‘It’s Hard to Price a Dream’: What Experts Think About Investing in SpaceX
Israeli institutional investors, which manage long-term assets worth $1 trillion, are also taking part today in SpaceX’s offering, which is already enjoying strong demand. At the same time, some of them declined to be identified, saying they viewed the information as confidential business material. In recent years, Israeli institutions have become active players in major Wall Street offerings. For example, Migdal and Clal invested $170 million in Anthropic’s capital raise last May, at a valuation of $900 billion.
At Migdal, SpaceX is seen as a unique combination of an established technology company and future growth engines. “In our view, this is a technology company with several arms, some of them generating revenue, mature and profitable, such as Starlink, and some based on breakthrough technology that could bring the company to amazing places within a few years and significantly boost results, such as Starship,” said Yuval Bar Even, head of peer investments at Migdal. “Elon Musk is one of the world’s most brilliant entrepreneurs, with proven abilities in developing breakthrough technologies,” he noted.
Bar Even said that despite the questions around valuation, there is room for a company like SpaceX in investment portfolios. “In our view, there is a place for such a company in portfolios, both passively through exposure to technology indices and the S&P 500, and directly, of course in the right dose,” he stressed. However, he acknowledged that pricing the company is especially complex. “It is בהחלט difficult to price companies whose value is largely based on a dream, the probability of whose success is unclear. But given the maturity of the technology and the quality of the founder, significant value for the company is certainly justified. Is a sales multiple of 80 or 120 the right one? It is hard to know. This is not an exact science.” According to him, this is a highly unique company. “In practice, it has three main engines of activity. One of them is already profitable today and has almost monopolistic characteristics, Starlink. The other two engines still require substantial investment, but in them too the company has an advantage that is very hard to compete with,” he concluded.
“This is an asset that many want to hold, so some investors are willing to pay a premium,” explains an institutional investor, speaking anonymously. “There are not many companies in the world that can provide global communications not dependent on geographic location, and at the same time carry out launches into space. This is a very rare combination of capabilities,” he said. “Even if we do not participate in the offering itself, this is a company that will very likely enter the leading indexes in the United States. Therefore, every institutional investor must know it in depth, because in the end it may reach portfolios through the indexes. This is a company with a high ability to create value over time, despite the price in the offering.” He also noted that the main difficulty is not understanding whether this is a quality company, but pricing it. “We are talking about a valuation that resembles the biggest giant companies in the world, even though significant parts of the business are still not profitable. Part of the valuation the company receives comes from investors’ belief in Musk’s ability to take activities that are today in investment stages and turn them in the future into profitable businesses on a global scale,” he concluded.
At TEMA, which manages the NASA ETF and holds exposure to SpaceX while the company remains private, the emphasis is on its structural advantage. “Few companies have succeeded in building such clear advantages in engineering excellence, scale and execution,” says Yuri Khodgimiryan, the company’s chief investment officer. According to him, the high barriers to entry in the industry make SpaceX a “gateway to space,” with the ability to prioritize its own payloads and widen the gap over competitors.
Launch costs have fallen by 90%. Khodgimiryan believes investors tend to focus on the rockets and the group’s AI activity, but Starlink is not getting enough credit. “We see SpaceX as three businesses, space, connectivity and artificial intelligence. The rockets capture a large part of the public imagination and Grok, X’s AI, formerly Twitter, attracts attention on the AI side, but the connectivity business remains undervalued,” Khodgimiryan explains. “In our view, Starlink alone can support a significant portion of SpaceX’s market value.”
According to him, even after the company’s rise in value, there is still significant growth potential. “The space economy is still at a very early stage of development. Only in the past decade have launch costs fallen by about 90%, mainly thanks to SpaceX’s innovation, which opened the door to new markets. In the short term, there is always uncertainty, but the long-term opportunity looks solid and promising,” he concludes.
