How To Invest In SpaceX In 2024? What Are Options?
As of late 2023, Elon Musk's SpaceX was valued at over $180 billion, making it one of the most valuable start-ups in the world. Musk founded the company in 2002. How to invest in SpaceX involves exploring unique avenues within the aerospace and defense sectors, given that the company is not publicly listed.
Author:Stefano MclaughlinReviewer:Luqman JacksonJan 10, 20247.2K Shares99.2K Views
As of late 2023, Elon Musk's SpaceX was valued at over $180 billion, making it one of the most valuable start-ups in the world. Musk founded the company in 2002. How to invest in SpaceXinvolves exploring unique avenues within the aerospace and defense sectors, given that the company is not publicly listed.
From creating a liquid-propellant rocket that reached orbit to delivering astronauts to the International Space Station and accomplishing a vertical propulsive landing, the company has been a pioneer in space exploration.
Investors are eager to gain an indirect stake in the company as profits and revenues skyrocket. There is currently no public market for SpaceX shares; however, employees and early investors may be able to liquidate their holdings, subject to certain limitations. Investors who want a piece of SpaceX can choose from a few different options.
What Is SpaceX?
A frontrunner in the civilian space business, SpaceX creates and deploys cutting-edge spacecraft. Notable projects undertaken by the organization include a completely reusable spaceship and lofty goals of sending humans to Mars and the moon.
In addition to its two satellite launch services, SpaceX runs the Falcon 9 rocket business and is working on the Starlink projectto put broadband internet access into low-orbit satellites all around the world.
Contracts to collaborate with NASA on the Artemis human lunar lander project have been awarded to the corporation. This project seeks to return humans to the moon.
With an anticipated $1.6 billion in sales in 2021, satellite launches are SpaceX's primary source of income. Midway through 2021, Starlink began beta testing, and by 2022, it may have generated a tidy profit.
In order to fulfill the Artemis contract, SpaceX is creating a deep-space transportation system named Starship; the FAA has not yet approved the prototype for an orbital test.
The business faces competition from the likes of Blue Origin, Virgin Orbit, United Launch Alliance, and even government-run organizations like CNSA and NASA.
Is SpaceX Publicly Traded?
Neither the Nasdaq Stock Exchange nor the New York Stock Exchange (NYSE) list SpaceX as a publicly traded company. Consequently, the space exploration company's shares are not available for purchase by regular investors through brokerage accounts.
Elon Musk is the CEO and a major shareholder. Among Musk's most valuable holdings, estimates place his stake anywhere from forty percent to fifty percent. Employees and venture capital investors own the remaining stock in the company.
Neither SpaceX nor any of its affiliated companies have any plans to go public as of late 2023. No plans to go public were also in the works for the firm. After Musk stated in April 2023 that SpaceX's investment initiatives could be funded without seeking outside investors, the company may have grown without conducting an initial public offering (IPO).
In the meantime, current and former workers and investors can sell shares through the company's active internal trading program. In late 2023, SpaceX was in talks with investors to finalize a deal that would enable insiders to sell their shares at $97.
That way, workers might sell their shares for cash without the corporation having to go through with an initial public offering (IPO).
The Starlink satellite internet firm, however, is said to be going public. In November 2023, Bloomberg reported that SpaceX was aiming to spin off Starlink and distribute the assets to stockholders in anticipation of an initial public offering (IPO) by late 2024, at the latest.
Musk wasted little time denying the rumor. Before Starlink goes public, he wants to make sure the company has consistent and predictable revenue growth and cash flow.
How To Buy SpaceX Stocks
Buy Shares Directly
Before a private company becomes public, there is a method to purchase shares in it. Accredited investors may use Equitybeeto get into private enterprises and high-growth startups backed by venture capital, such as Reddit, Instacart, and Stripe.
The ability to purchase shares at the same price that private equity firms paid in the most recent fundraising round gives accredited investors a leg up when it comes to investing in private companies through employee stock options.
You will get a cut of the future profits from any successful liquidity occurrences as compensation for your investment in the options.
