Spacex Investment: A Guide For Indians

SpaceX, or Space Exploration Technologies Corp., is an American aerospace manufacturer founded by Elon Musk in 2002. The company has since made several groundbreaking achievements, including becoming the first private company to put a spaceship in orbit. SpaceX is a private company, and only selected investors own equity. So, how can someone from India invest in SpaceX? One way is by purchasing shares of Alphabet Inc., the parent company of Google, which owns a 7.5% stake in SpaceX. Another way is to buy Tesla stock, as Musk's successful track record with companies such as SpaceX can be a solid proposition for investors looking to buy TSLA stocks.

Investing in SpaceX through Alphabet Inc. stock

SpaceX is a privately-held company and does not offer direct buy-in options for investors. However, one way to gain exposure to SpaceX stock is by investing in Alphabet Inc. (Google's parent company), which owns a stake in SpaceX. Here are some things to consider when investing in Alphabet Inc. stock as a way to invest in SpaceX:

Alphabet Inc.'s Investment in SpaceX

Alphabet Inc. first invested in SpaceX in January 2015 with a $900 million investment at a valuation of $12 billion. They also invested in another funding round in December 2021, giving them a total stake of about 6.99%. Given SpaceX's current valuation, Alphabet's investments are likely worth around $12.6 billion.

Advantages of Investing in Alphabet Inc.

• Alphabet Inc. is a large and established company with a diverse range of products, including Google, YouTube, and their driverless car venture. Investing in Alphabet stock provides exposure to these businesses in addition to SpaceX.
• Alphabet Inc. stock has shown a steady rise since its debut in 2004, crossing the $600 billion valuation mark in 2017 and reaching over $1,000 per share in October 2024.
• Alphabet Inc.'s large size and diverse business interests can provide more stability and diversification to your investment portfolio compared to investing solely in SpaceX.

Disadvantages of Investing in Alphabet Inc.

• SpaceX represents a small fraction of Alphabet Inc.'s total business. As a result, any profits or losses from SpaceX's performance may have a limited impact on Alphabet's overall stock price.
• Investing in Alphabet Inc. may not provide direct influence or exposure to SpaceX's strategic decisions and mission to Mars, which are largely controlled by Elon Musk and private investors.

Other Considerations

• Before investing, it is essential to assess your risk appetite, investment goals, and financial health, and conduct thorough research.
• Consider using investment apps or brokerage accounts that allow you to buy US stocks, keeping in mind the regulatory and tax implications.
• Diversifying your investments across different stocks and asset classes can help manage risk and maximise potential returns.

In summary, investing in Alphabet Inc. stock can provide indirect exposure to SpaceX while also offering the benefits of investing in a well-established and diverse technology company. However, it is important to carefully weigh the advantages and disadvantages before making any investment decisions.

India's changing policy on private company involvement in ISRO missions

The history of ISRO's commercialisation began with early partners such as Data Patterns, Hindustan Aeronautics Ltd (HAL), Larsen & Toubro, and Godrej Aerospace, who helped manufacture auxiliary components. In 1992, the Department of Space (DoS) established Antrix Corporation Ltd., a wholly government-owned company under ISRO, to promote, market and deliver commercial products to international companies. Antrix acts as a conduit between ISRO and private industry partners, facilitating technology transfer and assessing the financial and commercial viability of joint ventures.

A major boost to the Indian private space sector came in 2020 with the establishment of the Indian National Space Promotion and Authorisation Centre (IN-SPACe). IN-SPACe was set up to promote, authorise and supervise space activities of non-governmental entities (NGEs), providing a single window for regulatory approvals. It assesses the needs and demands of private players and explores ways to accommodate these requirements in consultation with ISRO. IN-SPACe also provides technical incubation for start-ups and promotes space tourism and the start-up ecosystem.

