Is SpaceX a victim of its own success?
We have to believe that the new conquest of space is attracting a large number of investors.
The rocket and space tech company started by Tesla (TSLA) co-founder Elon Musk raised $337.35 million in December, according to a filing with the Securities and Exchange Commission.
This round of funding has undoubtedly caused the valuation of the company to fly, which had already reached $100 billion dollars in October. The stock price was at $560 per SpaceX share at the time.
Now, the company is not yet publicly-traded, but it is preparing to split its action. According to a report from CNBC, SpaceX is proposing to its privatel-held shareholders to split their shares in a 10-for-1 ratio. If the company carries out its plan, the value of each share will be reduced to $56 per share.
No Impact on the Fundamentals
“The split has no impact on the overall valuation of the company or on the overall value of your SpaceX holdings,” SpaceX said to a company-wide email obtained by CNBC.
This would be the first time SpaceX has split its stock. This decision would have no impact on the fundamentals of the company or that of the action. Usually, listed companies split their stock when it becomes out of reach of retail investors.
Alphabet, Google's parent company, recently announced a stock split, which has thrilled the markets. It is rumored that the e-commerce giant Amazon could be the next to do it. The action of the company founded by Jeff Bezos is currently trading around for $3,052 for market value of $1.55 trillion.
One of the main reasons for a split is to make the share price more accessible and thus attract a greater number of investors. In doing so, the company also hopes to improve the liquidity of its shares.
Tesla, in August 2020, announced a 5-for-1 split, giving every Tesla shareholder five shares of the company for each share of Tesla they owned.
SpaceX didn't respond immediately to requests for comment.
The valuation of SpaceX has soared in recent years with each fund-raising of the company, which needs large financial means to finance two crucial projects: the next generation rocket Starship and its global satellite internet network Starlink.
Two Projects Requiring a Lot of Investment
Starlink, SpaceX's first consumer product, is high-speed internet powered by a network of thousands of small low-orbit satellites.
The company has already launched more than 2,000 Starlink satellites, with an overall goal of launching about 12,000.
Musk's plan to turn SpaceX into a company capable of transporting people to the moon and Mars rests of the profitability of the Starlink.
SpaceX debuted Starlink Premium, an internet broadband service that costs five times its standard service, a few weeks ago. The standard service costs $499 for the hardware and $99 a month.
In December, Musk tweeted that the company has started construction on an orbital launch pad at the Kennedy Space Center in Florida for missions to the Moon and Mars.
These projects gobble up a lot of money and it is not certain that they will succeed.
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