How to invest in SpaceX has lately been something like “a talk of the town” in the circles of investors whether they represent big or small portfolios. Tesla’s stock, the other company of Elon Musk, has known a significant appreciation since its appearance in the stock market. It is therefore pretty understandable why buying a share in Musk’s ambitious and more promising creation, has gathered so much interest worldwide. However, is it possible to become a shareholder of this space tourism firm and consequently derive a part of its expected profits considering that it hasn’t yet entered the stock exchange (not an IPO)?
Well, there is a way. A more indirect way though. The how-to is what you will learn here, in this article, if you keep on reading.
Space Exploration Technologies Corp. (the full name of SpaceX) is not a publicly listed company. It remains private. So you won’t find anywhere shares of it because no public offering has occurred yet. So, how can you invest in SpaceX? The only way to be “a part of the game” is if you invest in other businesses that collaborate with Musk’s pioneering aerospace tour venture (and are already publicly listed) or in companies that already own a part of SpaceX (some public entities, and many private equity firms). Let’s expand a little further.
If you can afford to buy a bunch of stakes in the following companies, you get a little closer to becoming a SpaceX shareholder and invest in SpaceX indirectly.
Alphabet is the parent company of Google that has up to now put more than $10 billion into SpaceX. So, owning Alphabet stocks (GOOG) offers you the opportunity to approach Elon’s venture until its IPO day is announced. That is of course if Alphabet doesn’t liquidate its share till then.
Bank of America Cooperation (BAC) is a well-known investment bank with its headquarters in North Carolina, USA, and worth of around $270 billion. With more than $250 million invested in SpaceX, the Bank’s share today is estimated to have reached $1 billion.
The investment management firm Baillie Gifford which is based in the premises of Edinburgh, Scotland, has already gotten hold of SpaceX stocks and has created two trusts that permit potential investors to become SpaceX shareholders indirectly. You will find these trusts’ shares trading on the London Stock Exchange. The first one is called Scottish Mortgage Investment Trust and the second one is Baillie Gifford US Growth Trust investment trust having exposure to SpaceX that reaches 0,8% and 1,6% respectively.
Venture capital funds also hold stakes in SpaceX. Founders Fund, Gigafund, and Valor Equity Partners are the ones worth mentioning. Investing in venture capital funds has been quite a challenge for retail investors since it is accessible only to investment banks and private wealth management companies. However, over the years, and especially due to the development of crowdfunding platforms it has become approachable for all levels of investors.
Tip: Keep in mind that all of the above entities don’t only have shares in SpaceX and that their stakes’ performance can fluctuate for many reasons.
Another option you have, if you want to invest in SpaceX, is to put your money into other space travel firms or companies that could be collaborators of SpaceX (e.g. suppliers) shortly.
Similar aerospace firms, airline companies, or even army-involved entities can offer you an alternative to investing in SpaceX. Boeing (BA) for one thing, is one of them. Other examples of this kind are Lockheed Martin Corporation ( ), Raytheon Technologies Corporation ( ), and Virgin Galactic Holdings, Inc (NYSE: SPCE).
Companies that may be partners or suppliers of Elon Musk’s venture can also be an option. Garmin Ltd and Iridium Communications can therefore have a place in your portfolio.
Another alternative to investing in SpaceX is to invest in a mutual fund or ETF that is targeted at the aerospace industry. These financial products allow you to buy stakes in a single fund to which many other stakes belong. In a nutshell, you get to buy a mixture of several companies’ shares with one move. Something that increases the diversification of your portfolio on one side and decreases your risk on the other. So, if one or two companies don’t perform well you don’t get to lose all your money. Direxion Daily Aerospace and Defense Bull 3X Shares (DFEN), iShares U.S. Aerospace & Defense ETF (ITA), and SPDR S&P Aerospace & Defense ETF are three good examples of ETFs
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In March 2020, Morgan Stanley issued a research note on SpaceX’s value. The research estimated its worth at $52 million. Almost two years later the company seemed to enjoy a valuation close to $100 billion. Regarding the firm belonging to the so-called future-oriented group of companies whose stocks have shown a rather good performance since the period of February—March 2020 when the market went down, it can be a beneficial investment move.
Here are the most important pros of the “move”:
Whatever way you choose to invest in SpaceX (currently indirectly) there is one thing you should bear in mind: and that is that your move comes with a risk – as it happens with every investment. So, look first at how much you can afford to invest, and do some thorough research on the companies/funds, trusts, etc, you consider putting your money into. You can also consider consulting a financial advisor. On the other hand, you could also wait for the grand IPO day to become a genuine SpaceX investor and directly invest in SpaceX.
You get to choose that.
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