Investors are ‘thirsty’ for shares of America’s most valuable startup SpaceX

Tram Ho

Investors, from music producer and entrepreneur Jay-Z to former high-profile stock traders, are eager to own a piece of America’s most valuable startup, SpaceX.

Elon Musk is counting on investors like Spyridon Mentzas to cement his position as the world’s richest man.

Mentzas, a former head of securities at Mizuho Securities, founded his own company with the sole purpose of buying shares in SpaceX, the rocket company of billionaire Elon Musk. It took three years for his Hijojo Partners to acquire a stake in SpaceX, the startup valued at about $125 billion in its most recent funding round.

Of course, Mentzas isn’t the only one jostling for shares in America’s most valuable startup. Edoardo Zarghetta, director of the PreIPO Club fund, also started buying SpaceX shares two years ago on the secondary market, at a premium of more than 10%. Investors from Norway to Hong Kong (China) all say they are huge fans of Musk and will invest in SpaceX for a long time, although some admit that there is a lot of financial confusion surrounding the company. burn money”.

“For me, just being a part of it [SpaceX]. We will be the only Norwegian company that is involved in the space sector,” Olav Trent, head of Norwegian wealth fund Rex Fund, told Bloomberg .

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Billionaire Elon Musk, co-founder of SpaceX (right) and Mike Sievert, CEO of T-Mobile (left). Photo: Bloomberg.

SpaceX now plays an important part in Elon Musk’s huge fortune. Most recently, at the end of 2019, Musk’s stake in SpaceX was $ 14.6 billion, exceeding what this billionaire holds in Tesla.

However, the Covid-19 pandemic and the strong rise of high-flying stocks (stocks with high price, highly speculative and strong rise and fall in a short time) like Tesla have changed the situation. By January 2021, Musk’s total position in Tesla, excluding options, reached $135.3 billion, higher than the $18.7 billion in SpaceX, according to the Bloomberg Billionaires Index.

The situation is even more different today, as the markets in 2022 begin to punish former high-flyers, with Tesla shares at one point falling nearly 50% from their November 2021 peak. . And Musk, Tesla’s CEO, has sold about $15 billion of stock in the electric-car company since April, when he kicked off the Twitter acquisition. However, the 51-year-old billionaire managed to get out of this $44 billion deal.

During that time, SpaceX was relatively undisturbed. Five unnamed investors sold some shares of the company for $250 million on the secondary market, according to a public filing on the exchange on Aug. Recently, SpaceX also partnered with T-Mobile US to provide wireless phone service to remote areas of the US.

As a result, Musk’s $46.9 billion stake in SpaceX grew to nearly half of his Tesla position, and also the highest since the early days of the Covid-19 pandemic. .

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One of the keys to SpaceX’s success is that the company is carefully controlled by Musk and those close to him, like his brother Kimbal and friend Luke Nosek. Kimbal and Luke Nosek, co-founders of Paypal, are both currently directors of SpaceX. In 2017, Nosek co-founded Gigafund, an investment fund that poured more than $1 billion into SpaceX.

Therefore, it will not be easy for small investors like Mr. Mentzas to become shareholders of SpaceX.

The founder of Hijojo Partners realized that to join a SpaceX funding round, he needed to have deep connections in Silicon Valley or pay a fee for a dedicated channel to connect small investors with each other. join in, according to some investors. Another option is to buy shares on the secondary market, but the demand is so high that millions of dollars worth of deals are closed instantly.

However, this rocket company has a huge need for capital, which means it has to rely on a large number of continuous investors such as Mentzas, who buy a small number of shares rather than a small number of shares. not necessarily big enough to overtake SpaceX’s major shareholders. A few famous names are also backing SpaceX, including the family office of male rapper Jay-Z and the national investment companies of Abu Dhabi.

The need to invest in SpaceX is so high that many investors accustomed to holding executive positions in startups have expressed interest in owning just a fraction of SpaceX, said PreIPO Club’s Zarghetta. . Musk, who is estimated by the Bloomberg Billionaires Index to own about 44 percent of SpaceX, would be the 24th richest person in the world by the value of his SpaceX stake alone.

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SpaceX is a long-term game in space and will become a trend in the next few decades. Photo: Bloomberg.

Most of the investors interviewed expect Musk to IPO Starlink of SpaceX in the next few years, they are even prepared to be unprofitable for a long time. However, Musk still has great motivation to list this company, for example the need to recruit and retain talent.

Meanwhile, Wall Street has an opposing view on whether SpaceX will cost more than Tesla. A survey conducted by Bloomberg at the end of July showed that 44% of 1,562 participants predicted the capitalization of the rocket company, including Starlink, to increase in the next five years.

ECI Group, an American venture capital fund that is investing in SpaceX, expects Musk’s space company to eventually be valued and become more important than Tesla. According to Warren Hui, a partner at Soul Ventures, SpaceX is a long-term game in space and will become a trend in the next few decades.

However, a big short-term risk is that SpaceX may end up separating Starlink. Musk recently told employees that could happen in three to four years.

“We do not have complete or detailed financial data about this company. Some investors argue that SpaceX does not have enough information to invest. But that’s how Mr. Musk runs his company,” Mentzas said. His plan is to continue to accompany and develop with billionaire Elon Musk, with the goal of one day being big enough to become a major shareholder of SpaceX.

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Source : Genk