SpaceX listing: you may
already own some

Founded by Elon Musk in 2002, SpaceX is more than just a rocket company – it also operates satellite internet company Starlink, xAI (which has the Grok chatbot) and X (formerly Twitter).

Enthusiasm surrounding its IPO – targeted for June this year – has been fuelled both by the company’s remarkable growth and by strong investor demand for access to disruptive technologies. Much of the excitement stems from SpaceX’s leadership in commercial space launches, the fast-growing reach of its Starlink satellite network, and the view that the business is well positioned to benefit from several powerful long-term trends shaping the global economy.

Indirect exposure

With demand expected to be high, it is traditionally challenging for retail investors to obtain shares in popular IPOs such as this. However, clients invested in our global portfolios already have meaningful indirect exposure to SpaceX through existing holdings.

One of the most notable examples is Scottish Mortgage Investment Trust, where SpaceX currently accounts for close to 18% of net asset value. Should a listing proceed at the US$1.75 trillion touted valuation, that weighting could rise to around 25%. Scottish Mortgage is the single largest holding in our global direct equity portfolios at around 8.5%, meaning clients already have an effective look-through exposure to SpaceX of roughly 2%.

Scottish Mortgage has held SpaceX since 2018, with its original US$200m investment – made in tranches from 2018 to 2021 – now estimated to be worth around 20 times its initial cost.

There are also other routes for access. Alphabet is estimated to own around 6% of SpaceX, a stake reportedly acquired for roughly US$1 billion and now potentially worth closer to US$200 billion. Investors holding Alphabet, which accounts for 4.7% of our global direct equity portfolio, therefore also participate indirectly in the SpaceX growth story.

Other high-profile IPOs expected in the near term are OpenAI and Anthropic. Microsoft has a substantial stake in OpenAI, while Alphabet, Amazon and Scottish Mortgage are significant investors in Anthropic. Through our holdings in Microsoft, Alphabet, Amazon and Scottish Mortgage, many of our clients already have indirect exposure to these two tech giants.

Beware of buying the hype

It should be noted that IPO excitement does not always translate into attractive short-term returns and that, in our view, the valuations currently being attached to SpaceX and Anthropic appear optimistic. History shows that some of the market’s most eagerly awaited listings have experienced sharp declines in the months after debuting. In several cases, investors who waited for sentiment to cool achieved materially better long-term outcomes than those who bought into the initial hype.

Meta Platforms, for example, fell around 50% in the months following its 2012 IPO before ultimately becoming an exceptional long-term investment. While the stock has delivered annualised returns of around 23% since listing, an investor who waited four months before buying and then simply held the shares would have achieved annualised returns of more than 30% over the subsequent 14 years.

A similar pattern played out with Uber. After listing in 2019, the shares were hit hard during the Covid pandemic, falling more than 70% by mid-March 2020. An investor who bought at IPO would have achieved annualised returns of around 8% to date. By contrast, an investor who waited until mid-April 2020 – roughly 37% below the IPO price and seven months after listing – would have achieved annualised returns closer to 18%, compared with around 16.5% for global equities over the same period.

Airbnb also experienced significant post-listing volatility, falling sharply in the period after its IPO. An investor who bought on listing day would have generated negative annualised returns to date, while an investor who waited until July 2022 – when the shares were trading at just above half their listing level – would have achieved materially stronger long-term returns, even if still below those of global equities overall.

Then there is Rivian, one of the largest IPOs of recent years and a major beneficiary of enthusiasm surrounding electric vehicles. Investors who bought at listing have lost most of their capital, while those who waited six months before investing still experienced losses – but considerably less severe ones.

Valuation still matters

This is not to dismiss the quality or long-term potential of businesses like SpaceX or Anthropic. Rather, it is a reminder that valuation still matters. Periods of intense optimism can push expectations – and prices – to levels that leave little room for disappointment.

For long-term investors, the lesson is often less about chasing the next headline IPO and more about ensuring portfolios already contain high-quality businesses with durable growth prospects. This is why we own Scottish Mortgage, where over 40% of the net asset value is in unlisted companies.

Scottish Mortgage owns stakes in seven of the world’s 10 largest private companies. Through its philosophy of investing in the world’s best growth businesses and owning stakes for the long term, irrespective of whether the ownership structure is private or listed, we give our clients diverse exposure to a set of opportunities unavailable elsewhere in such a liquid and cost-effective structure.