Independent article: Is it too late to get into SpaceX?

Missing the SpaceX IPO does not mean missing the space economy, but investors should be careful not to buy out of fear of missing out.

SpaceX is an extraordinary business, but it is now priced with huge expectations attached. The danger after a blockbuster listing is that people stop buying a business and start buying a story. That is where investors get hurt.

For anyone who wants indirect exposure, a broader aerospace, defence or technology fund may be more sensible than making one company the whole bet. There are also listed companies linked to satellites, launch services, semiconductors and space infrastructure, but each comes with its own risks and none is simply “the next SpaceX”.

The smarter question is not “how do I buy SpaceX late?” It is “how much of my portfolio can I afford to expose to a high-risk, high-expectation theme?”

Space is exciting. That does not make it automatically suitable for everyone.

Investors no longer need to look for indirect exposure. SpaceX is available on most investment platforms, so they can simply buy the shares. The real question isn't whether they can, but whether they should.

The IPO has been one of the most anticipated in history, with years of expectation already reflected in the valuation. Investors are paying not only for today's launch business and Starlink, but also for highly ambitious future projects. As with Tesla, many will pay a premium for Elon Musk's vision.

Some other growth stocks weakened around the IPO, perhaps as investors rotated capital into SpaceX. More cautious investors may prefer the wider space economy instead. Aerospace manufacturers, satellite operators, semiconductor suppliers and defence companies all stand to benefit from the same structural tailwinds while offering greater diversification and less reliance on a single company living up to exceptionally high expectations.

At Musk's valauation there was never a right time to get into SpaceX. Morningstar had it valued at 50% more than it was worth, and how a loss making company can be the most valuable in the world would worry most investors.

In reality, most investors gain exposure through global equity trackers, technology funds and investment trusts that hold stakes in private companies or the wider space ecosystem. Rather than trying to pick the next SpaceX, investors may be better served by diversified funds or companies involved in satellites, aerospace, semiconductors and launch technology. The long-term growth opportunity in space is broader than any single company, and diversification reduces the risks of backing one high-profile name.

Missing the SpaceX IPO feels a bit like watching a rocket launch from the car park, wonderfully spectacular, but you weren't on board. However, the space economy is bigger than one company and satellite, defence aerospace and launch infrastructure stocks will all benefit from the infrastructure SpaceX is building, without the premium price tag. Sometimes the smartest position isn't on the rocket itself.

Warren Buffett famously recommended buying wonderful companies at a fair price. The two important questions are whether SpaceX is a wonderful company and, more importantly, whether the price investors are paying represents fair value.

Of course, it would be foolish to dismiss what Elon Musk has achieved. But investors need to separate a business leader’s past successes from the discipline of investing. As the regulator would have us say, past performance is no guarantee of future performance.

As independent financial advisers, we would not recommend individual stocks, however exciting the story may appear. For many investors, broad diversification through investment funds can help reduce the risks associated with investing in a single company. Hype can carry prices a long way, but investors should be careful not to let excitement override basic investment fundamentals.