July 2022 Update
SpaceX stock will not be available to purchase until at least 2025, according to a recent statement by Elon Musk. He set out a plan to achieve $30b in revenue which is likely to be the catalyst to IPO.
SpaceX UK Expansion
Elon Musk is planning a huge SpaceX expansion over in the UK. His plans centre around the launch of 42, 000 satellites into space (yes, you read that right!). The challenge they’re facing is with the telecoms watchdog, who’s rules and regulations currently prohibit SpaceX or Starlink Internet Services from realising their plans.
The idea behind the 42,000 low orbiting satellites is simple; make the internet accessible to the entire world. Musk feels as though the strict rules are depriving millions of internet access and that the red tape is unnecessary.
The telecoms watchdog on the other hand are concerned about a huge number of low orbiting satellites above the UK. SpaceX are just one of a number of companies interested in launching these satellites which could potentially mean there would be hundreds of thousands hovering above the UK.
It’s something worth keeping an eye on, especially for anyone interested in buying SpaceX stock.
SpaceX win NASA contract worth $255 million
As an investor, this is the kind of news we’re looking for; big contract wins from huge clients. This is the kind of news that could push SpaceX stock higher, if it were available.
The contract is for SpaceX to provide launch services for upcoming telescope missions.
Starlink Ahead of Growth Expectations
Starlink has exceeded their own growth ambitions and has seen huge subscriber growth over the last quarter.
The growth could mean we’re fast heading towards an eagerly anticipated IPO but we’re still a long way off the level of subscribers needed to deliver £30b in revenue, which is the target.
Musk Pulls out of Twitter Deal
The recent news of Elon Musk pulling out of the Twitter deal frees up cash and time which could be to the benefit of SpaceX stock. Musks advisors which include private companies, Morgan Stanley and Goldman Sachs have lost a huge opportunity now he’s pulled out and they maybe extra motivated to push for a SpaceX IPO.
The final frontier. The great abyss. The cosmic universe.
Whatever you call it, there’s no denying mankind’s obsession with space. From the first sci-fi novels to the Apollo 11 mission, we’ve been craning our necks up and wandering what’s out there for generations.
And in the past few years, tech entrepreneurs’ personal projects have restored space to the forefront of our minds. The ‘billionaire space race’ has led to a resurgence of funding, research and interest in the space sector.
The players are well known: there’s Jeff Bezos and his Blue Origin project; Richard Branson’s Virgin Galactic; and Paul G. Allen’s Vulcan Aerospace.
But, one company is ahead of the rest: Elon Musk’s SpaceX.
Unless you’ve been living under a rock, you’ll have no doubt heard of billionaire Elon Musk. Having played a part in the creation of PayPal, Musk founded Tesla – now clearly established as the world’s leading Electric Vehicle company.
He became the world’s richest man in 2021 – and has a proven track record for maximising investors’ funds. Tesla shares are currently trading at over 47x the IPO price – naturally, there has been a great deal of interest in SpaceX stock.
So, is it possible to acquire shares in SpaceX – and if so, does the company represent a solid investment?
What exactly is SpaceX?
Founded in 2002 to ‘revolutionize space technology’, SpaceX designs, manufactures and launches rockets and spacecraft.
SpaceX CEO Elon Musk has repeatedly spoken about his desire to reduce the cost of space travel – ultimately, SpaceX intends to launch crewed missions to Mars.
That said, SpaceX has already achieved several major breakthroughs. It was the first private company to recover a spacecraft, and the first to send NASA astronauts to the International Space station.
SpaceX manufactures the Falcon 9 rocket; revolutionary since it is the first orbital class rocket which can be reused – greatly reducing the cost of launches. Its fleet also includes the Falcon Heavy – the wold’s most powerful rocket – and the Dragon, the only spacecraft capable of bringing significant cargo back to Earth. SpaceX’s new Starship prototype succesfully completed high-altitude flight tests in May 2021.
SpaceX is also responsible for Starlink, a ‘high-speed, low-latency broadband internet’ system, powered by satellites in low orbit. You’ll need a clear view of the sky to connect; Space X claims that Starlink is ideal for remote, rural areas where connection has previously been poor or unavailable. Starlink is already avaliable for those who live between 45 and 53 degrees latitude, and should be accessible globally by the end of 2022.
SpaceX Compnay Overview
Valuation – $100 billion (October 2021)
CEO – Elon Musk
Funding – $7.4 billion (December 2021)
Major Investors – Alphabet (Google), Sequoia Capital, Baillie Gifford, THRESHOLD VENTURES, T. Rowe Price Group Inc., ROTHENBERG VENTURES, Elon Musk
2021 Revenue – $1.2 billion (estimated)
Digging deeper into SpaceX’s financials
Currently, SpaceX generates revenue primarily through its satellite launches – and by shuttling cargo to and from the International Space Station.
