Future-oriented stocks have performed well since the February-March 2020 market pullback. Many onlookers may be hungry to know how to invest money right now. SpaceX is a company that has drawn a lot of eyeballs in recent years, and with good reason.
If you are curious about investing in SpaceX or want to get a snapshot of its potential, we’ll get into the details.
|Number of employees||Over 9,500|
|Ticker symbol||Doesn’t exist yet|
|Expected IPO date||N/A|
SpaceX is an aerospace manufacturer that also offers space transportation services. The company was founded by Elon Musk in 2002. SpaceX has attracted significant attention over the past two decades due to its founder’s bold goals and ever-trending Tweets. Some experts and analysts have estimated its valuation at $100 billion. As such, many investors might want to know how to buy SpaceX stock.
Musk launched SpaceX with the stated goal of reducing space transportation costs. Ultimately, he aims to achieve a crewed mission to Mars. After the 1969 Moon landing, a human mission to Mars appeared to be the next logical progression and space exploration technologies thrived on the back of enormous public funding in the Cold War period.
Unfortunately, investment has waned since the end of the Cold War. NASA’s annual budget made up 4.3% of the Federal budget in 1965, but that sank to 0.88% in 1995 and has since dropped below 0.5% in the 2010s. Elon Musk aims to jumpstart a privately funded future mission powered by SpaceX.
Why do people want to invest in SpaceX?
Enthusiasm for space travel has enjoyed a spike in recent years as SpaceX has stolen headlines. In 2020, the May 30 Space Launch Live event — showcasing the Falcon 9 rocket transporting NASA astronauts and the SpaceX Crew Dragon — became the No. 1 non-prime telecast for the Discovery Channel and the highest-rated telecast for the Science Channel. SpaceX also has much more to boast about in the early part of the 2020s.
Billionaire Elon Musk has proven to be adept at raising venture capital. A report from the New York-based firm Space Capital suggested that private investment in space companies rose to $1.9 billion in the first quarter of 2021. Investment in this area has grown top heavy in recent years, with only a handful of companies drawing in the lion’s share of funding. Fortunately, SpaceX has been among them.
SpaceX raised a whopping $850 million in the first quarter of 2021. It reportedly received a total of $6 billion in offers from various investors. The $850 million it accepted in that funding round was more than double the investment rate of its next highest competitor. The company has looked to aggressively raise capital as it has eyes on two major projects in the coming years: Starship and Starlink.
Starship is a class of next-generation reusable launch vehicles being developed for the purpose of Mars exploration. These rockets are designed to be even more powerful than the Saturn V rockets that carried American astronauts to the Moon. On July 25, 2019, the ship Starhopper completed the first successful flight by any Starship prototype up until that point. The project’s Super Heavy BN4 and Starship SN20 are being pushed to become the first prototypes to attempt to reach orbital velocity.
Meanwhile, Starlink is a satellite internet constellation already made up of thousands of units. SpaceX has already started to use this network to provide high-speed internet to customers. By the middle of 2021, the constellation was already made up of more than 1,600 Starlink satellites. Better yet, its beta internet service offering is available in 21 countries.
Reasons to invest in SpaceX
This past October, a Morgan Stanley survey revealed that respondents expected SpaceX to become more valuable than Tesla. For reference, Tesla has managed to soar to a $1 trillion market cap in 2021. Investors have been attracted to the potential applications of SpaceX’s reusable launch architecture across industries from communications to earth observation.
Emergen Research recently released a report on the global space propulsion system market. It estimated this market was worth $6.67 billion in 2020. Emergen predicts the market will reach $19.9 billion in 2028. This would represent an attractive CAGR of 14%. CAGR, or compound annual growth, aims to measure an investment’s annual growth rate over a given period. This can be a great measuring stick for a potential long-term investment target.
Pros of buying SpaceX stock
- Huge growth potential in the aerospace and communications sectors
- Starship and Starlink projects have met with early success
- SpaceX has proven to be top of its class when it comes to drawing in capital
Reasons to avoid SpaceX
The potential of these projects has stirred major excitement among investors, enough for them to predict that SpaceX could supplant Tesla in the future. However, the commercial space travel market is still relatively small at this stage. This puts a ceiling on SpaceX’s revenue potential in the near term.
