Billionaire Elon Musk founded Space Exploration Technologies Corp., also known as SpaceX, which is one of the most highly valued private space exploration companies to date. Established in 2002, SpaceX was formed with the mission of sending people to Mars and other destinations in the solar system. While that dream has yet to be fully realized, the company is conducting several other worthy operations.
- Manufacturing rockets and space vehicles
- Flying astronauts and people to space
- Sending satellites into orbit to provide global internet services (named Starlink)
- Providing defense services to the U.S. government
One of SpaceX’s prime customers is The National Aeronautics and Space Administration (NASA). To date, SpaceX has launched 208 space flights, successfully conducted 170 landings, and undertaken 143 re-flights with its first-of-its-kind reusable rockets.
Looking at its achievements, there is no doubt that investors want to own a piece of this exceptional space exploration company, as much as they want to invest in other space stocks. Having said that, SpaceX is a privately owned company, and so it becomes difficult (not impossible) to invest in. This brings us to the main question: “How Can We Invest in SpaceX?” To answer that question, let us first look at who exactly owns SpaceX.
SpaceX is jointly owned by Musk, private equity companies, venture capital firms, a few public companies, and angel investors. At its most recent funding round, SpaceX was valued at a stunning $137 billion.
How Can We Invest in SpaceX Directly?
SpaceX is not yet publicly traded, but an IPO (initial public offering) may be on the horizon. For the time being, investors who want to buy a share of SpaceX and other private companies can do the same by buying stock from existing investors and employees who have received stock compensation.
First, you will need to identify if any of the existing investor shares are currently up for sale. You can do so by registering with reputable brokers that specialize in connecting potential investors with private equity company insiders.
An investor willing to buy shares of private companies needs to undergo a thorough accreditation process, have sufficient capital as there may be minimum investment requirements, be willing to pay brokerage, and be ready for non-negotiable pricing. You can buy SpaceX shares once you’ve completed the necessary paperwork and funding.
How Do We Invest Indirectly in SpaceX?
Another way of investing in private companies such as SpaceX, indirectly, is by buying shares of publicly listed companies that have investments in SpaceX. We have identified two public companies with investments in SpaceX. These are:
- Alphabet (NASDAQ:GOOGL) (NASDAQ:GOOG) – The trillion-dollar tech giant, along with Fidelity Investments, invested $1 billion in SpaceX in 2015 at a valuation of roughly $12 billion.
- Bank of America (NYSE:BAC) – The American banking conglomerate invested $250 million in SpaceX in November 2018. SpaceX was valued at $30 billion at the time.
It is important to note that the above companies have primary business operations in altogether different sectors, and their stock prices can be impacted by the performance of the overall businesses. Their investment in SpaceX forms a very small portion of their business, and hence, an investor must do an in-depth study of the company before buying the stocks.
How Do I Buy the SpaceX IPO?
Private equity players typically exit an investment through an IPO. Once the private investors are fully assured of the best valuation a company has reached, they exit their stakes in a public equity offering at sky-high valuations.
SpaceX has no plans of going public currently, as the Musk-led company is easily able to raise capital from private investors. However, if and when SpaceX decides to go public, an investor must be ready.
Following are steps to buy listed shares of SpaceX when they become public:
- Log in to or create a brokerage account (if you do not already have one)
- Search for SpaceX shares via company name or Ticker/Stock symbol
- Select the number of shares you wish to buy
- Place your order with quantity and price
- Once your trade is completed, you become a SpaceX shareholder
What are the Alternate Ways to Invest in SpaceX?
As mentioned, SpaceX is not a publicly listed company, yet. Investors willing to buy shares from the aerospace and defense sector may buy stocks of other listed companies from the sector.
- The Boeing Company (NYSE:BA)
- Lockheed Martin Corporation (NYSE:LMT)
- Raytheon Technologies Corporation (NYSE:RTX)
- Northrop Grumman Corporation (NYSE:NOC)
- Aerojet Rocketdyne Holdings (NYSE:AJRD)
- Virgin Galactic Holdings (NYSE:SPCE)
- Rocket Lab USA (NASDAQ:RKLB)
- AST SpaceMobile (NASDAQ:ASTS)
- Maxar Technologies (NYSE:MAXR)
An investor can also gain exposure to SpaceX’s business by buying shares in companies that are its suppliers or partners.
- Garmin Ltd. (NYSE:GRM)
- Iridium Communications (NASDAQ:IRDM)
Furthermore, an investor may choose to invest in the space technology sector by investing in Exchange-Traded Funds (ETFs) and Mutual Funds (MFs) that hold stocks in the space sector.
- Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN)
- ARK Space Exploration & Innovation ETF (ARKX)
- iShares U.S. Aerospace & Defense ETF (ITA)
- SPDR S&P Aerospace & Defense ETF (XAR)
- SPDR S&P Kensho Final Frontiers ETF (ROKT)
- Procure Space ETF (UFO)
And finally, if you want to invest in Elon Musk’s other publicly traded company, Tesla (NASDAQ:TSLA), a pioneer in electric vehicle (EV) manufacturing, you can do so.
Key Takeaways
Investors can invest in private companies like SpaceX by pursuing any of the indirect methods listed above. However, if you are keen to directly buy shares of SpaceX in an IPO or thereafter, you may have to wait for a long period. Meanwhile, there are numerous options for investors to gain exposure to the attractive space technology and exploration sector via other listed companies and funds.
