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If you’re vying for a piece of SpaceX stock, you’re not alone. Investors everywhere want to get their hands on a piece of this innovation leader, but there’s a problem: SpaceX isn’t a public company. You may be wondering, how can I buy SpaceX stock then?
It might be a long shot, but then again, so was the moon landing. Here’s how you might get around the whole not-a-public-company issue.
Let’s Talk About SpaceX First
SpaceX is a private manufacturing company in the transportation and aerospace arena. It was founded by Elon Musk (yes, that Elon Musk) in 2002 and is headquartered in Hawthorne, a suburb of Los Angeles, CA. Today, the company employs around 7,000 people, compared to just 160 employees in 2005.
As you may know, Musk has a fascination with the possibility of traveling to Mars and potentially colonizing it one day. His goal in creating SpaceX developed from an idea of landing a miniature greenhouse on Mars to see if he could grow plants in space. The company aims to reduce the costs associated with space transportation to make travel and colonization other planets a reality one day.
In 2010, SpaceX became the first commercial company to successfully deliver items to and from the International Space Station via its Dragon spacecraft. They also hold the record as being the only company to successfully return a spacecraft to low Earth orbit, also accomplished in 2010.
Though surrounded by competition (Arianespace, Launch Services, and United Launch Alliance), SpaceX remains a frontrunner in the industry and leads the global market in launch services.
To date, the company has completed more than 100 missions (including satellite launches and U.S. government missions) totalling $12 billion in contracts. SpaceX has also developed a contract with NASA to design a Dragon spacecraft capable of transporting humans.
Right now, SpaceX is a private company, but that hasn’t stopped droves of investors and enthusiasts from speculating. Any hint of an IPO with SpaceX’s name attached is bound to excite the masses. And, given that Tesla and PayPal (two other brainchild’s from Musk) have already gone public, the idea of a public SpaceX isn’t too far fetched.
Here’s the thing: Musk has big plans for Tesla, and a recent interview has brought about questions that make the idea of a SpaceX public offering a little “out there.” Musk has made his dislike of the public market well-known, but that hasn’t stopped investors from dreaming of the day when SpaceX and IPO are married in the same phrase in a literal sense.
To be fair, going public looks like a highly profitable venture for all involved. Musk would have investors lining up at his door to champion the event and there’s no doubt it would bring a steady stream of revenue into the company’s bank account.
But let’s also remember why companies go public in the first place: to raise money. Right now, that just doesn’t seem like a priority to a company who already has a healthy revenue flowing into its reserves. The demand (and need) for IPO funding just isn’t there, which makes the possibility of going public even more unlikely.
Side note: This isn’t just a reality for SpaceX. It’s becoming less of a necessity for companies to go public to garner funding.
There’s also the fact that Musk himself has already stated that SpaceX will remain a private company, at least until they are able to successfully shuttle humans between Earth and Mars via the Mars Colonial Transporter. Musk believes that the hype of an IPO may hinder greater business objectives, and has even considered taking Tesla private, citing the “volatility of the quarterly earnings cycle and being the target of traders who have bet against the company.”
Right now, and until future notice, there’s just no hurry to abandon their private status.
Since its founding, SpaceX has experienced tremendous financial success, and their reputation is only improving. In May, SpaceX’s valuation rose to $33.3 billion, making it even more valuable than Tesla.
The company’s recent round of fundraising brought in $536 million, and they’ve raised more than $1 billion in 2019 alone. Much of its recent fundraising has been fuelled by their development to build a network to beam high-speed internet access to anywhere in the world.
From the onset, SpaceX has generated significant growth in both valuation and stock price, as shown in the image:
Even though investors can’t buy a piece of SpaceX outright, we can still put a value on it. As of 2018, the stock was valued at $25,000, compared to just $27 in 2002. As the company continues pushing toward the satellite broadband network and enabling life on Mars, the company will continue its diligence in raising funds and exploring equity funding options.
Recently, the Wall Street Journal reported that the company is selling new shares to private investors to assist in fundraising. These shares are valued at about $186 per share and collectively worth $500 million. It’s a rare glimpse into the company’s capital structure, and with each round of fundraising and each contact with a private investor, we glean just a little more detail about the company’s business, finances, and valuation.
SpaceX isn’t going public, at least not any time soon, so how can you score a piece of historic stock? You can — but only in theory.
In a privately owned company, only select investors are allowed to hold equity. There are no direct buy-in options for investors, so owning a piece of SpaceX truly gives you elite status. But here’s an indirect workaround that might satisfy your starstruck ambitions:
In 2008, San Francisco-based venture capital firm Founder’s Fund invested $29 million in SpaceX. Four years later, venture capital firm DFJ handed over $30 million in exchange for a slice of SpaceX stock. Google and Fidelity saw value in the company in 2015 and purchased a stake, collectively signing a deal that skyrocketed SpaceX’s value to $10 billion.
Most notable, the funding from Google was geared toward SpaceX’s growing interest in the satellite business. SpaceX anticipates building a global communication system by positioning hundreds of satellites into orbit that will eventually connect people on Earth and future citizens of Mars to the web.
Both venture capital firms and Fidelity are also privately owned, but Google is a public company. This means that if you want a connection to SpaceX, you can purchase shares of Alphabet, Google’s parent company. Because Alphabet partially owns SpaceX, you can theoretically share a piece of it through your Google shares. It might not be the solution you were hoping for, but it’s about as close as you’re going to get to owning the real thing — for now, at least.