The Centre has also introduced reforms to increase private participation in space activities, including making its existing infrastructure and data accessible to private entities. This is expected to enable private companies to carry out their space-related activities more effectively. The demand for space-based applications and services is growing in India, and ISRO is unable to meet this demand alone. By encouraging private involvement, ISRO will be able to focus more on science, research and development, interplanetary exploration and strategic launches.

In February 2021, the Centre issued guidelines allowing private companies to acquire geospatial data and maps from government agencies without the need for licences, permissions or clearances. Building on these guidelines, the Centre unveiled the National Geospatial Policy in December 2022, laying out a framework for the development of a geospatial ecosystem and promoting private sector participation in the collection of geospatial data.

The Indian Space Policy, introduced in April 2023, further strengthened the private space sector by permitting NGEs to offer communication, internet, remote sensing and navigation services, operate ground facilities for space operations, use orbital resources to establish communication satellites, and manufacture and operate space transportation systems. This policy shift has allowed ISRO to transition from manufacturing operational space systems to focusing on research and development in advanced technologies.

The Centre's amendments to the FDI policy in February 2024 further encouraged private investment in the space sector. The revised policy allows up to 74% FDI for satellite manufacturing and operation, up to 49% FDI for launch vehicles, spaceports and associated systems, and 100% FDI for manufacturing components and systems/sub-systems for satellites, ground and user segments.

With these policy changes, the Centre aims to boost India's space economy from $8 billion to $100 billion by 2040. Since 2020, start-ups have successfully launched their own satellites, established a portable launchpad and a private mission control centre within the ISRO campus. Despite increased private participation, ISRO remains the driving force in India's space sector, having launched 424 foreign satellites since the 1990s.

SpaceX's achievements and valuation

SpaceX, or Space Exploration Technologies Corp., is an American space technology company founded by Elon Musk in 2001 or 2002. The company has made significant advancements in rocket propulsion, reusable launch vehicles, human spaceflight, and satellite constellation technology.

• SpaceX became the first private company to return a spacecraft from low-Earth orbit in December 2010.
• In 2012, SpaceX's Dragon spacecraft became the first commercial spacecraft to deliver cargo to and from the International Space Station.
• In 2015, the Falcon 9 rocket successfully delivered 11 communications satellites to orbit, and the first stage returned and landed at Landing Zone 1—another first for an orbital-class rocket.
• In 2016, the Falcon 9 rocket launched the Dragon spacecraft to the International Space Station, and the first stage returned and landed on the drone ship "Of Course I Still Love You".
• In 2017, SpaceX achieved the world's first reflight of an orbital-class rocket when the Falcon 9 first stage returned to Earth for the second time.
• In 2018, the Falcon Heavy rocket made its first launch to orbit, successfully landing two of its three boosters. With more than 5 million pounds of thrust at liftoff, it is one of the most capable rockets flying.
• In 2020, SpaceX became the first private company to send humans to the International Space Station with the Dragon's second demonstration mission. Later that year, NASA certified SpaceX's Falcon 9 and Crew Dragon human spaceflight system, making it the first commercial system to achieve this designation.
• In 2021, SpaceX raised $1.61 billion in equity funding, increasing the company's valuation to approximately $74 billion.
• In 2022, SpaceX's Falcon 9 broke the world record for the most launches of a single vehicle type in a single year, with a launch approximately every six days.
• As of October 2024, SpaceX's Falcon 9 rockets have landed and flown again more than 330 times, reaching 1-2 launches per week.

SpaceX is not publicly traded, but a space industry newspaper estimated its revenue to be over $10 billion in 2024. The company has raised funding from investors like Google and Fidelity Investments, and its valuation has grown significantly over the years, reaching $127 billion in 2022.

SpaceX's IPO chances

SpaceX is a private company and it does not trade publicly on major stock exchanges. As of mid-2024, SpaceX had no plans for an IPO. However, there is speculation that the company will take its Starlink satellite internet business public.

