Alphabet Counts the Ka-Ching With SpaceX Returns

In 2015, Google made a $900 million investment in SpaceX. This seemingly whimsical wager has since paid off significantly for Alphabet, the parent company of Google. Now, Alphabet holds about 100 times the initial investment, amounting to $94 billion as of June 30, 2022. The investment was made in SpaceX's series F round, granting Alphabet 551.2 million shares. These shares were valued at $94.2 billion based on the stock's closing price of $170.86 on that date.

Despite Alphabet's substantial stake, it pales in comparison to other major institutional investors. Gigafund Management holds 171.8 million shares, while Fidelity Investments follows with 302.6 million shares. Baillie Gifford and BlackRock each own 51.4 million and 51 million shares respectively. Together, these five investors control most of SpaceX's shares. Elon Musk, the founder of SpaceX, holds an impressive 48.4% of the company, giving him considerable voting power.

The report highlights the concentration of SpaceX's ownership among a select few institutions and Musk himself. This leaves relatively little public share ownership relative to the company's massive valuation. However, the report also underscores the growing asset value that SpaceX shares represent for large investors, such as Alphabet.

For Google, the investment functions as a hidden asset outside its core cloud and advertising businesses, generating a scale of paper gains that few strategic corporate investments have ever accomplished.