SpaceX offers other companies ‘rideshare’ services aboard the Falcon 9 rocket launches – starting at $1 million for satellites weighing less than 200 kg.
While Musk has admitted that revenue from satellite launches may never exceed $3 billion, SpaceX’s lofty valuation is rooted in the potential scope of future income streams. Starlink has revolutionary potential – and could eventually bring in upto $30 billion a year.
SpaceX also has a lucrative contract in place with NASA – and in 2021, won a $2.9 billion contract to work on the Artemis mission, which will take astronauts back to the moon for the first time in 50 years.
What’s more, sources suggest that SpaceX’s most recent funding round saw the company sell $755 million in stock at $560 a share.
This represented a 33% rise on the $419.99 stock price listed in February 2021; indeed, with share prices soaring so rapidly, Musk announced a stock split in February 20022 – whereby one $560 share would be converted into 10 $56 shares.
Since August 2020, the company’s valuation has more than doubled – and SpaceX’s $100 billion valuation makes it the world’s second most valuable private company, after ByteDance. Clearly, the financials suggest a company taking flight.
So, Can I buy SpaceX stock?
As of March 2022, direct investment in SpaceX is not possible because the company isn’t publicly listed and is not trading on the stock market.
Although you can’t buy SpaceX shares – at least not yet, anyway – it is possible to back the company indirectly, by investing in companies who work SpaceX or have already aquired stock.
You can easily buy shares in Google parent company Alphabet – which has already acquired $1 billion worth of SpaceX stock – although potential investors should be aware that SpaceX’s performance is unlikely to be the primary driver of Alphabet’s stock price.
Alternatively, you could buy into one of the two Baillie Gifford trusts which have exposure in SpaceX, or invest in the venture capital firms that back SpaceX.
Could there be a SpaceX IPO in the pipeline?
Truth be told, it’s tough to say.
Musk has form when it comes to taking companies public: in 2010, his EV company Tesla went public at $17 a share. Despite the skepticism surrounding electric cars at the time, the IPO was a huge success for both Musk and his investors – Tesla’s stock is currently trading at over $838.
But, despite Musk’s personal history, it looks unlikely that SpaceX will be trading as a public company any time soon.
In 2020, Musk tweeted that SpaceX will ‘probably IPO Starlink, but only several years in the future when revenue growth is smooth & predictable’. His follow-up statement – ‘Public market does *not* like erratic cash flow’ – clearly implied that a near term IPO would simply present too great a risk.
Indeed, Musk’s reluctance to a rolling out a SpaceX IPO that would allow the retail investor to acquire stocks in the company stretches back further. In a leaked email, dated to 2013, he wrote:
“I am increasingly concerned about SpaceX going public before the Mars transport system is in place.”
Musk highlighted the fact that trading publicly could jeopardize the Mars mission, and also lead to a great deal of risk and ‘volatility’ for shareholders. He also emphasised that both Tesla and SolarCity went public ‘because they didn’t have any choice’.
But, when confronted with the email by a Twitter user in 2021, he publicly replied “A lot has happened in 8 years”.
The picture is undoubtedly murky, but ultimately it appears that SpaceX won’t launch an IPO until the company is closer to achieiving its original goals, and can rely on more stable revenue streams. Elon Musk has often proven a master of surprise – and many of us would jump at the chance to buy SpaceX stock – but our hunch is that an IPO date remains a long way off.
Can I do anything before a SpaceX IPO launches?
Yes – there are certainly pre-IPO markets where it may be possible to pick up stock from current SpaceX shareholders, such as company employees.
Forge Global, EquityZen and SecFi all deal in pre-IPO shares – but there is no guarantee these markets will have SpaceX shares for sale at any given time.
Those desperate to buy SpaceX stock will be tempted to invest pre-IPO, and could make prodigious profit if SpaceX revenue continues to soar as expected.
But this kind of investment is not without risk – there is no guarantee that the firm will go public; likewise, it is impossible to predict the future landscape of a crowded industry like space exploration. With so many private companies seeking a footing in the space sector, there’s always the possibility that interest in SpaceX stock could wain, and that the IPO could fail.
What about the competition?
Naturally, SpaceX has plenty of competition – and since we can’t bank on the firm going public anytime soon, those convinced that the industry is set to soar might want to invest elsewhere. That said, customers should be warned that some rival companies have performed poorly since opening up their stocks to the public.
Virgin Galactic’s stock – listed publicly since October 2019 – slumped below $8 in March 2022 (ATL), having reached an all-time-high of $55.91 in June 2021. Its sister company Virgin Orbit is trading at around $6, well below its initial listing price of $9.67.
It doesn’t look much better for Boeing, whose share price was slashed close to 23% in the past 12 months.
Clearly, space investment remain volatile at this point – for now, you might be better off investing in one of Elon Musk’s other ventures. Tesla’s stock has performed impressively since the company went public – while The Boring Company and Neuralink remain private companies for now, but could well launch IPOs in the future.