One of the most exciting companies in the world right now is a somewhat mysterious organization known as SpaceX. The company was launched by Tesla founder Elon Musk, who has a history of defying the odds when it comes to rolling out new technologies.
Wall Street is buzzing about SpaceX, and nearly every investor wants to know how to buy SpaceX stock. How can you get in on the SpaceX action? Well, as it turns out, it’s not as simple as it may seem.
SpaceX has tons of potential, but can you profit from the company’s growth? It’s possible, but you have to go through a side door. Fortunately, there are a few of those.
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What Is SpaceX?
SpaceX is an aerospace company that designs, manufactures, and launches advanced rockets and spacecraft. The privately held company is owned by Elon Musk himself, although there are positions held by employees, other insiders, angel investors, a handful of public companies as well as shares available through private equity firms.
It is currently the only private company that is capable of returning a spacecraft from low-Earth orbit. Among other missions, SpaceX delivers cargo and humans to and from the International Space Station.
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What Is the Value of SpaceX Stock Today?
In July of 2023, CNBC reported that SpaceX stock has a current valuation estimated at $150 billion. That valuation is based on an agreement to sell up to $750 million of the stock currently held by insiders. The price is set at $81 a share.
The purpose of the sale is not to raise funds for the company but to give employees and other shareholders the opportunity to sell their stock. In effect, SpaceX is providing liquidity to investors since their stock does not trade on the financial markets.
The $150 billion valuation is based on the number of shares available multiplied by the $81 share price.
The same article reports that the company has a “near monopoly on the US satellite launch market.” Much of this concerns the connection between SpaceX and Musk’s Starlink broadband Internet service, which already has more than 1.5 million subscribers.
SpaceX has launched almost 5,000 Internet satellites for Starlink, so it’s not hard to see why SpaceX is generating so much excitement on the ground.
Can I Buy SpaceX Stock?
The short answer is no, at least not in the traditional way. Despite the company’s dazzling performance, its stock remains private. That means it’s held by insiders and employees, and the stock only trickles out to the general public periodically and in small amounts. I’ll explain this in more detail a little later.
So you can’t buy SpaceX through any type of investment advisor or online broker. But there are some less conventional ways to acquire the stock, if not now, than in the near future. It will require keeping your eyes and ears open and having the patience to wait for the window to open for the opportunity.
Here are some ways to get in on the SpaceX action.
Prepare for Pre-IPO SpaceX Stock
Let’s make one point absolutely clear up front: there is no date set for a SpaceX initial public offering. No matter how much buzz there is in the financial markets, the media, or on the street, Musk will take the company public when he’s ready to do so.
Part of the reason for the hesitancy is that there has been no trouble raising financing for SpaceX from private sources. Private companies often go public to increase the capability to raise funds in the financial markets, either through the sale of stock or the issuance of bonds. SpaceX is not at a point where it needs to do that, and they have not indicated a timetable for doing so.
That said, it’s almost certain that SpaceX will go public at some point. You’ll want to be ready when it does. You can do that through investment brokers that offer pre-IPO investments. Those firms will most likely be first in line when the IPO is launched.
Two of the most prominent brokers in this arena are EquityZen and EquityBee. These are brokers that specialize in IPOs and other sophisticated investments. It’s possible that one of these companies will be among the brokers first in line when a SpaceX IPO is launched.
You’ll need to be an accredited investor to join either one. In other words, you must meet minimum annual income and net worth requirements that establish your ability to absorb the risks such investments bring. Each platform has a minimum investment requirement of $10,000.
Here are some other options if you aren’t an accredited investor or don’t have $10,000 to invest in the stock.
Other Broker Options
If you want to be prepared when a SpaceX IPO is launched, there are brokers that don’t require accredited investor status or such a rich initial investment. Examples include SoFi Invest and Webull. Both offer IPO participation with no minimum investment requirement, as well as commission-free trades.
Either one may also be a good choice if you want to invest in companies that have significant positions in SpaceX, like Alphabet (Google) and Bank of America, which we’ll discuss below.
But if you do choose to invest in either stock, understand that their positions in SpaceX represent only a minor percentage of their overall revenues and that both companies are engaged in business activities completely unrelated to SpaceX. As such, you’ll need to evaluate whether such investments represent a worthwhile play on SpaceX stock.
Purchase Alphabet Inc Class A (GOOGL) Stock
Alphabet is the parent company of Google, the world’s largest search engine, and a company with more than $280 billion in annual revenue. The revenue figure is important because Alphabet’s investment in SpaceX is estimated at only $12 billion. Still, there is a loose connection to SpaceX, making it a worthwhile investment if you believe Alphabet’s overall prospects are strong even apart from their investment in SpaceX.
