SpaceX is not listed on the stock market. However, funds that invest in SpaceX are listed on the stock market, providing investors with the opportunity to gain exposure to this fast growing rocket maker.
What is SpaceX?
First of all, and for those of you that don’t know, SpaceX is an American aerospace company founded by Elon Musk in 2002. It has revolutionised the space industry by developing reusable rockets and spacecraft.
It was the first private company to send a spacecraft to the International Space Station and has since become a leading provider of commercial launch services. SpaceX has also generated a reputation for staying one step ahead of its peers like Rocket Lab, with innovations like Starship, a fully-reusable heavy-lift launch system for interplanetary travel.
Beyond its launch services, there’s Starlink, a satellite internet constellation aimed at providing global broadband coverage. Reports suggest it’s cash flow positive and may be spun off at some point in the future.
Musk’s vision for the company is truly extraordinary, with the ultimate goal of enabling human colonisation of Mars and making space travel more accessible. And with Musk’s ally moving into the White House, it’s certainly a company to watch.
How can I get exposure to SpaceX?
Unfortunately, I can’t buy a piece of SpaceX directly, but there are trusts, funds, and ETFs I can invest in to gain exposure. These funds and ETFs have varying degrees of exposure to SpaceX.
| Holding as a percentage of portfolio | |
| Scottish Mortgage | 4.8% |
| Edinburgh Worldwide Investment Trust (LSE:EWI) | 12.4% |
| Baillie Gifford US Growth Trust | 7.6% |
| Schiehallion Fund | 8.5% |
| Baron Focused Growth Fund | 8.8% |
| ARK Venture Fund | 12.4% |
Interestingly, the size of these holdings has surged in recent weeks as funds have revalued their investments in SpaceX, and there are compelling reasons for this revaluation.
SpaceX’s surging valuation
As SpaceX is a privately held company, we don’t know much about its financials. However, the company is reported valued at $350bn according to an upcoming tender. According to Morgan Stanley, this suggests price-to-sales ratio of 23.6 times. A year ago, the company was reported worth $180bn.
That’s incredibly expensive, and it might scare some investors off. But the same analysts at Morgan Stanley expect the growth curve to be so steep that the current valuation infers a forward price-to-earnings of 24 times and a P/S ratio of 5.2 times for FY2030.
Edinburgh Worldwide Investment Trust
Edinburgh Worldwide Investment Trust is another Baillie Gifford-run fund, and it’s a really interesting, albeit risky proposition. The fund aims to invest in initially immature entrepreneurial companies, typically with a market cap below $5bn.
The fund’s top holding is actually SpaceX, followed by Alnylam Pharmaceuticals at 5.9% and PsiQuantum at 4.8%. In fact, SpaceX is such a large proportion of the portfolio that it’s possible the fund could sell some of its holdings due to concentration risk.
More broadly, it’s a really exciting portfolio of companies that could change the world in sectors like space travel, quantum computing, and biotech. However, there’s a lot of risk associated with investing in relatively early companies — many fail. This, of course, could make EWI an attractive way to gain exposure to exciting companies for investors with the right level of risk appetite.
However, personally, my preferred exposure to SpaceX is via Scottish Mortgage. It’s a more balanced portfolio, and a great fit for my pension portfolio.
This post was originally published on Motley Fool
