the first to raise more than $1 billion, bringing the company’s value to $10.1 billion. The Series H financing round raised $452.3 million, bringing the after-money valuation to $21.3 billion. In October 2020, the company raised $2.1 billion, valuing it at $44 billion. billion. The company sold shares for $419.99 per share. Its most recent funding round was in October 2021, where the company raised $755 million at $560 a share, valuing SpaceX at more than $100 billion.
SpaceX reportedly had more than $6 billion in demand for the October 2021 round. Therefore, SpaceX can dictate terms and has little difficulty raising funds. For this reason, it is doubtful whether SpaceX will go public anytime soon.
SpaceX is now over 100 dredge stocks for investors and employees who got shares early, assuming the most recent post-money valuation. Along this line, SpaceX recently performed a 10 for 1 stock split. Once completed, the stock price will be reduced to $56 per share, making each share more affordable. The stock split does not change the total market value, only the stock price.
Pros and Cons of Buying SpaceX Shares
There are a few advantages to buying SpaceX stock. First, the company is at the cutting edge of commercial aerospace and has tremendous growth potential. Subsequently, the company’s Falcon 9 satellite launch service has been successful, showing promise for future endeavors. In addition, the Starlink service is tested and may also be successful. Finally, SpaceX can raise capital relatively quickly in its growth trajectory.
There are also a few downsides to buying SpaceX stock. First, the company is private and pre-IPO stocks are difficult to value and also have less liquidity. Second, the company’s revenue is low compared to its $100 billion valuation. Third, the company has big ambitions, which will be expensive.
How to buy SpaceX shares
Although SpaceX is raising money, most small investors cannot buy shares. However, institutional and high net worth individuals can. Current investors include Founders Fund, Gigafund, Valor Equity Partners, GoldenArc Capital, Fidelity Investments, Baillie Gifford, Bank of America and dozens of other organizations.
However, it is still possible to directly or indirectly own a piece of SpaceX.
Venture capital funds
An easy way to buy SpaceX stock is to join a venture capital (VC) fund that invests in SpaceX. For example, Manhattan Venture Partners is an investor in SpaceX. If you are an investor in the partnership, you will have access to SpaceX shares.
However, there is a catch. You must be an accredited investor as defined by the Securities and Exchange Commission (SEC). The bottom line is that you must have an income of $200,000+ or 300,000+ with your spouse in the past two years. Alternatively, you can have a net worth of $1 million, but it cannot include your primary residence.
This hurdle prevents most people from buying SpaceX stock through VC funds. The number of people with incomes over $200,000 is small. The median household income was $68,703 in 2019. In the US, only the top 10% have a median net income of more than $200,000. Few people have a net worth of $1,000,000, especially after excluding their primary home. According to the US Federal Reserve, the median wealth in 2019 was $121,700, but the median wealth is $748,800, including primary homes.
Therefore, most retail investors will not qualify as accredited investors.
Baillie Gifford Trusts
The Baillie Gifford trusts are another way to buy SpaceX stock. The company has two trusts that own SpaceX stock. The first trust is the Scottish Mortgage Investment Trust and the second is the US Growth Trust.
The Scottish Mortgage Investment Trust (SMT) is a listed trust on the London Stock Exchange (LSE). In addition, it is part of the FTSE 100 Index and began operations in 1909. The trust’s 2021 annual report states, “We have continued to build our holdings in SpaceX.” Therefore, it is possible to indirectly own SpaceX through this trust.
The US Growth Trust (US) primarily owns stock options and reportedly has exposure to SpaceX.
Investing in trusts on the LSE can be difficult for US investors. Perhaps the easiest and least risky way to gain exposure to SpaceX stock is to buy shares of Alphabet (GOOG, GOOGL). In 2015, Google invested $900 million with Fidelity Investments in SpaceX. The shares were worth nearly 10% of SpaceX at the time.
Shareholders of Google thus indirectly own SpaceX shares. However, you would only have a small portion of SpaceX. Google’s balance sheet had $110,229 million in tradable securities at the end of 2021. The investment in SpaceX is only a small percentage of the valuation.
Secondary Markets
An alternative way to buy SpaceX stock is through the secondary market. Several online marketplaces match private company employees with pre-IPO stocks and investors. The platforms also connect VC firms looking to sell shares ahead of the IPO. Two online marketplaces are EquityZen and Forge Global.
However, this is risky for retail investors. The secondary market for pre-IPO stocks is not like a stock exchange. An investor needs to know how to price shares of private companies, and this is not an easy task even for professionals. The last thing you want is to buy shares in the secondary market that are worth less than you paid for them.
Final Thoughts on Buying SpaceX Shares
Buying SpaceX stock is not an easy task. The company is private and usually raises money from institutional or high net worth investors. It has had no trouble raising funds, making it unlikely that SpaceX will do an IPO anytime soon. In addition, Elon Musk has questioned this possibility, although Starlink may yet be spun off as a separate company.
Investors can gain exposure to SpaceX through venture capital funds, the Baillie Gifford Trusts, the secondary market and owning shares of Alphabet. However, investors should remember that investing in private companies is not a low-risk or short-term investment. Many institutional and high net worth investors have owned stocks for years but can afford it.
Disclosure: The author is not a licensed or registered investment advisor or broker/dealer. He does not give you individual investment advice. Consult a licensed investment professional before investing your money.
This article originally appeared on Wealth of Geeks.
Jeff is a fan of all things finance. When he’s not changing the world with his blog, you can find him on a run, playing a Mets game, playing video games, or just playing with his kids.
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