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Invest in Space X?

The United States is again launching astronauts from US soil to the International Space Station. Since the Space Shuttle program was retired, the USA had to pay Russia to launch US astronauts from the Baikonur Cosmodrome in Kazakhstan. The credit goes to Space X and eventually to Boeing as Space X has passed all of NASA’s tests, including a test flight with two astronauts to the Space Station. Boeing is fixing a glitch that has put them back a step or two. You can easily invest in Boeing, but can you invest in Space X? The quick answer is that you cannot invest directly in this private company but it is still possible to do so indirectly.

Space X and Rocket Boosters That Can Be Used Again and Again

One of the keys to success in exploration of space, keeping the Space Station going, returning to the moon, or going to Mars is reducing the cost of launching a rocket. According to CNBC sixty percent of the cost of a big rocket is the booster. With the exception of the space shuttle, rocket boosters were always allowed to fall back to earth after a launch. But, Space X changed that by launching rockets, turning off the booster before all of the fuel was used, and then re-igniting the booster to fly back to earth and land! This has become standard for Space X launches and makes their system hugely more efficient than those used by anyone else.

Goals of Space X

This private company was founded in 2002 with the stated purpose of reducing the costs of space exploration and eventually going to Mars. It has succeeded in reusing boosters and has a contract to bring astronauts to the Space Station. Mars is still in sight but a ways off.

Invest in Space X - Falcon Heavy Rocket
Invest in Space X – Falcon Heavy Rocket

Can You Invest in Space X?

According to WFMJ, the original money for Space X came from the private equity group, Founder’s Fund. A later investment came from the DFJ investment group. The third round of funding came from Fidelity and Google. Since Fidelity is private the only way to invest in a company that has equity in Space X is to invest in Alphabet, Google’s parent company.

It is unlikely that Elon Musk, who is the driving force for Space X as well as Tesla will ever want the company to go public despite the huge windfall that would mean for the original investors. That is because Musk still wants Space X to accomplish its ultimate goal of going to Mars. Diluting the control of the original investors, including Musk, would endanger the fulfillment of that dream.

Alphabet has a market cap of just over $1 trillion dollars. Alphabet’s share of Space X would be worth a couple of billion or more if the company went public. Thus, if you were to invest in Alphabet to get a piece of Space X, your Space X investment would only be 0.2% of your Alphabet investment. Nevertheless, Alphabet is a pretty good investment for the long term.

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