How to buy SpaceX: Chasing the celestial unicorn

In the celestial realm of high-stakes investment, SpaceX emerges as the elusive unicorn of the cosmos. From pioneering reusable rockets to steering satellites and Starlink, Elon Musk's brainchild has skyrocketed to a $210 billion valuation. But securing a piece of this celestial giant isn't easy—no public shares yet, just whispers of private trades and exclusive deals. For now, aspiring investors navigate a nebula of options from accredited paths to specialized funds or settling for a glimpse through ancillary investments in its orbital ecosystem..Sign up for your early morning brew of the BizNews Insider to keep you up to speed with the content that matters. The newsletter will land in your inbox at 5:30am weekdays. Register here..Join us for BizNews' first investment-focused conference on Thursday, 12 September, in Hermanus, featuring top experts like Frans Cronje, Piet Viljoen, and more. Get insights on electricity and exploiting SA's gas bounty from new and familiar faces. Register here..By Kiel Porter .___STEADY_PAYWALL___.The constellation Monoceros, faintly visible against the Milky Way, has for centuries occupied the heavens as "the unicorn." The other space unicorn? Elon Musk's Space Exploration Technologies Corp. The billionaire entrepreneur's onetime side hustle has, in less than two decades, evolved from a novel idea—reusable rockets—into the most highly valued startup in the US. The $210 billion colossus launches satellites, operates the Starlink internet service and counts itself as a critical NASA subcontractor, ferrying astronauts to the International Space Station. .Yet investing in SpaceX is anything but simple. The Hawthorne, California-based company remains privately held, which means its shares don't trade on a stock exchange—not yet anyway. Although that day may come should the company ever go public, for now obtaining a piece of SpaceX (like many unicorns) is not unlike getting past an exclusive club's velvet rope. Playing hard to get helps create demand and push up the company's valuation. .What's the easiest way to invest in the meantime? Well, you can try asking Musk yourself or landing a job at SpaceX, where you might earn shares as a perk of being a rocket scientist. Or maybe you can find a shareholder who's vested and willing to sell—a venture capitalist or other wealthy individual who invested in the company's early days, perhaps, or a former employee. Even if you succeed, this retail-investing mission is about as advanced as it gets. Consider what follows a modest guide for the galaxy's most determined investors. .Read more: 🔒 How to buy SpaceX: Navigating the cosmos of investment.First of all, do you actually have the money for this journey? Because the only legal way to acquire shares in this type of company is to become what's known as an accredited investor. US regulators define that as an investor who's had two consecutive years of earned income above $200,000 (or $300,000 for a married couple) or has a net worth of $1 million (excluding the value of your primary home). Not one of the 24 million American households that meet this threshold? There are still a few ways to gain exposure to SpaceX—just skip ahead to "What to Do When Nobody Wants Your Money.".Arranging a purchase from an individual who holds common or preferred stock personally is the most direct route to getting in. How to find such a person? Well, there's always LinkedIn, but a private wealth manager (think UBS or Morgan Stanley, not Betterment) will have specialists who can find and vet individuals or groups that want to sell shares. Unfortunately, even if you find a willing seller, SpaceX may refuse you. The company doesn't like adding investors who haven't been vetted. It's also a hassle to update the share registry if individuals are trying to trade it like a public stock, so in recent years SpaceX has added provisions restricting whom investors can sell to. This makes shares that don't have restrictions rarer, and because they aren't subject to fees as with shares held by a third-party manager, they're often sold at a premium to the price at time of tender.What SpaceX has more difficulty policing are shares held by institutions or individuals in special vehicles. In such arrangements, an investment firm owns and manages a pooled fund, which can contain thousands of shares in a single company such as SpaceX. People can trade their piece without SpaceX knowing, and because people typically hold smaller slices, they're more numerous (and hence liquid) than an individual's vested stock. Again, any self-respecting wealth manager will have contacts with access to this type of share, but you'll typically need to invest at least $100,000 to participate. You'll also need to pay your manager for their efforts.Don't have or don't want to have (and pay for) a wealth manager? The next option is to create an account on a registered broker-dealer platform such as Hiive or Rainmaker Securities, marketplaces that specialize in the trading of nonpublic securities. These firms vet sellers (who can include individuals with vested shares) on their platforms. You can log in, browse and compare prices and volumes on offer. Having a marketplace helps create transparency on pricing, potentially giving you better value—though, again, you'll need to have at least six figures to spend and be willing to pay a fee for the service..Read more: Pentagon thwarts Russian use of SpaceX's Starlink in Ukraine conflict.What to Do When Nobody Wants Your Money .If you're still watching SpaceX from afar, you'll need to opt for a less ambitious approach. One option is a diversified fund that includes stakes in the company as part of its portfolio. One of the better-known mutual funds is the Baron Focused Growth Fund (BFGFX). SpaceX accounted for 9.5% of its portfolio as of April 30. The fund requires a minimum purchase of $2,000. Fidelity Investments, another SpaceX backer that's participated in multiple fundraising rounds, has mutual funds that first acquired shares in 2015.Another, newer option is Destiny Tech100, a publicly traded closed-end fund focused on pre-public companies. SpaceX and Sam Altman's OpenAI make up almost two-fifths of its holdings. Destiny Tech100 trades like a stock, making it easy to buy and sell … but it trades at an enormous premium to its underlying assets, updates the fair value of its holdings on a quarterly basis and has shown extreme volatility. Also, the results so far haven't been great: The fund started investing in 2021 and had racked up a loss of 34% on its US investments as of December.Another unconventional way to tap into SpaceX is to buy shares of publicly traded companies that are suppliers for its rockets and satellites. Mid-caps such as turbo pump maker Graham Corp. and rocket landing leg manufacturer Hunting Plc are among the companies in SpaceX's supply chain that are poised to piggyback on its growth.Have a few hundred dollars to spend rather than a few thousand? A more arm's-length approach to investing in SpaceX is to acquire shares of highly liquid and publicly traded companies that themselves have ownership stakes. Bank of America Corp. and Google parent Alphabet Inc. have both invested in previous SpaceX funding rounds. Those holdings are a tiny part of their portfolios, however, and are unlikely to be a major catalyst for appreciation in their respective stocks.Or maybe just skip SpaceX and settle for an ETF that invests in publicly traded, space-related companies. ARK, Invesco and iShares all offer space-themed ETFs that let investors add a dash of the heavens to their portfolios.If all else fails, acquire some SpaceX merch. Shirts go for $30. .Read also:.SpaceX cracks down on SA Starlink connections, set to cut access from April-endSpaceX launches first Starlink satellites for global mobile coverage – Could SA fall further behind?Amazon's project Kuiper takes on SpaceX's Starlink.An ETF is a publicly traded fund that tracks an index, in this case companies focused on the space business. ETFs provide exposure to a group of diversified and theoretically lower-risk assets..© 2024 Bloomberg L.P.

How to buy SpaceX: Chasing the celestial unicorn

Related Stories