You may sign up to be alerted when SpaceX becomes available on Equitybee, but it isn't available at the moment.
One aerospace business that offers commercial space station modules linked to the International Space Station (ISS) is Axiom Space, which is listed on Equitybee.
Invest Indirectly In Public Companies
There are alternative methods to get exposure to SpaceX, even though you can't acquire shares directly. One option is to purchase stock in a publicly traded firm that has a stake in SpaceX.
Alphabet (Google's parent firm) and Bank of America are the only two public businesses to have invested in one of its investment rounds thus far.
In January 2015, Alphabet (GOOG, GOOGL) put $900 million (or $12 billion) into the company, marking its first investment. Its overall investment is around 6.99% because it participated in a second financing round in December 2021.
It is likely that Alphabet's stakes are worth around $12.6 billion, considering SpaceX's present price.
In its round in November 2018, with a valuation of around $30 billion, Bank of America (BAC) contributed $250 million. Approximately $1.5 billion is the estimated value of this shareholding.
You have the option to use your brokerage account to purchase shares of Alphabet or Bank of America. Looking into Public is a good idea if you're not already a brokerage account holder.
Unfortunately, the fractional ownership in SpaceX by each of these firms is a major drawback to investing indirectly.
The $12.5 billion investment in SpaceX represents just around 0.7% of Alphabet's whole business, given that the corporation is worth $1.75 trillion. With a market valuation of $265 billion, Bank of America's $1.5 billion investment in SpaceX represents just 0.6% of its whole business.
Nonetheless, gaining exposure to SpaceX is a pleasant bonus if you enjoy these two firms and want to purchase them anyhow.
Invest In A Fund
Even though Cathie Wood's Ark Invest is no longer popular, she does manage a couple of funds that are applicable to SpaceX investments.
This is mostly conjecture based on Ark's purchase of Twitter shares in a comparable scenario, but it is possible that Ark may acquire some SpaceX shares from Andreessen Horowitz as part of the most recent investment round.
Make sure to verify the number of shares bought by Ark and the proportion of the fund that will be invested in SpaceX if a deal is struck with Andreessen Horowitz (aka a16z).
Make sure you have a positive impression of each of the fund's holding firms before deciding to invest. The ARKX Space Exploration ETF is another option that can pique your curiosity.
Invest In Competitors And Partners
Consider investing in SpaceX's rivals like Boeing, Raytheon, Lockheed Martin, HEICO Corporation, Astra Space, and Aerojet Rocketdyne if you're not interested in SpaceX's 20x PS ratio.
While SpaceX does in-house development for the majority of its components, it stands to gain from future success in its partnerships with firms like Iridium Communications, Tesla, Velo3D, and Garmin.
Either your standard brokerage account or, for authorized investors, Equitybee, are viable options for purchasing these stocks. On the other hand, Equitybee also offers investments in Axiom Space, a private aerospace firm.
Is SpaceX Profitable?
SpaceX does not need to disclose financial information because it is not a publicly traded company. The corporation has disclosed certain financial details, nevertheless, due to its popularity.
According to a Wall Street Journal article dated August 2023, SpaceX made $55 million on $1.5 billion in revenue during the first quarter of that year. The company's yearly losses in 2022 and 2021 were $559 million and $968 million, respectively, on $4.6 billion and half of those sales, so that's a big improvement.
At the same time, Starlink is getting close to turning a profit when operated independently. By the end of 2023, Musk said, the business will have achieved breakeven cash flow. In only one year, that division's income has increased sixfold, reaching $1.4 billion.
Based on these metrics, it appears like SpaceX is getting off to a lucrative start. Its stock price has the potential to soar in the future if the company is able to achieve rapid increases in both sales and profitability.
What Is SpaceX's Valuation?
Investors should also carefully analyze the stock's valuation before making a purchase. Investors risk losing money regardless of whether profits take off if the price is too high.
Thanks to its continuing secondary share sale, SpaceX was valued at $180 billion ($97 per share) on the private market by the end of 2023. That was a 20% rise from its prior valuation of $150 billion, or $81 per share.
