The funds that already invest in SpaceX

‘The world’s first trillionaire’ is the title that awaits Elon Musk as he prepares to float his space company on the stock market. Expectations that investors will value SpaceX at $1.75 trillion at flotation would make his current stake in the business, reportedly about 40%, worth about $700bn and propel his overall wealth to well over $1 trillion when his holdings in Tesla and other ventures are taken into account.

Fidelity customers’ wealth ambitions may be slightly more modest, but they may still be wondering how they could own a slice in SpaceX, which earlier this month filed regulatory paperwork for a stock market flotation, otherwise known as an ‘initial public offering’ or IPO.

Here are some options.

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How to own SpaceX shares indirectly – right now

Because SpaceX is still unlisted, you cannot buy the shares at present (if we disregard small American online marketplaces for wealthy individuals). However, a number of British investment trusts have stakes, sometimes very large ones, in Mr Musk’s space company.

Here they are, listed in order of percentage exposure to SpaceX:

• Edinburgh Worldwide 20.4%
• Scottish Mortgage 19.3%
• Baillie Gifford US Growth 14.9%
• Schiehallion Fund 12.8%
• RIT Capital Partners 2.5%
• Monks 2.4%

Source: Association of Investment Companies. Trusts with exposure of less than 1% omitted.

All the above trusts except RIT Capital Partners are managed by Baillie Gifford, which has a close relationship with SpaceX’s management team. However, a new board nominated by Saba Capital, a US ‘activist’ investor, has now taken charge at Edinburgh Worldwide and the trust’s future direction is uncertain.

The above percentages for Baillie Gifford trusts are based on the firm’s own estimate of SpaceX’s valuation of $1.25 trillion, which is less than the $1.75 trillion valuation that the space company is expected to have at flotation. Baillie Gifford said that its lower valuation was ‘deliberate’ and that its valuations team, along with an independent valuer, valued private holdings on the basis of ‘verifiable transactions, not press speculation’.

How to own SpaceX shares directly – once it floats

Once SpaceX has floated its shares on the stock market, they will be available from brokers. Fidelity International will not be enabling customers to buy shares in the flotation itself – only, in all likelihood, on the ‘secondary market’ afterwards. Our policy is as follows: ‘We do not currently support IPO participation on our platform, so clients will not be able to participate in the upcoming SpaceX IPO at launch. Once trading begins on the secondary market, we expect the shares to be available to clients in the usual way, subject to CDI availability within CREST.’ A CDI is a ‘CREST depository interest’, a means by which foreign shares are made available to British savers. At present, US stocks in CDI form can be held on the Fidelity platform in general investment accounts or ISAs.

What’s the difference between taking part in the flotation and buying in the secondary market? The former happens at the price determined by SpaceX, while purchases in the secondary market take place at the market price that prevails at the time. Often the price in the secondary market is higher than the flotation price, but it’s not a foregone conclusion.

The company has filed paperwork with the American financial regulator for a listing on the Nasdaq stock exchange. It is scheduled to take place next month.

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SpaceX is not the only space company. Here’s how to invest in the sector more widely

A London-listed investment trust called Seraphim Space is devoted to investing in space-related assets; it calls itself ‘the world’s first and only publicly listed investment vehicle focused exclusively on spacetech’.

It aims to ‘generate capital growth over the long term through investment in a diversified, international portfolio of predominantly early and growth-stage unquoted spacetech businesses with the potential to dominate globally’. Current holdings include ICEYE, whose radar satellites can see through cloud and darkness, ALL.SPACE, whose military-grade terminals connect simultaneously to satellite and cellular networks, and D-Orbit, which specialises in ‘space logistics’.

About 67% of the trust’s assets are in these three companies. Shares in the trust have risen by 122% so far this year, largely thanks to the appearance of a huge premium of 88%. Please remember past performance is not a reliable indicator of future returns. The premium is the share price relative to the most recently reported net asset value. The shares traded in line with the NAV as recently as mid-February.

An exchange-traded fund (ETF) could not invest in unlisted firms in the way Seraphim Space does because ETFs are ‘open-ended’ – they shrink and grow, in response to demand, by buying and selling shares in their holdings. Unlisted stocks cannot be sold at will, so ETFs hold quoted companies.

One, the VanEck Space Innovators ETF, has among its largest holdings Rocket Lab Corp, a satellite launch company, Planet Labs, which provides satellite imaging, and Viasat, a satellite broadband firm. All three are listed in New York. The ETF has risen by 100% over the year to date.

Past performance is not a reliable indicator of future returns

Source: FE, total returns in GBP from 22.5.21 to 22.5.26. Excludes initial charge.

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Important information - investors should note that the views expressed may no longer be current and may have already been acted upon. Reference to specific securities should not be construed as a recommendation to buy or sell these securities and is included for the purposes of illustration only. Overseas investments will be affected by movements in currency exchange rates. Shares in investment trusts are listed on the London Stock Exchange and their price is affected by supply and demand. Investment trusts can gain additional exposure to the market, known as gearing, potentially increasing volatility. This information is not a personal recommendation for any particular investment. If you are unsure about the suitability of an investment you should speak to one of Fidelity’s advisers or an authorised financial adviser of your choice.