aerospace

3 Reasons SpaceX Could Be Your Next Investment

Jenny SmedraLeave a comment

3 Reasons Why You Will Want to Invest in SpaceX

SpaceX was founded with the mission to reduce the cost of space transportation and expand human colonization. Although it has yet to achieve this goal, it has become one of the most valuable companies in the world. So if you are looking to invest in SpaceX, here are 3 reasons that make it an attractive investment.

3 Reasons People Want to Invest

As of now, SpaceX is not a publicly traded company. Therefore, your average investor can’t buy shares through their brokerage account. However, that hasn’t stopped many investors from trying to invest in SpaceX. And when you look at the numbers, you can understand why.

1. It’s a major industry player.

SpaceX is a pioneer in aerospace technology and has become the second most valuable private company in the world. And with an eye towards the future, this looks like it will bring huge returns for its investors. Its valuation has drastically increased in recent years due to recent funding for two new projects, Starlink and Starship, that could revolution telecommunications and aerospace transportation.

But, its reusable launch architecture may prove to be one of its most valuable accomplishments. With a wide range of use cases for communications, transportation, scientific observation, and other space-related ventures, it has the potential to generate enormous profits.

2. Musk has demonstrated his skill in raising venture capital.

Sadly, the federal government has severely limited funding for space exploration over the last few decades. So, the industry turned to the private sector and venture capitalists for backing. Unfortunately, many projects have failed because they couldn’t raise the necessary funds.

But in his role as founder and CEO, Elon Musk has demonstrated his skill to obtain funding. In Q1 2021, he secured $850 million with a reported $6 billion more in offers from other investors. This is double the amount of its closest competitor. With his adeptness to raise capital, SpaceX will have the money it needs to continue testing the limits of science and space travel.

3. There is huge potential for long-term growth.

With all the recent attention, it’s hard to ignore the headlines. But putting all personal opinions about him aside, Elon Musk commands a small fortune between his two largest companies: Tesla and SpaceX. Their current valuations are $858 billion and $100.3 billion respectively.

However, a survey from Morgan Stanley reveals that many industry experts and institutional investors believe SpaceX will become more valuable than Tesla. Nearly 63% of respondents said they think SpaceX is a “more attractive investment” and “has the potential to be a more valuable company over the long term.”

While it’s natural that the company’s stakeholders feel this way, its performance in the stock market over the last few years strongly suggests that they may be right.

How Can You Invest in SpaceX?

Direct Investments

Unfortunately, SpaceX is still a privately held company, and it hasn’t announced plans to go public. Although it is possible to buy private shares, they come with a hefty price tag. And, they are only available to a select group of investors.

First and foremost, you must be accredited to be eligible which means:

  • You must have a net worth of over $1 million (not including your residence).
  • Your income is more than $200,000 for individuals/$300,000 with spousal income.
  • You have a valid securities license.

If you meet these criteria, your best bet for investing is to locate shares from current investors that are for sale. Many use sites like EquityZen which connects investors and shareholders.

Indirect Investments

However, there are also indirect ways to invest in SpaceX.

  • You could look for proxies such as mutual funds and ETFs that own shares.
    • ARK Space Exploration & Innovation ETF (ARKX)
    • Direxion Daily Aerospace & Defense Bull 3X Shares (DFEN)
    • iShares U.S. Aerospace & Defense ETF (ITA)
    • Procure Space ETF (UFO)
    • SPDR S&P Kensho Final Frontiers ETF (ROKT)
    • SPDR S&P Aerospace & Defense ETF (XAR)
  • Another option is to focus on publically traded companies within the same sector that work with SpaceX.
    • Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD)
    • AST SpaceMobile, Inc. (NASDAQ: ASTS)
    • Astronics Corporation (NASDAQ: ATRO)
    • The Boeing Company (NYSE: BA)
    • HEICO Corporation (NYSE: HEI)
    • Howmet Aerospace Inc. (NYSE: HWM)
    • Lockheed Martin Corporation (NYSE: LMT)
    • Maxar Technologies Inc. (NYSE: MAXR)
    • Northrop Grumman Corporation (NYSE: NOC)
    • Raytheon Technologies Corporation (NYSE: RTX)
    • Virgin Galactic Holdings, Inc. (NYSE: SPCE)
  • You can also invest in synergistic companies and suppliers.
    • Garmin, Ltd. (GARM)
    • Iridium Communications (IRDM)
  • Lastly, you could look at other companies that hold investments in SpaceX.
    • Bank of America (BAC)
    • Fidelity (FNF)

Many people want to invest in SpaceX because it is an exciting opportunity and a potentially lucrative investment. Although purchasing private shares comes with many restrictions, there are other ways you can get in on the action. But hopefully, in time, it will become more accessible to average investors.

We want to hear from you! Share your thoughts on SpaceX in the comments below.

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