SpaceX has been in the news quite a lot lately.
This past weekend, SpaceX successfully brought back four astronauts from the first ever commercial spacewalk. In August, aerospace firm Boeing had its latest high-profile failure when its Starliner spacecraft was deemed unsafe for transport. The ship brought astronauts Butch Wilmore and Suni Williams to the International Space Station but suffered multiple failures in the process. So NASA decided that a trip back on the Starliner was too risky. Instead, they have turned to rival SpaceX to bring the pair home in February.
Additionally, the company’s increasingly popular Starlink subsidiary continues to expand, most recently landing a deal to supply United Airlines flights with Wifi. A successful Starship launch in June also marked a major stepping stone in the company’s ultimate mission to bring humanity to Mars.
SpaceX appears to be having a moment, one that may well turn into a legacy if it can continue to build out its ambitious technology. If you would like to invest in this company, here’s what you should know.
Sign up for the Market Minute newsletter for financial and economic news that may impact SpaceX and other potential investments.
What Does SpaceX Do?
SpaceX is an aerospace firm founded by Elon Musk. It’s fair to say that the company has both a big picture aspect and a practical one.
From a big-picture perspective, Musk has said that he would like SpaceX to contribute to the future of human space travel. He hopes that this company will, eventually, take people to Mars and begin colonizing the planet. From an investor’s standpoint this larger vision resembles the footprint of a nonprofit corporation, in which the organization spends money to achieve the mission, rather than the for-profit model of building the mission around revenue.
But make no mistake, SpaceX has an imminently practical side as well. This company has grown into a major aerospace contractor, reducing costs and developing efficient, reusable spacecraft. In fact, at time of writing, it’s one of the few companies in the United States that can manage space flight.
Among other operations, SpaceX’s business includes:
-
Government manufacturing contracts to build rockets
-
Government services contracts to transport astronauts
-
Private services contracts to transport individuals
-
Government and private services contracts to launch satellites
-
Government and private high-speed internet through Starlink
Founded in 2002, SpaceX reportedly began to show a profit in the early 2020s. Reporting suggests that the company made somewhere between $200 million and $3 billion in profits in 2023. NASA’s decision to abandon its own shuttle program, outsourcing launches to private contractors, has opened up opportunities in space flight. Boeing’s growing troubles have only made those opportunities greater.
SpaceX may be the right company at the right time.
However, there are still questions. Third party reporting indicates that SpaceX makes little, if any, money off its space program. Instead, all profits appear to come from the company’s Starlink service. This service, in turn, may not actually be as profitable as it appears, as reporting by Bloomberg suggests that Starlink may have higher costs and debts than the company has disclosed. (To be clear, as a private company Starlink has no duty to publicly disclose its revenue, costs, debts or other related figures. This is why much of the company’s financial figures require speculation.)
Some recent reporting finds that SpaceX has a current value of around $200 billion. There are no current plans for an initial public offering (IPO), and given SpaceX’s noncommercial goals, a public offering is unlikely.
Stay up to date with stock market news by signing up for the Market Minute newsletter.
SpaceX Is Privately Held
SpaceX is a privately held company, meaning that its stock is not listed on any public or regulated exchange, and ordinary retail investors cannot directly invest in SpaceX in most cases. It also does not have to file reports or other disclosures with the Securities and Exchange Commission (SEC), as required of publicly traded companies.
As a private company, only accredited investor or institutional investors can freely trade shares of SpaceX stock. Retail investors can generally qualify as an accredited investor if they earn an average of $200,000 or more per year, have $1 million or greater net worth, or otherwise have certain finance certifications. Then, you can only buy this stock through a private transaction with existing shareholders and, even if you could find someone willing to sell, those transactions are restricted.
A financial advisor can help you navigate the private investment landscape. Get matched with up to three fiduciary advisors using SmartAsset’s free tool.
How to Get Indirect Investment Exposure to SpaceX
For most individual investors, typically the best way to invest in a private company is through indirect exposure. This is the practice of investing in the companies and assets that are linked to a private company’s fortunes in some way. You would find assets that will rise and fall based on the success or failure of the private company, and then invest accordingly.
In the case of SpaceX, you have a few options.