That puts SpaceX's valuation higher than that of Northrop Grumman (NOC 1.14%), Lockheed Martin (LMT 0.46%), and Boeing (BA - 8.03%), the three most prominent U.S. defense companies.
Even if the business is making money, that's a lot of money. In 2023, SpaceX is expected to generate $8 billion in revenue, putting its price-to-sales ratio (P/S) at 22 times. Its price-to-sales ratio would rank among the highest in late 2023 among Nasdaq 100 index companies if it were a publicly listed corporation.
At the same time, SpaceX is trading at about 80 times its future price-to-earnings ratio, with a forecast net income of $2.3 billion. While it is hefty, it pales in comparison to another Musk-led company: Tesla (TSLA 1.25%), which sold for over 80 times earnings by the end of 2023.
Those are quite high multiples for the company's worth. But if SpaceX's profitability and sales soar in the next few years, it might grow in price. Thus, by the time it becomes public, its worth may have improved.
Alternate Ways To Invest In SpaceX
SpaceX, a privately held company, offers investors alternative opportunities in the aerospace and defense sectors. Diversifying one's portfolio with established companies like Boeing, Lockheed Martin, Raytheon Technologies, Northrop Grumman, Aerojet Rocketdyne Holdings, Virgin Galactic Holdings, Rocket Lab USA, and AST SpaceMobile can provide exposure to SpaceX's dynamics.
Investing in businesses that are SpaceX's partners or suppliers, such as Garmin Ltd. and Iridium Communications, can give you indirect exposure to the company. For broader exposure to the space technology sector, Exchange-Traded Funds (ETFs) and Mutual Funds (MFs) can provide compelling options.
ETFs like Direxion Daily Aerospace & Defense Bull 3X Shares, ARK Space Exploration & Innovation ETF, iShares U.S. Aerospace & Defense ETF, SPDR S&P Aerospace & Defense ETF, SPDR S&P Kensho Final Frontiers ETF, and Procure Space ETF can capture the overall growth and innovation within the space industry.
Tesla, a pioneer in electric vehicle manufacturing, can also be an enticing option for investors interested in Elon Musk's ventures, including SpaceX.
FAQs About How To Invest In Spacex
What Are The Available Investment Options For Individuals Looking To Invest In SpaceX?
Investors can't directly purchase SpaceX stock since it's a private company, but they can explore indirect investment avenues such as investing in funds or other companies associated with the space industry.
How Does SpaceX's Valuation Impact Investment Decisions?
Understanding SpaceX's current valuation and potential future valuations is crucial for investors, as it provides insights into the company's perceived worth and potential returns.
Are There Any Publicly Traded Companies With Close Ties To SpaceX?
Investors can explore publicly traded aerospace and technology companies that have partnerships, collaborations, or contracts with SpaceX as an indirect way to invest in the company's success.
What Regulatory Considerations Should Be Taken Into Account When Investing In Space Exploration Companies Like SpaceX?
Investors should be aware of the regulatory landscape surrounding space exploration and how government policies and regulations may impact the investment climate for companies like SpaceX.
How Can I Stay Informed About SpaceX's Latest Developments And Financial Performance?
To stay updated on SpaceX and its activities, investors can regularly monitor news releases, financial reports, and official statements from the company, as well as follow reputable financial news sources and space industry updates.
Final Thoughts
In conclusion, how to invest in SpaceX demands a thoughtful approach that involves exploring alternative investment avenues within the broader aerospace and defense sectors.
Elon Musk's space exploration company SpaceX is not yet listed on a public stock exchange, but the Starlink satellite internet service company might. Investors should consider the company's profitability and valuation because they are what determine the stock price.
Exciting as it may be, investing in private companies like SpaceX comes with risks, minimums, and restrictions on buying and selling. Some other options are public companies, funds, and exchange-traded funds.
Additional opportunities in the aerospace and space industries may arise as a result of indirect investments in SpaceX. The investment in SpaceX is extremely risky and speculative, but the rewards might be huge.
Stefano Mclaughlin
Author
Luqman Jackson
Reviewer
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