SpaceX's IPO Plans And Ways To Invest

SpaceX Company Overview

SpaceX, founded by Elon Musk in 2002, is a groundbreaking American aerospace company. With a vision to reduce space transportation costs and eventually facilitate Mars colonization, SpaceX has achieved significant milestones.

Notably, it became the first private entity to launch, orbit, and recover a spacecraft, send astronauts to the International Space Station, and develop a liquid-propellant rocket reaching orbit. Their fleet includes Falcon 9 and Falcon Heavy launch vehicles, Dragon spacecraft for ISS missions, and the ambitious Starship for interplanetary travel.

Revenue primarily comes from providing launch services for satellites and ISS resupply missions. SpaceX's Starlink project, aiming to offer global broadband via satellite constellations, adds to their diverse initiatives. Despite praise for innovation, concerns revolve around safety and environmental impact, establishing SpaceX as a pivotal force in shaping the future of space exploration.

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Can You buy SpaceX Stock and how?

Investing in SpaceX is not possible for the general public because the company is private. Unlike publicly traded companies, such as Apple or Tesla, whose shares are available for purchase on stock exchanges, SpaceX has chosen to remain private. This means its shares are not listed or traded on major stock markets like the New York Stock Exchange or Nasdaq.

Being a private company, ownership and control of SpaceX are limited to a select group of individuals, primarily Elon Musk. Reports suggest that Musk owns a significant portion of SpaceX shares, estimated to be between 40% and 50%. The rest of the ownership is distributed among employees and venture capital investors. Without being publicly traded, regular investors, or "retail investors," cannot buy SpaceX shares through a brokerage account, as they can with publicly traded companies.

SpaceX IPO plans

As of late 2023, SpaceX, led by Elon Musk, had not announced any immediate plans for an Initial Public Offering (IPO). Musk stated that the company did not need to raise capital through an IPO to fund its investment programs. Instead, SpaceX implemented an internal trading program, allowing employees and existing investors to sell shares.

There were discussions about an agreement in 2023 that would enable insiders to sell up to $750 million of stock at $81 per share, providing liquidity for employees without the need for a public offering. While there was speculation about a potential IPO for SpaceX's Starlink satellite internet business, Musk denied the reports and emphasized the importance of achieving smooth revenue growth and cash flow before considering a public offering.

Recent information suggests that SpaceX might consider an IPO in the future, possibly around 2026, according to Vijay Marolia, the Chief Investment Officer of Regal Point Capital. However, the political environment might have an impact on the choice, with an IPO announcement possibly occurring after the 2024 election. There has been talk about a spinoff of Starlink, but Musk indicated that such a move might occur post-IPO, possibly closer to the Mars mission. Overall, while an IPO for SpaceX remains a possibility, the company is currently focused on its internal trading program and achieving financial stability.

Ways to invest in SpaceX stock in 2024

Investment in SpaceX Stock Through Public Companies

Investment Considerations

• Alphabet: With a market cap of $1.75 trillion, its $12.6 billion stake in SpaceX represents about 0.7% of its total business.

• Bank of America: With a market cap of $265 billion, its $1.5 billion stake in SpaceX represents just 0.6% of its total business.

Investment Advice

Space-Related Investments Through Exchange-Traded Funds (ETFs)

If you're interested in gaining exposure to SpaceX indirectly, consider investing in Alphabet or Bank of America, as they have stakes in SpaceX. However, keep in mind that the SpaceX investment is a relatively small portion of these companies' overall business.

If you want to invest in space-related companies but can't directly buy SpaceX stock, you have another option through investment funds called exchange-traded funds (ETFs). These funds allow you to invest in a bunch of different space-related companies at once.

ARK Space Exploration & Innovation ETF (ARKX)

• Managed by Cathie Wood.

• Focuses on space exploration and innovation.

• Plans to hold between 35 and 55 different companies.

• Costs about 0.75% of your investment.

• Manages nearly $300 million in assets.

• Key holding in late 2023: L3 Harris Technologies, making up around 4.9% of the total.

Procure Space ETF (UFO)

• Owns shares of companies involved in space industries.

• Has around 36 different holdings.

• Charges a fee of 0.75%.

• Manages about $40 million in assets.

• Key holding in late 2023: Virgin Galactic, making up about 5.2% of the total.

iShares U.S. Aerospace & Defense ETF (ITA)

• Invest in 35+ U.S. industry leaders like Boeing, Lockheed Martin, Raytheon, and others.

• Benefit from the growth in aerospace and defense, covering commercial jets to satellite technology.

• With a reasonable 0.40% expense ratio, it won't burn a hole in your pocket. ITA, with over $5.8 billion in assets, is a reliable choice for a stable long-term investment.

SPDR S&P Kensho Final Frontiers ETF (ROKT)

• Passively managed, focusing on space travel and exploration services.

• Holds about 32 stocks.

• Charges a fee of 0.45%.

• Manages around $17 million in assets.

• Key holding in late 2023: L3 Harris Technologies, making up approximately 4.5% of the total.

Investment in SpaceX: Competitors and Partners

Competitors

Competitor Investment Considerations

• Each competitor has its own unique strengths and weaknesses.

• SpaceX's dominance in cost-effectiveness may not be replicated by competitors.

• Thorough research is essential before considering investment.

Partners

Partner Investment Considerations

• Partnerships with SpaceX can offer diversified exposure.

• Companies involved in key projects may see increased demand and growth.

Additional Options

Venture Capital Firms: VC firms like Andreessen Horowitz and Sequoia Capital invest in private space companies, potentially becoming future competitors or partners of SpaceX.

Should you invest in SpaceX?

SpaceX's profitability is a dynamic landscape. While not consistently profitable on an annual basis, the company displayed positive signs in the first quarter of 2023, reporting $1.5 billion in revenue and a $55 million profit. This marked a notable improvement from previous years, where SpaceX faced annual losses, such as $559 million on $4.6 billion of revenue in 2022.

Key revenue streams include launch services, a profitable segment with contracts from government and commercial clients. Starlink, SpaceX's satellite internet project, is rapidly growing, reaching breakeven cash flow by late 2023 with a revenue surge to $1.4 billion. However, it's still considered in the investment phase.

SpaceX's valuation reached around $150 billion in July 2023, making it the most valuable private company globally and the leading aerospace company, surpassing giants like Boeing and Lockheed Martin. This valuation has steadily risen from $33.3 billion in 2019 to $100 billion in October 2021. Despite ongoing R&D investments, SpaceX's profitability trajectory, coupled with its soaring valuation, positions it as a major player in the aerospace industry with promising prospects for future growth.