How to Invest in SpaceX
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Summary:
Because SpaceX is still a private company, regular investors can’t easily invest in SpaceX stock. However, if you meet certain requirements, such as being an accredited investor, you might be able to purchase private shares from one of SpaceX’s original investors. Otherwise, there are a couple of ways to indirectly invest in SpaceX or the space travel industry as a whole.
Aside from the occasional joyride into orbit, SpaceX is doing some important work in the aerospace industry. Among other things, the founder, CEO, and chief engineer of SpaceX, Elon Musk, has his sights set on bringing humans to Mars.
With all of the interest surrounding space travel, it makes sense that investors and space enthusiasts alike would want to own a piece of the pie. Unfortunately, although Musk has mentioned his desire to go public, as yet no date has been set for an initial public offering (IPO) of SpaceX shares. However, if you do want to get in on the action, there are a few ways to invest in companies that are ancillary to SpaceX.
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About SpaceX
Space Exploration Technologies Corp. (SpaceX) is an aerospace manufacturer that specializes in space travel and technology. Started in 2002 by billionaire Elon Musk, SpaceX, among other things, was the first private company to use commercial aircraft to send supplies and humans to the International Space Station (ISS) in 2012 and 2020, respectively.
In addition to delivering cargo, NASA astronauts, and other crew members to the International Space Station, SpaceX launches communications satellites into orbit for the purposes of global internet services.
SpaceX is also a proponent and pioneer of reusable rockets to substantially reduce the costs of space exploration. One of the largest expenses of space travel is the expense of building rockets, which, until now, have only been used once. Unlike traditional rockets, the ships built by SpaceX can withstand re-entry into the atmosphere, land back on Earth, and be flown again.
Perhaps best known for its trips to the ISS and satellite launches (plus those quick jaunts through the atmosphere), Musk has said that one day he hopes to send people to Mars in SpaceX aircrafts.
How to invest in SpaceX directly
As mentioned, you can’t buy SpaceX shares on the stock market, but there might be a way to purchase some private company shares if you’re a specific type of investor. However, it won’t be easy or inexpensive to do so, even if it’s possible.
SpaceX is funded by its founder, Elon Musk, and other high profile investors such as Google, Fidelity Investments, and Founders Fund, among others. Occasionally, initial investors may want to sell off some or all of their shares privately.
There are a few companies that specialize in doing just that. They connect investors with shareholders who wish to sell their equity for cash, with the company’s approval. This is the only way to get your hands on actual SpaceX stock prior to an IPO. How can you be a part of this?
Become an accredited investor
First of all, you need to be an accredited investor. According to the U.S. Securities and Exchange Commission (SEC), this means you need to have at least one of the following qualifications.
- An earned income of $200,000 a year ($300,000 with a spouse or spousal equivalent) for the past two years and expect similar for the current year.
- A net worth of $1 million (alone or with spouse equivalent), not including primary residence.
- Have a securities license, either Series 7, 65, or 82, in good standing.
Even if you do meet the criteria needed to purchase private shares in SpaceX (or any private companies), keep in mind that you will still need to be approved and have your accreditation verified. Be sure to have all of your necessary paperwork in order before you buy, and you might want to have an attorney look everything over as well.
In addition, you will have to pay a broker’s commission and there will likely be a high minimum investment required. You also might be subject to holding period requirements after the IPO, which could be detrimental to your investment if the IPO is disappointing.
While SpaceX is doing groundbreaking work, there is no guarantee when or if it will go public. This means you could end up holding those shares for quite some time. If you’re looking for a quick return on your investment, this might not be the best option for you right now.
How to invest indirectly in SpaceX
Since the average investor can’t realistically buy SpaceX stock, your next best option to get some skin in the game is to invest in publicly-traded companies that work with or supply SpaceX.
Momentus (NASDAQ: MNTS) is one such publicly listed company you could consider. Like SpaceX, it’s a U.S. commercial space company. However, its shares trade publicly on the stock market, and it recently announced several upcoming launch agreements with SpaceX.
That being said, if you decide to go this route, know that Momentus is not as advanced of a space exploration company as SpaceX. Even with this partnership of sorts, there is no guarantee of its success.
As of Friday, May 27, the share prices closed at $3.16 — down from a 52-week high of $14.69. It’s impossible to guess where it will go from here, but at such a low stock price it might be worth risking a modest investment. Either way, financial experts would advise that you don’t invest more than you can afford to lose.
Other indirect investment options
Beyond that, you could deepen your research further and invest in some other publicly traded companies that are suppliers to SpaceX or work with them in some fashion.
If you don’t already have a brokerage account, you might look into brokerage firms that specialize in this type of space technology. But your best bet might be to first talk to a financial or investment advisor to get investment advice about your options.
Investing in SpaceX investors
A final option to get some exposure to SpaceX profitability without actually being able to buy SpaceX stock is to invest in a public company that is already invested in SpaceX’s success.
This is kind of a long shot, as it’s fairly unlikely that the success of a single firm will cause the share prices of even a key investor — with many other stakes — to rise significantly. Still, if long-term investing is your goal, and the literal and figurative rise of SpaceX follows Musk’s vision, it could be worth getting in where you can.
Related investments in space tech stock
Alternatively, if it’s the space game, in general, you’re interested in, there are a number of publicly-traded companies you can make a direct investment in today. The Boeing Company (NYSE: BA) and Lockheed Martin Corporation (NYSE: LMT), for example, are other businesses that work in the aerospace industry.
Just remember that buying stock in an individual company is a fairly risky investment — kind of putting all your eggs in one basket, as it were. This is why potential investors might want to also think about investing in mutual funds or exchange-traded funds (ETFs) that focus on the space tech sector.
Rather than basing your entire investment on a single company’s revenue, you’re buying into a mutual fund or ETF that encompasses many companies focused on aerospace. This way, if some firms don’t do well, the majority of other tech stocks hopefully make up for the poor cash flow of a few. SPDR S&P Aerospace & Defense ETF (stock symbol XAR) and ARK Space Exploration & Innovation ETF (ARKX) are two of multiple space ETFs.
Key Takeaways
- Without a SpaceX IPO on the immediate horizon, there is no way for the average investor to buy SpaceX stock.
- Accredited investors can sometimes acquire shares of private companies from original investors of the space technology company.
- Buying shares in companies that partner with or supply SpaceX is an indirect way of investing in SpaceX.
- However, buying individual stocks can be risky. Instead, you could invest in mutual funds or ETFs that include many players in the space technology arena. This is generally a safer investment alternative than only investing in one individual company.
- While it’s a bit of a long shot, you could also buy into key investors of SpaceX. This is a way to potentially grab a bit of the spotlight should there be a SpaceX IPO date in the future.
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