Alphabet (NASDAQ:GOOG) has generated an extraordinary paper return from its early investment in SpaceX (NASDAQ:SPCX), with its disclosed holding valued at approximately $94 billion at the end of June, more than 100 times the $900 million the Google parent invested in Elon Musk’s space company in 2015.
Following SpaceX’s $86 billion initial public offering in June, Alphabet has emerged as the company’s largest individual institutional shareholder by a wide margin, according to a Reuters analysis of regulatory filings released so far.
The disclosures provide greater visibility into the positions accumulated by major SpaceX investors as the company transitioned from a privately held business into a publicly traded company. They also illustrate the enormous gains generated for some investors that backed SpaceX years before its IPO.
Regulatory filings reveal scale of Alphabet’s SpaceX stake
Institutional investment data reported through 13F filings is compiled quarterly and generally becomes public within six weeks after the end of each quarter.
That means the figures provide only a snapshot of holdings as of June 30 and do not reflect transactions completed by investors since then.
There are additional complications surrounding SpaceX because some investors acquired their positions before the IPO and may face different restrictions governing when those shares can be sold.
“It’s very, very difficult to tease out which of these institutions were holding pre-IPO shares,” Interactive Brokers market strategist Steve Sosnick said.
Alphabet is an important exception because it publicly disclosed its original $900 million SpaceX investment in 2015, providing a clear reference point for measuring the dramatic appreciation of its position.
Alphabet did not immediately respond to a request for comment.
Sosnick also noted that 13F filings provide no information about individual investors’ lockup arrangements or whether they intend to realise gains on positions accumulated before the IPO.
Alphabet held more than 551 million SpaceX shares
Alphabet reported owning 551.2 million SpaceX shares at the end of the second quarter.
At SpaceX’s June 30 closing price of $170.86, that position was worth approximately $94.2 billion, representing more than 100 times Alphabet’s original investment.
SpaceX has subsequently retreated from its late-June level. Based on Wednesday’s share price, Alphabet’s disclosed position would have been valued at around $81.8 billion.
Even after that decline, the stake remains approximately 90 times larger than Google’s initial $900 million investment.
Alphabet dominates institutional ownership
Alphabet’s position is substantially larger than those reported by other major institutional investors in SpaceX.
Gigafund Management ranked a distant second with 171.8 million shares, followed by Baillie Gifford with 51.4 million shares and BlackRock with 51 million.
Ontario Teachers’ Pension Plan reported a position of 50.7 million shares.
Together, these investors and Alphabet accounted for the majority of SpaceX shares disclosed through 13F reports filed by Thursday afternoon and analysed by Reuters.
The figures indicate that reported institutional ownership of SpaceX remains heavily concentrated among a relatively small number of major investors.
SpaceX remains above its IPO price
SpaceX entered the public market on June 12 at $135 per share.
The stock subsequently climbed sharply before retreating from its June 30 level. Shares closed Wednesday at $146.15, leaving them approximately 8.3% above the IPO price but 14% below their June 30 close.
Despite the volatility, investor interest in the company remains substantial.
Sosnick told Reuters that SpaceX continues to rank among the most actively traded shares among Interactive Brokers customers, receiving a “fresh jolt of buying last week when market fears about what would happen when the first lockup expiry arrived proved to be unfounded.”
The comments suggest concerns that the expiration of restrictions on some shareholders could trigger heavy selling failed to materialise to the extent investors had feared.
Retail investors turn net sellers
Retail trading patterns have recently shown some signs of changing.
Individual investors, who are not required to disclose their positions to the U.S. Securities and Exchange Commission in the same way as institutional managers, became net sellers of SpaceX shares on Friday for the first time since the company’s IPO, according to Vanda Research.
The research firm estimated that self-directed retail investors sold a net $4.5 million of SpaceX stock during the session.
SpaceX shares subsequently fell 3% on Thursday, although the stock has still advanced around 30% since August 5.
For Alphabet, even substantial fluctuations in SpaceX’s public-market valuation leave its original investment showing an enormous paper gain. The increase from a $900 million investment in 2015 to a position valued at as much as $94.2 billion at the end of June demonstrates the scale of value created by one of Alphabet’s most successful strategic investments.