Update: On May 18, 2022, Reuters reported a secondary market share sale at $72/share, which would raise the current valuation of SpaceX to over $125 billion. No new shares were issued for this offering and it was not clear which existing shareholders sold their shares.
SpaceX is currently the most valuable venture-backed private company in the US. An early October financing round pushed the Company’s valuation to over $100 billion, leapfrogging Stripe to gain the number one spot.
SpaceX’s association with billionaire Elon Musk, its list of high profile investors, its already substantial revenues, and the potential for a spinoff of its Starlink venture will keep the SpaceX IPO in the public eye, and it’s likely to be one of the biggest IPOs in years.
Is it possible to buy SpaceX stock? If so, what options do investors have? Let’s take a closer look at SpaceX and how investors can purchase SpaceX shares.
What Is SpaceX?
SpaceX designs and manufactures advanced spacecraft, and launches them into… yes you guessed it… space. 🚀
The Company is considered the most advanced player in the civilian space industry.
SpaceX is well known for its grand plans to fly to the moon and to Mars and its fully reusable spaceship project, but it also has two working businesses.
- SpaceX Falcon 9 rockets provide affordable launch services for satellites weighing up to 200 kilos (440 pounds).
- The Starlink project aims to provide global broadband service through a network of low-orbit satellites. Starlink may be spun off in its own IPO.
SpaceX has also won contracts to work with NASA on the Artemis human lunar lander project, which aims to put humans back on the moon. The contract award has been challenged in court by rival Blue Origin.
Satellite launches compose the bulk of SpaceX revenue and are expected to bring in $1.6 billion in sales in 2021. Starlink entered beta testing in mid-2021 and could produce significant revenue in 2022. SpaceX has launched 1,740 Starlink satellites and the system will eventually deploy as many as 40,000 satellites.
While satellite launches are currently the main revenue generator, that’s a limited market and does not have large growth potential. Elon Musk himself has stated that satellite revenue will probably not exceed $3 billion a year. Starlink, on the other hand, has a much larger potential market.
SpaceX is developing a deep space transport system called Starship, which it will use to serve the Artemis contract. A Starship prototype is currently awaiting FAA approval for an orbital test.
SpaceX competes with Blue Origin (founded by Amazon billionaire Jeff Bezos), United Launch Alliance (formed by aerospace giants Boeing and Lockheed Martin), Virgin Orbit, and other mostly government-operated agencies like CNSA and NASA.
When Will SpaceX Hold Its IPO
Most observers expect that SpaceX will eventually go public, though no registration statement has been filed and there is no indication of when an IPO might occur.
Unlike many private companies, SpaceX does not need to hold an IPO. The Company has shown a very high ability to attract private capital and seems able to finance its programs indefinitely without going public. Some investors report that Musk has told them not to expect a return for 15 years. A company that can attract financing on those terms is under no pressure to stage an IPO.
If market conditions remain strong, SpaceX could choose to hold an IPO within the next year or two. They could also spin off Starlink in an independent IPO, or they could simply carry on as a private company. CEO musk has stated that Starlink will hold an IPO once the Company can predict its cash flow.
There’s no clear indication of imminent intent to stage an IPO. Anyone planning to buy SpaceX stock needs to be prepared to hold onto their investment for an extended period.
SpaceX completed a new round of private financing in October 2021, selling up to $755 million worth of stock at $560 per share, 33% above the $419 per share achieved at the last valuation in February. That financing round left the Company’s total valuation at over $100 billion.
Some accounts suggest that SpaceX was offered up to $6 billion in financing, indicating that more private financing is available.
SpaceX investors include Fidelity Investments, Threshold Ventures, Bank of America, Baillie Gifford, NASA, Google, Founders Fund, and many others.
How Can I Buy SpaceX Stock?
SpaceX is still privately held, meaning its shares are not available on the stock market yet. But are there other ways to purchase SpaceX stock?
Invest Through a Pre-IPO Secondary Market
There is a secondary market for pre-IPO shares, and it is sometimes possible to purchase them. Online pre-IPO marketplaces may acquire shares from early investors or employees who have received shares through stock options.
