How to Buy SpaceX Stock: You Can Indirectly

SpaceX is not publicly traded on a stock exchange, making it difficult but not impossible to own. Because it is a privately held company, small retail investors can only own it indirectly. But how does one buy SpaceX stock?

The company is not listed on the New York Stock Exchange (NYSE) or the Nasdaq. As a result, investors cannot buy or sell SpaceX shares using a brokerage account. Most investors who own a percentage of the company are institutional or high-net-worth investors with access to private equity and venture capital firms.

Then, how can small retail investors invest in SpaceX stock?

What is SpaceX?

Space Exploration Technologies Corp., or SpaceX, was founded in 2002 by Elon Musk to allow humanity to reach and colonize Mars. The company is an aerospace company designing and building rockets and communication satellites. 

Elon Musk is the founder, chief executive officer (CEO), and chief engineer of SpaceX. Besides SpaceX, he has several other successful start-ups, beginning with PayPal (PYPL). His most successful company, Tesla (TSLA), has created significant wealth for people. Consequently, Elon Musk became wealthy based on his ownership of Tesla stock.

Rockets and Launch Services

The company offers reusable space transportation services. The main product is the Falcon 9 rocket, a reusable rocket. These rockets provide low-cost launch services for satellites weighing up to 440 pounds (200 kilograms). Satellite launches generated about $1.6 billion in sales in 2021. Other developmental platforms include the Falcon Heavy, the Dragon spacecraft, and the Starship.

SpaceX is developing a deep-space transport called Starship. A prototype awaits Federal Aviation Administration (FAA) approval for an orbital test. Starship is part of NASA’s Artemis project, which seeks to return humans to the moon.

Communication Satellites

SpaceX has also developed the Starlink project. This technology provides high-speed, low-latency broadband internet service worldwide from a low-orbit satellite constellation. The company launched its first two prototype satellites in 2018 and 60 operational satellites in 2019. Since then, SpaceX has launched 1,000+ satellites for Starlink and started global service.

The company is also a defense contractor. By leveraging the Falcon 9 and Starlink technologies, it offers earth observation, communications, and hosted payloads through the Starshield Service.

Will SpaceX Have an IPO

The short answer is no. SpaceX must still file with the Securities and Exchange Commission (SEC) for an initial public offering (IPO). As a result, small investors cannot buy or sell shares on a stock exchange.

Moreover, Elon Musk is reportedly hesitant about the idea of SpaceX going public. SpaceX’s long-term goal is to colonize Mars. However, Elon Musk has stated short-term demands of shareholders may not allow SpaceX’s long-term plan to happen. Consequently, an IPO will likely take a while because he is the company’s founder, CEO, and majority owner.

In addition, SpaceX has had little difficulty raising capital in the private market, making an IPO unnecessary. According to Crunchbase, since 2002, the company has raised approximately $9.0+ billion in 30 funding rounds from 84 investors.

The Series A funding round in 2002 raised $12.1 million with a post-money valuation of $18.8 million. But by October 21, the company raised $755 million at a price of $560 per share, valuing SpaceX at more than $100 billion. SpaceX had $6+ billion in demand for this round. The most recent institutional investor raise of $650 million valued the company at $137 billion.

Last year, Elon Musk announced an IPO for the Starlink business was still three or four years away, meaning one could occur in 2025. But it is unlikely a SpaceX IPO will happen.

How to Buy SpaceX Stock

Even though SpaceX is raising money, small investors cannot purchase shares. Instead, institutional and high-net-worth individuals can buy shares. For instance, investors include Founders Fund, Sequoia, Gigafund, Valor Equity Partners, GoldenArc Capital, Fidelity Investments, Baillie Gifford, Bank of America, Saudi Arabia’s Public Investment Fund, Abu Dhabi Investment Authority, Andreessen Horowitz (a16z), and dozens of other organizations.

However, owning a piece of SpaceX is still possible, indirectly.

