Investing in SpaceX is a rare opportunity for any investor, as it stands out among the few privately-owned companies to have profoundly impacted the aerospace industry. Technology magnate and billionaire Elon Musk, renowned for his inventive ideas and far-reaching ambitions, is behind this compelling venture. To some, that makes the thought of investing in SpaceX all the more glamorous.
His space technology company has been instrumental in the success of numerous space exploration endeavors, including trips to the International Space Station with NASA astronauts and deploying communications satellites.
As SpaceX continues to push the boundaries of space exploration, its stock valuation could be poised to skyrocket. The private company is already nearing 10,000 employees, and with a value of more than $125 billion, it’s no wonder why so many people want to invest in SpaceX stock.
Unfortunately, there’s no easy way to buy shares of SpaceX on the open stock market. As a private company, SpaceX doesn’t offer public stock investments. This is true of all private companies. So unless Musk makes SpaceX a publicly-traded company and announces a SpaceX IPO (Initial Public Offering), making a direct investment is off the table.
Investors who want to buy SpaceX stock and own a piece of this groundbreaking organization will have to look elsewhere for their opportunity.
Fortunately, you don’t have to look too far. There are a few creative ways investors can get in on the action and gain correlated exposure to SpaceX’s valuation. This guide will explore the different available methods and provide helpful tips to ensure you make an intelligent investment. So if you’re ready to take your portfolio to Mars and beyond, let’s get started!
If you’re lucky enough to have a connection with Musk, SpaceX, or private equity firms, you may be able to invest directly in the private company. Private stock offerings are only available for select investors, so you’ll have to be an accredited investor to even get your foot in the door.
What are accredited investors? According to the U.S. Securities and Exchange Commission (SEC), it’s someone who meets certain financial requirements, such as having a net worth of at least $1 million or an income of over $200,000 for each of the two most recent years.
If you meet the financial requirements investing in private company shares is within your grasp. In order to acquire shares, it is best to seek out interested insiders, such as angel investors or venture capital firms who are looking for potential buyers.
Thankfully, companies now specialize in connecting these types of individuals with potential investors. One such company is the Founders Fund, which plays a matchmaker between interested parties and helps them make a secure transaction.
It’s important to note that even if you use such a specialized company to buy private shares, there’s no guarantee they will be able to access SpaceX stock. This is because it’s still unknown how long it will take for additional private shares to become available.
So, while you can fill out and submit investment documents and provide funding to secure the stock, you might not have access to SpaceX shares right away due to the limited supply of existing shares.
Moreover, there are some essential details to iron out when investing privately. First, since private company stock is unregistered, investors are exposed to various risks that may not be present in public shares.
In addition, the process of selling private stock can be complicated and costly due to its unique nature. For these reasons, it’s best to understand the nuances of investing in private stock before taking the plunge.
For one, there’s a very real possibility that you’ll have to make a minimum investment of $100,000 or more. You’ll also need to be aware of potential fees and taxes that may apply when investing in private stock, such as SpaceX.
These usually come in the form of commissions to a brokerage account that handles investment transactions. In addition, it’s unlikely that you will be able to negotiate a lower price for the stock since private shares are generally sold at a fixed ‘block’ price.
Finally, you should also be aware of potential restrictions on when and how often you can sell your shares. While these limits vary depending on the type of stock you purchase, they all follow the same basic principle: you must wait until certain conditions have been met in order to trade or sell your shares.
By taking the time to understand the ins and outs of investing in private stock, you can make a smarter decision about whether it’s right for you.
If you’ve determined that it’s not possible or financially feasible to go the private share route, there are still other options available.
Although you may not be able to directly invest in SpaceX, you can invest in suppliers and companies that can benefit from the success of SpaceX – by investing in mutual funds or ETFs (exchange-traded funds) that include such companies. Of course, this requires some research, as there is no single fund or ETF dedicated exclusively to SpaceX-related exposure.
You’ll have to look for funds and ETFs that include holdings of companies related to the aerospace industry.
In addition, because these investments are not direct investments in SpaceX, there may be some downsides, such as investments in competitors or competing technologies.
Direct Public Offerings or Secondary Offerings
Another option is to look out for any direct public offerings of SpaceX stock. While these are relatively rare, they do happen on occasion when a company goes issues a secondary offering or raises additional capital.