In 2023, Elon Musk, who controls the company and owns a significant stake, stated that SpaceX doesn't need to raise capital to finance its investment programs and therefore does not need to complete an IPO to bring in money from outside investors to finance growth. Musk's SpaceX stake has fallen below a majority interest, and he may not want to risk losing more control of the company through an IPO.

However, SpaceX has an active internal trading program to allow employees and existing investors to sell shares. In 2024, SpaceX made an agreement with investors that would allow insiders to sell their shares at $112. This provided employees with liquidity for their shares, so the company wouldn't need to complete an IPO to allow insiders to sell shares.

Some investors have managed to buy shares through pre-IPO opportunities. Purchasing pre-IPO shares in a private company like SpaceX can be complicated, but it is possible through pre-IPO secondary marketplaces, private equity firms or venture capital funds, and employee equity sales.

If SpaceX does go public, the IPO could be one of the largest in history, similar to other tech giants like Tesla and Amazon.

SpaceX's history and competitors

SpaceX, or Space Exploration Technologies Corp., was founded by Elon Musk in 2001 with the vision of reducing space launch costs and making human colonies on Mars possible. The company has since made significant advancements in rocket propulsion, reusable launch vehicles, human spaceflight, and satellite constellation technology.

In 2008, SpaceX was on the brink of bankruptcy after three failed launch attempts of the Falcon 1 rocket. However, the fourth launch was successful, and the company then shifted its focus to developing the Falcon 9 rocket and the Dragon 1 capsule to meet NASA's requirements for deliveries to the International Space Station. By 2012, SpaceX had completed all test flights and began delivering Commercial Resupply Services missions to the ISS.

SpaceX has achieved several milestones, including being the first private company to return a spacecraft from low-Earth orbit and, in 2012, to deliver cargo to and from the ISS. In 2015, SpaceX achieved the world's first reflight of an orbital-class rocket, and in 2018, its Falcon Heavy rocket made its first launch, becoming one of the most capable rockets flying.

In 2020, SpaceX became the first private company to send humans to the ISS, and its Dragon spacecraft was certified by NASA for crew missions, marking another significant milestone. SpaceX continues to innovate with its Starship launch vehicle, which aims to fully realise the company's vision of a fully reusable, cost-effective, and adaptable launch vehicle.

Competitors

United Launch Alliance (ULA):

ULA was formed in 2005 as a joint venture between two contractors due to rising costs. ULA initially held the reins of the US launch industry but faced competition from cheaper rockets from Russia and Europe. In response, ULA overhauled its processes to reduce costs and developed the Vulcan Centaur rocket to compete with SpaceX. However, Vulcan is primarily focused on governmental entities and faraway orbits, and it remains to be seen if it can challenge SpaceX's dominance in the Low Earth Orbit (LEO) industry.

Blue Origin:

Blue Origin, founded around the same time as SpaceX, shares a similar vision for space exploration and employs reusable rockets. However, Blue Origin has lagged behind, with only a suborbital rocket for tourism to show. They are now working on the New Glenn rocket, which is set to make its maiden flight in 2024. New Glenn sports a self-landing booster and a seven-metre-wide payload fairing, and its engines burn cleaner than carbon-based fuels. Its payload capacity is similar to a partially reused Falcon Heavy, but its price is unknown.

Rocket Lab:

Rocket Lab, founded in 2006 in New Zealand, has established itself in the small rocket scene with its Electron rockets. They are now developing the Neutron rocket, a medium-lift rocket with a reusable booster, to compete with SpaceX's Falcon 9. A Neutron launch is expected to cost $50-55 million, only slightly higher in price-per-kilo than Falcon 9.

Arianespace:

Arianespace, the oldest commercial launch company, once dominated the global launch market with its Ariane series rockets. However, they have been plagued by sluggish bureaucracy and risk-aversion, losing customers to SpaceX. Their development of the Ariane 6 rocket has faced delays, and they have been unable to pursue reusability due to Europe's conservative climate. As a result, Arianespace now holds a much smaller share of the market.

Frequently asked questions