Venture Capital Funds

A straightforward way to invest in SpaceX stock is to become a venture capital fund (VC) member investing in SpaceX. For example, Manhattan Venture Partners is an investor in SpaceX. If you are an investor in the partnership, you indirectly own shares of the aerospace firm. 

However, to invest in a VC fund, a person must be an accredited investor as defined by the SEC. The bottom line is you need to have an income of $200,000+ or $300,000+ with your spouse in the two most recent years. Alternatively, a person can have a net worth of $1 million, excluding their primary residence.

Besides accredited investor status, a person must meet the investment minimum, usually tens to hundreds of thousands of dollars.

Baillie Gifford Trusts

The Baillie Gifford trusts are a second way to buy SpaceX stock. The financial firm has two trusts that own SpaceX stock. The first is the Scottish Mortgage Investment Trust, and the second is the US Growth Trust.

The Scottish Mortgage Investment Trust (SMT) is a publicly traded trust on the London Stock Exchange (LSE). In addition, it is a part of the FTSE 100 Index. The trust was founded in 1909. The trust’s annual report from 2023 indicates SpaceX is its largest private holding at 3.4% of assets under management (AUM).

The US Growth Trust (USA) also has SpaceX listed as its number two, holding at 5.8%. However, this fund is only available to individual investors in the United Kingdom.

Alphabet

Investing in trusts on the LSE may be difficult for American investors. Perhaps the most straightforward and least risky way to gain exposure to SpaceX stock is by buying Alphabet (GOOG, GOOGL) stock. 

In 2015, Google invested $900 million with Fidelity Investments in SpaceX at a valuation of $12 billion. At the time, the shares were worth ~10% of SpaceX. Alphabet later invested another $337 million in December 2021. Alphabet’s total investment has probably appreciated to more than $10 billion.

Hence, shareholders of Alphabet indirectly own SpaceX stock.

Bank of America

A second method with lower risk is to acquire Bank of America (BAC) stock. The firm invested $250 million in an earlier round in November 2018. The bank’s investment is likely valued at roughly $1 billion now. Shareholders indirectly own SpaceX stock.

Secondary Markets

An alternative way to buy SpaceX stock is through the secondary market. Several online marketplaces link employees in private companies with pre-IPO shares and investors. The platforms also connect VC firms seeking to sell shares before the IPO. Several online marketplaces are EquityZen, Forge Global, MicroVentures, and InvestX. However, you must check if SpaceX stock is available on these sites.

Secondary markets may be risky for retail investors because buying and selling pre-IPO shares is not like on a stock exchange. An investor needs to know how to price shares of private companies, and this is a challenging task, even for professionals. The last thing you want is to buy shares on the secondary market that will be worth less than you paid for them if they are mispriced.

Pros and Cons of Investing in SpaceX Stock

There are a few pros to buying SpaceX stock. First, the company is on the cutting edge of commercial space travel and communication. Thus, it has enormous growth potential. Next, the company’s Falcon 9 satellite launch service is successful and growing. Third, the Starlink service is growing rapidly. Lastly, SpaceX can raise capital relatively quickly in its growth trajectory.

There are a few cons to buying SpaceX stock, too. First, the company is private, and pre-IPO shares are difficult to price and have less liquidity. Second, the company’s revenue is low relative to the nearly $150 billion valuation. Third, the company has significant ambitions, which will be costly and require more capital.

The Bottom Line About How to Buy SpaceX Stock

Investing in SpaceX stock is not so simple. The company is private and usually raises money from institutional or high-net-worth investors, making it challenging for small retail investors to own it directly. Moreover, Elon Musk has cast doubt on an IPO, although Starlink may be spun off as a separate company in an IPO as early as 2025. Next, the secondary market is a potential avenue to directly own pre-IPO shares but presents challenges.

Investors can gain indirect exposure to SpaceX through VC funds, the Baillie Gifford Trusts, and owning Alphabet or Bank of America stock. However, investors should remember investing in private companies is not a low-risk or short-term investment, like cash. Many institutional and high-net-worth investors wait years before realizing a return on their investment.

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