For investment purposes, purchase Alphabet Inc Class A stock under the symbol GOOGL. That’s important because Alphabet also offers another class of stock that may not be in your best interest.
Purchase Alphabet Inc Class C (GOOG) Stock
Alphabet Inc Class C (GOOG) allows you to invest in Google, but these shares have no voting rights. It’s a class of stock issued by the owners of Alphabet/Google to preserve the voting rights of the company’s top executives.
While it does represent ownership in the company, it’s considered less valuable than GOOGL, which includes shareholder voting rights. For that reason, GOOG trades at a discount to GOOGL, and GOOGL is the more popular stock among investors. However, many investment funds own an equal share in the two stock issues.
Purchase Bank of America (BAC) Stock
This is another indirect play on SpaceX and one that’s less significant than Alphabet. Bank of America is one of the largest banks in America, with over $100 billion in revenue and more than $3 trillion in assets.
It has an investment in SpaceX that was valued at $250 million in 2018 but is more likely valued at around $1.25 billion today, given that SpaceX’s value is approximately five times higher than it was five years ago.
But even a position of $1.25 billion is a drop in the bucket, given the magnitude of Bank of America’s revenues and asset base. And as a bank, its main business is completely unrelated to the SpaceX venture.
So, while it is an indirect way to invest in SpaceX, it looks to be very indirect.
Invest in SpaceX’s Competitors
When one company in an industry innovates and generates exciting new opportunities, competition naturally rises to the occasion. While you may not directly invest in SpaceX itself, you can invest in its competitors. Though none offer the same potential as SpaceX, they are in the same industry, which may lead to similar innovations and even partnerships with SpaceX.
The most prominent examples include major companies like Boeing (BA), Lockheed Martin (LMT), Northrup Grumman (NOC), and Raytheon (RTX).
Once again, these companies have substantial revenues that are distantly related to space technology. For example, Boeing is primarily a builder of commercial aircraft, while Raytheon is engaged mainly in the development and manufacture of weaponry for the military.
Still, any of those companies could benefit from the spillover of technology and innovation from SpaceX. Therefore, each may be a better play on SpaceX than Alphabet or Bank of America.
Invest in Space Technology Index Funds
Another indirect way to play SpaceX is by investing in index funds that specialize in space technology companies, as well as related industries. There are plenty of choices.
Ark Invest’s ARK Venture Fund (ARKVX) or ARK Space Exploration & Innovation ETF (ARKX) are two examples, and possibly the most direct with their emphasis on space technology. Other ETFs to consider are the iShares U.S. Aerospace & Defense ETF (ITA) and the SPDR S&P Aerospace & Defense ETF (XAR).
But with each of these funds, there are also significant holdings in other technologies not directly related to the SpaceX model.
Yet another potential index fund is the Renaissance IPO ETF (IPO) through TradeStation. Though they don’t specialize in space technology, the fund holds IPOs, as is indicated by the name of the fund and its ticker symbol. Renaissance has a strong orientation toward new technology companies, so SpaceX would likely be included in its portfolio once the stock reaches the IPO phase. The fund advertises a 0% overlap with S&P 500 index ETFs.
FAQs
It’s unknown when SpaceX will go public, and no one in the investment world knows for sure if it will ever happen. Currently, the company can raise sufficient capital to maintain and expand its business.
Unfortunately, successful private companies tend to stay private longer now than in the past, for a decade or longer. SpaceX was founded in 2002, which means it’s already entering its third decade as a private company. That doesn’t offer much hope that an IPO will happen anytime soon.
There’s no way to purchase SpaceX stock at the present time directly. But you may be able to buy the stock when it becomes available from early insider stock sales. When it does, you may be able to purchase the shares through specialized brokers, like EquityZen or EquityBee.
The most recent price set for SpaceX stock is $81. But that’s the result of a planned sale of insider stock, not the value determined by an open financial market. However, it’s all we have to go on at the moment.
Should You Invest in SpaceX Stock?
It seems apparent that good things are happening with SpaceX. If they do decide to go public, their stock is certain to generate a high level of interest.
But while it may seem as if SpaceX is a sure thing, nothing is guaranteed. First, the company is engaged in cutting-edge technology, which has the potential to change rapidly. Second, competitors can come up and undercut SpaceX’s business. Third, there’s always the possibility Elon Musk will overplay his hand and keep the company private for too long. And finally, the stock price is currently being set by the company’s owners, not the market. It’s anyone’s guess what the stock price will be once it reaches IPO status.
If and when you do get an opportunity to buy SpaceX stock, don’t invest more than you’re prepared to lose. SpaceX stock should only comprise a small percentage of your total investment portfolio, which is otherwise invested in more stable and traditional asset classes.