This can involve SpaceX issuing new shares of its stock directly to the public and offering it at a set price. You’ll have to act fast if this offering is announced for you to acquire shares before they are oversubscribed. Alternatively, SpaceX may choose to raise capital by issuing additional private shares, which would require the same stringent requirements listed above.
Mutual Funds and ETFs in the Same Sector
Suppose you wish to invest in the general industry and don’t care about investing in potential competitors. In that case, you could also invest in companies or entities via ETFs or mutual funds related to the aerospace sector. You may want to consider the following ETFs:
ARK Space Exploration and Innovation ETF (ARKX)
This is a thematic ETF that focuses on companies involved in the exploration and development of space.
Procure Space ETF (UFO)
This fund provides exposure to companies involved in deploying and utilizing space-based products and services.
iShares U.S. Aerospace & Defense ETF (ITA)
This fund invests in U.S.-based aerospace and defense companies.
SPDR S&P Aerospace & Defense ETF (XAR)
This fund offers exposure to companies involved in aerospace and defense activities.
SPDR S&P Kensho Final Frontiers ETF (ROKT)
This fund tracks companies involved in the exploration and development of outer space.
These funds all contain holdings related to the aerospace industry but not in SpaceX directly. They can provide you with a way to gain exposure to companies in this sector without the option to invest in private shares of SpaceX directly.
Other Publicly Traded Companies
There are other publicly-traded companies within the aerospace sector worth considering. This means their stocks can be bought and sold on a major stock exchange, such as the NYSE or NASDAQ. These include:
- Lockheed Martin Corporation (LMT): Lockheed Martin is a defense and aerospace industry giant.
- Boeing Company (BA): Boeing is one of the world’s largest aircraft manufacturers.
- Northrop Grumman Corporation (NOC): Northrop Grumman is an aerospace and defense technology company.
- Raytheon Technologies Corporation (RTX): Raytheon is a leader in aerospace and defense.
- Astronics Corporation (ATRO): Astronics designs and manufactures advanced aerospace systems.
- AST SpaceMobile Inc. (ASTS): AST SpaceMobile is a space-based wireless communications company.
- Virgin Galactic Holdings Inc. (SPCE): Virgin Galactic is a spaceflight company that recently started offering sub-orbital spaceflights.
Though these companies are not SpaceX, they are involved in the aerospace industry and thus may benefit from SpaceX’s success. By investing in these companies, you can gain exposure to the sector without the ability to purchase private shares of SpaceX.
Tips for Investing
Prior to investing in any of these options, you must conduct your own analysis and due diligence. Investigate the company’s financials, read up on industry news and trends, and realize the risks associated with investing. Taking thorough steps beforehand will help ensure a successful venture!
Despite the evident progress of SpaceX, it is essential to take into account that no one can guarantee what lies ahead for the company. Yet, despite its current success, there might be unforeseen risks that could cause a sudden plunge in stock prices.
Paying close attention to timing is pivotal when investing in SpaceX or any other public enterprise. Be on the lookout for news and updates, such as new collaborations or product offerings, that could influence stock prices. Furthermore, create alerts with ETFs and stocks you are interested in so you can respond quickly if needed.
Ultimately, make sure to diversify your investments and spread them out over different industries and types of assets. This way, you won’t take on too much risk, as you will be well-protected if one company or sector experiences a downturn. Hopefully, these alternative strategies have provided some insight into investing in SpaceX with confidence; wishing you all the best.
Josh is a financial expert with over 15 years of experience on Wall Street as a senior market strategist and trader. His career has spanned from working on the New York Stock Exchange floor to investment management and portfolio trading at Citibank, Chicago Trading Company, and Flow Traders.
Josh graduated from Cornell University with a degree from the Dyson School of Applied Economics & Management at the SC Johnson College of Business. He has held multiple professional licenses during his career, including FINRA Series 3, 7, 24, 55, Nasdaq OMX, Xetra & Eurex (German), and SIX (Swiss) trading licenses. Josh served as a senior trader and strategist, business partner, and head of futures in his former roles on Wall Street.
Josh's work and authoritative advice have appeared in major publications like Nasdaq, Forbes, The Sun, Yahoo! Finance, CBS News, Fortune, The Street, MSN Money, and Go Banking Rates. Josh currently holds areas of expertise in investing, wealth management, capital markets, taxes, real estate, cryptocurrencies, and personal finance.
Josh currently runs a wealth management business and investment firm. Additionally, he is the founder and CEO of Top Dollar, where he teaches others how to build 6-figure passive income with smart money strategies that he uses professionally.