How to Invest in SpaceX: The Pioneer in Space Travel
SpaceX is an exciting company that focuses on space exploration.
Lots of people enjoy following news about the company and watching its launches.
Pioneered by Elon Musk, who has been successful with companies such as electric car manufacturer Tesla and payments giant PayPal, you may have the confidence to invest in SpaceX well.
so it’s natural that people want to invest.
If you’re considering investing in SpaceX, here are the things you need to know.
No Direct Way to Invest
Because SpaceX is not a publicly-listed company, you cannot buy shares of the company or invest in SpaceX directly.
The only way to invest in SpaceX is to invest indirectly.
That means:
Either invest in businesses that SpaceX works with or investing in companies that hold an interest in SpaceX.
Companies That Have an Interest in SpaceX
There are some companies that have invested in SpaceX.
One way to indirectly invest in SpaceX is to invest in businesses that own shares in SpaceX.
The most accessible is likely to be Alphabet (NASDAQ: GOOG), the parent company of Google.
That said:
If you buy shares in Alphabet as an indirect way to invest in SpaceX, the performance of Alphabet’s services, like Google and Youtube, will have a much higher impact on your investment than SpaceX’s success or failure.
Unless SpaceX becomes worth trillions overnight, most of the change in Alphabet’s stock price will be based on other factors.
How to Invest in SpaceX Indirectly
If you’ve decided that investing in SpaceX indirectly, by buying shares in other businesses that own an interest in SpaceX, here’s what you’ll need to do.
Have a brokerage account
The first thing that you’ll have to do is open a brokerage account. Brokerages help facilitate the purchase and sale of securities, like stocks, bonds, and mutual funds.
There are many brokerage companies out there, each with its pros and cons.
You can get perks if you invest in your brokerage’s funds, so if you have a specific fund you want to invest in, that can guide you to the right brokerage.
Once you’ve chosen a brokerage to work with, you have to open an account.
That typically means filling out an application, providing some identifying information, and linking a bank account that you can use to fund your brokerage account.
Place a buy order
When you’re ready to buy a stock, you’ll have to place a buy order. There are two primary types of buy orders you can use.
The market order is the simplest. Simply tell your broker how many shares to buy and your brokerage will buy those shares at the best available price.
If shares are available for purchase, you’ll buy them, but you might wind up paying more than you expected, especially if you’re buying shares in a company that isn’t traded frequently.
Limit orders are safer, but a bit more complicated. With a limit order you specify how many shares to buy and the maximum price you’re willing to pay for each share. If the shares are available below your maximum price, your broker will buy them at the best available price. If no shares are available below the limit you set, you won’t buy shares at all.
With a buy limit order, you’ll know the maximum amount you’ll spend, but there’s a chance that you won’t buy any shares, which could lead to you missing out on an investment opportunity.
Other Ways to Invest in Space
SpaceX is just one of the few businesses that is involved with manned spaceflight.
So, there are other ways to invest in space technology.
Innovators in space technology
There are other aerospace companies, such as Boeing, that do a lot of manufacturing related to outer space and have divisions dedicated to developing space technologies.
You could choose to invest directly in one of these companies instead.
Investing in a single company is risky because you’re putting all your eggs in one basket.
Space funds
Another option is to buy a mutual fund or ETF that focuses on the aerospace industry.
Mutual funds let you buy shares in a single fund that owns a stake in dozens or hundreds of companies. This makes it easy to diversify your investment.
If one company fares poorly, you won’t lose your entire investment.
Ideally, the other stocks in the mutual fund will perform well and make up for the losses in the poorly-performing stock.
Company Overview
SpaceX is an American aerospace company that builds and launches space equipment including satellites and spacecraft.
It is one of the few entities on Earth capable of manned space launch. It also has other initiatives, such as launching communications satellites and the development of a satellite internet service.
SpaceX was founded in 2001 by Elon Musk, the CEO of Tesla. It launched its first spacecraft, the Falcon 1, in 2006.
How Does SpaceX Make Money?
Space travel is exciting, but it might not be immediately obvious how SpaceX can make money.
Currently, SpaceX’s main sources of revenue are selling its launch capabilities to other companies.
For example, companies will hire SpaceX to launch satellites for them. Governments also pay SpaceX to keep the International Space Station supplied.
More recently, NASA announced that it would work with SpaceX to launch another mission to the moon.
Research and Analysis
When you’re considering an investment, it’s important that you take the time to research the company and do your due diligence.
Every investor does research differently.
Some rely on a strategy called fundamental analysis.
These investors look at things like a company’s revenue, debt, cash flow, profit, and other financial indicators. Based on these numbers, fundamental analysts try to determine a fair price for a stock. If the stock is trading below the calculated fair price, it might be a good opportunity to buy shares.
Another common practice is to look at a company’s competitors and to determine how well positioned each is.
If there is a lot of competition in an industry, it may be risky to invest.
Because few companies are capable of space travel, there is not much competition in the industry.
Another research strategy is called technical analysis.
Technical analysts look at stock charts and try to identify patterns in them. They use the patterns they identify to try to predict future changes in the stock’s price.
Keep in mind:
Investing involves risk.
Even if fundamental and technical analysis indicates that the company is poised to gain value, there’s no guarantee that you’ll make money if you invest.
Consult an Advisor
All forms of investing are subject to risk but investing in a single business is one of the riskier ways to invest.
It’s exciting to invest in a company that you believe in but putting all your eggs in one basket means that you could lose a lot of money if that company fails.
Before you get started, take the time to consult a financial advisor to make sure that you’re on track to meet your financial goals. As always, only invest money that you can afford to lose.