SpaceX and companies in this field have benefited from soaring capital investment in a friendly climate over the past decade. Historically low interest rates and massive liquidity have bolstered the appetite for future-oriented projects. However, the threat of a rate tightening cycle has already ramped up market volatility. Tighter monetary policy could threaten the progress that SpaceX and other cutting-edge companies have made in recent years.
Cons of buying SpaceX stock
- Limited profitability in this sector in the early 2020s relative to valuation
- Lofty goals in the near and long term
When to expect a SpaceX IPO
Elon Musk has occasionally been mired in controversy due to his outspoken style that has impacted the stock price of Tesla. His open rivalry with Jeff Bezos, founder of Amazon and Blue Origin, has also proven controversial. SpaceX continuing to operate privately may hold more appeal for Musk due to his experiences with securities regulators. The founder has been cryptic on the subject of an initial public offering (IPO) whenever it turns up.
Gwynne Shotwell, SpaceX’s chief operating officer (COO), reportedly told investors in early 2020 that Starlink would be an attractive target for an IPO. Musk threw cold water when confronted about this prospect. Investors may be waiting a long time for publicly available SpaceX stock.
How to buy SpaceX stock
Now that we’ve gone over this company’s mouth-watering potential, investors may be wondering: how can you buy SpaceX stock? The answer may at first glance be disappointing, but investors should not be discouraged.
As of December 2021, SpaceX is not a publicly-traded company. This means the investing public is not able to snag shares of SpaceX at the time of this writing. The company has grown into the most valuable venture-backed private company in the United States. In 2015, Google’s parent company Alphabet and Fidelity combined to claim a 10% stake.
Unless you are fabulously wealthy, you will likely have to wait until SpaceX becomes a public company. EquityZen is an online marketplace that enables the trading of pre-IPO employee shares from privately held companies. It can link employees from private companies to prospective investors. Forge Global is another online marketplace that offers a similar service.
For more details, read our EquityZen review.
There is no way to buy SpaceX on the stock market yet. That being said, you could look to other top players in the space industry. In order to make these moves, you should already be set up with a brokerage account. Here are some of the best brokerage accounts to consider. You might also look at our list of the best investment apps.
Alternatives to direct investment in SpaceX stock
Investors cannot buy SpaceX stock through public means right now, but they can seek out stocks that have exposure to Musk’s burgeoning company as an indirect way of investing in the company.
For example, Google made a significant investment in SpaceX back in 2015. That means investors can get exposure to SpaceX by way of investing in Alphabet (GOOG, GOOGL), which trades on the NASDAQ exchange.
Four space-focused stocks beyond SpaceX
- Maxar Technologies: A Colorado-based company that provides earth intelligence and space infrastructure solutions to a global client base.
- Astra: This company reached orbit for the first time with the rocket LV0007, joining SpaceX, Rocket Lab, and Virgin Orbit in the group that has achieved this feat.
- Boeing: An older player in the aerospace, defense, and telecommunications sectors that is still an exciting prospect for the long term
- Lockheed Martin: Another long-time major player in the aerospace and defense sectors.
What is SpaceX’s stock symbol?
SpaceX does not possess a stock symbol as of early December 2021. On November 29, Elon Musk tweeted that “A lot has happened in 8 years” in response to another tweet that referenced a 2013 email wherein Musk expressed his desire to keep SpaceX private. This sent onlookers buzzing that Musk may be changing his tune over a potential IPO.
How do I buy SpaceX shares?
Investors can seek exposure to SpaceX by scooping up stock in its top investors such as Alphabet (Google’s parent company). However, SpaceX stock has yet to unveil an IPO at the time of this writing.
Is SpaceX stock worth buying?
A Morgan Stanley research note released in March 2020 valued SpaceX at $52 million. Fast forward to late 2021, and SpaceX boasts an approximate $100 billion valuation. There are many reasons an investor might be excited about SpaceX as we look ahead to 2022. On the other hand, investors need to be aware of the risks for a future-oriented company that has set out lofty goals.
Elon Musk’s SpaceX is a private company at the time of this writing in December 2021. There is no indication as to when Musk may look to pursue a public listing. The company’s progress is well worth monitoring considering the early success of its ambitious projects. Meanwhile, investors can also target other promising stocks focused on space.