While an IPO for SpaceX itself is highly unlikely, Elon Musk has previously alluded to the potential of long-term investors in his other companies, such as publicly traded Tesla, getting priority if SpaceX’s Starlink service were to IPO in the future.
You can invest in telecommunications. Although Starlink is a direct competitor to many internet services, both it and SpaceX act as essential infrastructure for telecommunications. Teleconferencing, phone calls and any other form of direct communication could benefit from Starlink’s goal of global high-speed internet. If more people are able to access the internet who otherwise previously could not, those companies’ total addressable market (TAM) may increase, potentially bringing in additional revenue streams. Additionally, any company that depends on putting satellites into orbit will benefit from SpaceX’s goal of cheaper, more efficient space flight.
Another option is to invest in companies that rely on spaceflight and rocket design. Again, this is a broad range of firms. Some, like Virgin Galactic (SPCE), want to commercialize space travel itself. They will rely on the kind of rockets that SpaceX wants to build. Others, particularly in the defense space, may rely on those rockets and their underlying technology to power future transportation and military systems. All can likely to benefit if SpaceX can continue to build its rocket program successfully.
Then there is fund investing. It is uncommon for public funds to offer private assets, but it does happen. As an investor you can look for funds like the publicly listed Destiny Tech100 mutual fund, which reportedly holds shares of SpaceX along with several other private firms. By looking for mutual funds and ETFs that hold private shares, you can get as close to direct investment as a non-accredited investor can to direct investment.
Or you could short Boeing.
Now, even tongue-in-cheek, we cannot mention short selling without also mentioning the risks. Shorting a stock creates the possibility of active loss, meaning that you can lose more than the money you invest and end up owing money. Always consider short sales with extreme caution. It may be best to use a financial advisor to help you evaluate and navigate sophisticated investment maneuvers like this.
That said, SpaceX and Boeing are, at time of writing, two of the only major space contractors left. This is a field that continues contracting, which means that Boeing’s loss is often SpaceX’s gain.
Sign up for the Market Minute newsletter to stay up to date on news that could potentially impact SpaceX or other potential investments that could benefit from SpaceX’s success.
The Bottom Line
SpaceX is Elon Musk’s aerospace company that operates rocket launches, satellite launches and Starlink internet service. It is a privately held company, meaning individual investors cannot freely invest. Accredited investors that meet the income and asset qualifications may be able to invest privately. Or retail investors may be able to get indirect exposure to SpaceX via other companies.
Tips on Private Investing
-
There are a lot of differences between private and public companies, which is why the SEC restricts those shares. Private companies tend to be significant opportunities for high-risk/high-reward growth investing, so let’s review the differences between these two sectors of the market.
-
A financial advisor can help you build a comprehensive retirement plan. Finding a financial advisor doesn’t have to be hard. SmartAsset’s free tool matches you with up to three vetted financial advisors who serve your area, and you can have a free introductory call with your advisor matches to decide which one you feel is right for you. If you’re ready to find an advisor who can help you achieve your financial goals, get started now.
-
Money is always in motion. Sign up for the Market Minute newsletter for financial and economic news that may impact your potential investment options.
-
Keep an emergency fund on hand in case you run into unexpected expenses. An emergency fund should be liquid — in an account that isn’t at risk of significant fluctuation like the stock market. The tradeoff is that the value of liquid cash can be eroded by inflation. But a high-interest account allows you to earn compound interest. Compare savings accounts from these banks.
-
Are you a financial advisor looking to grow your business? SmartAsset AMP helps advisors connect with leads and offers marketing automation solutions so you can spend more time making conversions. Learn more about SmartAsset AMP.
Photo credit: Grok, ©iStock.com/Tarcisio Schnaider, ©iStock.com/piranka
This is not an offer to buy or sell any security or interest. All investing involves risk, including loss of principal. This article IS FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED TO PROVIDE LEGAL ADVICE, TAX ADVICE, ACCOUNTING ADVICE OR FINANCIAL ADVICE. Before making any final decisions or implementing any financial strategy, you should consider obtaining additional information and advice from your accountant or other financial advisers who are fully aware of your individual circumstances. SmartAsset’s services are limited to referring users to third party advisers registered or chartered as fiduciaries (“Adviser(s)”) with a regulatory body in the United States that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors.
The post How to Invest in SpaceX appeared first on SmartReads by SmartAsset.
