Key Points
- A new stock sale values SpaceX at a massive $800 billion. This will create a large paper gain for Alphabet (Google), an early investor.
- Alphabet first invested in SpaceX in 2015 as part of a $1 billion funding round.
- The soaring valuation has boosted Alphabet’s earnings in the past.
- Investors are now expecting another multi-billion-dollar gain on Alphabet’s next earnings report.
Google’s parent company, Alphabet, is on track to report another massive paper gain, thanks to its early investment in Elon Musk’s SpaceX. The rocket company is completing a new stock sale that values it at a stunning $800 billion.
This new, higher valuation means Alphabet’s long-held stake in SpaceX is now worth a lot more. The company first invested in SpaceX in 2015, when it and Fidelity invested $1 billion for a combined 10% stake in the then-burgeoning company. That early bet is now paying off in a big way.
This isn’t the first time SpaceX’s success has boosted Alphabet’s bottom line. Earlier this year, Alphabet reported an $8 billion unrealized gain after a previous SpaceX stock sale valued the company at $350 billion. That accounting boost helped Alphabet beat Wall Street’s earnings expectations for the quarter.
Now, with SpaceX’s value more than doubling in less than a year, investors will be closely watching Alphabet’s next earnings report.
They expect to see another large, multi-billion-dollar paper benefit from the SpaceX investment, which will once again provide a significant lift to the tech giant’s profits.
