During its most recent investment round in December, SpaceX became one of the most valuable private companies.
Is SpaceX being harmed by its own success?
We have to believe that the new conquest of space is attracting a large number of investors.
According to a filing with the Securities and Exchange Commission, Tesla (TSLA) – Get Tesla Inc Report co-founder Elon Musk’s rocket and space tech business received $337.35 million in December.
This round of fundraising has likely boosted the company’s worth, which had already surpassed $100 billion in October. At the time, SpaceX stock was trading at $560 per share.
The firm is not yet listed on the stock exchange, but it is planning to separate its operations. According to a CNBC report, SpaceX is seeking to divide its private-held stockholders’ shares in a 10-for-1 ratio. If the firm follows through on its proposal, each share’s value will be cut to $56 per share.
There is no effect on the fundamentals
According to a company-wide email received by CNBC, “the split has no effect on the overall valuation of the business or on the overall value of your SpaceX shares.”
This would be the first time SpaceX’s stock has been divided. This choice would have no impact on the company’s or the action’s fundamentals. When a publicly-traded company’s stock grows out of reach for regular investors, it is usually divided.
The stock market has been ecstatic since Alphabet, Google’s parent company, announced a stock split. Amazon, the e-commerce behemoth, is said to be the next to do so. The stock of Jeff Bezos’ firm is presently selling at $3,052, with a market capitalization of $1.55 trillion.
One of the primary motivations for a split is to make the stock price more affordable to a wider range of investors. The corporation also intends to boost the liquidity of its stock by doing so.
Tesla announced a 5-for-1 split in August 2020, giving each Tesla stakeholder five shares of the corporation for each Tesla share they held.
Requests for a response from SpaceX were not immediately returned.
SpaceX’s stock price has risen steadily in recent years, owing to the company’s need for enormous sums of money to support two critical projects: the next-generation rocket Starship and its worldwide satellite internet network Starlink.
Two Projects That Will Require a Significant Investment
Starlink is a high-speed internet service powered by a network of thousands of tiny low-orbit satellites. It is SpaceX’s first consumer offering. The corporation has now launched over 2,000 Starlink satellites, with a total target of roughly 12,000 in the works.
The profitability of Starlink is crucial to Musk’s aim to develop SpaceX into a firm capable of delivering humans to the moon and Mars.
A few weeks ago, SpaceX unveiled Starlink Premium, an internet broadband service that costs five times as much as the normal service. The hardware costs $499 and the service costs $99 per month.
Musk said in December that the business has begun building an orbital launchpad for expeditions to the Moon and Mars at the Kennedy Space Center in Florida.
These initiatives eat up a lot of money, and their success is not guaranteed.