You may be able to buy SpaceX shares through these marketplaces.
- Forge Global/Sharespost is the product of a merger between two major pre-IPO marketplaces. The minimum investment is $100,000. Some shares may have higher minimums. Potential buyers may need to pass a qualification process.
- EquityZen acquires pre-IPO shares from early investors and employees and makes them available to qualified investors. There will be a qualification process and the minimum investment is $10,000, potentially higher for some shares.
- SecFi specializes in linking outside investors with employees who need to liquidate their stock options.
- Nasdaq Private Market provides access to private company shares for investors who meet SEC accredited investor criteria.
To use these platforms, you will have to register and open an account. You may need to meet a minimum level of income and investment experience to qualify, and there may be other criteria. There’s no guarantee that any marketplace will have SpaceX shares available.
⚠️ Investing in pre-IPO shares is risky. An IPO may be postponed if market conditions are not appropriate. If there is no IPO you may not be able to sell your shares.
Invest in the IPO
If you can’t find pre-IPO shares for sale, you might consider investing in the IPO itself. Your entry price will be higher, but you’ll have a reasonable assurance that you’ll be able to sell your shares if you want to.
Several major brokers allow account holders to participate in IPOs. All of them have requirements that investors have to meet. You will have to answer questions to confirm that you comply with rules on IPO investment.
- TD Ameritrade allows participation in IPOs if TD Ameritrade is part of the selling group. Participating account holders need a minimum balance of $250,000 or 30 trades in the last calendar year.
- Fidelity allows participation for customers who are in the Premium or Private client groups or those who meet minimum household asset requirements.
- Charles Schwab requires an account balance of $100,000 or a history with at least 36 trades.
- E*Trade does not restrict IPO participation by account balance or trading history. You will have to fill out a questionnaire from the underwriter of the IPO to determine your eligibility.
☝️ Most IPOs allocate only a small number of shares for retail investors. Even if you qualify you may not be able to buy the number of shares you want. You may not be able to buy shares at all.
⚠️ Many IPO purchases come with a lock-up period, usually 90 or 180 days. You will not be able to sell your shares until this period expires.
Invest After the IPO
The most conservative way to buy SpaceX stock would be to wait for the IPO and buy the shares on the public post-IPO market. You can do this through any brokerage account.
You won’t get in at the low price offered by pre-IPO or IPO purchases, but it’s the simplest way to invest, and there’s still a substantial upside if the company succeeds.
👉 For a point of comparison, Tesla shares at the IPO were priced at $17. The shares closed at $23.89 on their first day of public trading. At the time of this writing, they are worth over $580. That may not happen again, but you don’t need to buy at the IPO to earn a profit.
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Are There Any Concerns About SpaceX?
SpaceX is in a risky and highly speculative business that requires enormous amounts of capital. An accident could have a serious impact on the Company’s viability, especially on a manned mission.
The Starlink project comes with its own set of concerns. The network could include up to 42,000 satellites, which raises possibilities of a collision, simple failure, or other problems.
The extremely high capital cost and operational costs of SpaceX could put the Company at risk in a less liberal funding environment. If markets sink or the economy becomes less vigorous financing could be harder to obtain.
There are some ways to invest in private companies pre-IPO. Some ways are more difficult than others. But if you’re willing to do some digging, you might be able to purchase SpaceX stock before the company’s IPO.
SpaceX is a highly speculative investment with substantial risks. There’s no way to anticipate when an IPO will be held, so your funds could be tied up for some time. If the gamble pays off, the gains could be substantial.
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SpaceX designs, manufactures and launches advanced rockets and spacecraft. The company was founded in 2002 to revolutionize space technology. The company makes money by launching satellites and through its Starlink satellite internet program.
SpaceX is still privately held, meaning its shares are not available on the stock market yet. There are ways to purchase pre-IPO stock, but success is not guaranteed and there may be qualifying requirements.
SpaceX is exposed to accident risk. It is also in a business that has very high operating costs and requires huge amounts of capital.