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Home Stock Analysis Billionaire Elon Musk’s SpaceX is booming! This UK stock is offering an investment vehicle

Billionaire Elon Musk’s SpaceX is booming! This UK stock is offering an investment vehicle

by xyonent
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Similarly TeslaElon Musk is also the CEO of SpaceX. Unfortunately, the space exploration company is not publicly listed so you can’t invest in it. However, there are UK shares you can invest indirectly.

this is Baillie Gifford US Growth Trust (LSE:US) FTSE 250Here’s why it’s worth considering:

Put in all my effort

First, what’s so special about this maverick rocket company? Consulting firm McKinsey estimates that the global space economy will grow from $630 billion in 2023 to $1.8 trillion by 2035, meaning SpaceX’s market opportunity is huge.

Secondly, the company is pioneering reusable rockets, which gives the company a huge advantage due to lower launch costs, allowing it to carry out more missions.

In fact, as of June 8, SpaceX has launched 62 rockets this year. The company is targeting 148 launches, which would be a significant increase from last year’s 98 — or one every two and a half days.

Then there’s Starlink, the company’s satellite internet constellation business, which aims to launch up to 42,000 satellites into orbit to provide high-speed internet access around the world. SpaceX’s Falcon 9 rockets have launched more than 6,000 satellites into orbit to date.

Starlink is reportedly on track to generate $6.6 billion in revenue this year, up from nearly zero four years ago, and could generate $600 million in positive free cash flow, which is encouraging early on.

The company has also just signed a deal with an internet provider. Comcast To provide Starlink access to enterprise customers. Therefore, further growth seems certain.

Finally, the company’s 37-story rocket, Starship, just completed its first successful test flight. If SpaceX can launch and bring down this monster on a regular basis, it would be a milestone for space travel, larger payloads (including Starlink satellites), a permanent lunar base, and more.

But the founding mission of colonizing Mars doesn’t seem likely to happen anytime soon.

Why this FTSE 250 trust?

Fortunately, SpaceX isn’t short of cash, which means it can pick its own investors: It chose Baillie Gifford in 2018 because the firm has been a patient, long-time backer of Tesla.

Currently, SpaceX is US Growth Trust’s largest holding, accounting for 7.6% of its portfolio, which is a significant position.

But the portfolio also has a number of other attractive stocks, including privately held ones. One is Stripe, an internet payments company that is expected to exceed $1 trillion in total payment volume by 2023. Another is the artificial intelligence (AI) giant. NVIDIA.

Top 5 holdings (as of May 31st)

Weighting (%)
SpaceX 7.6%
NVIDIA 6.5%
Amazon 5.2%
Trade Desk 5.0%
stripe 4.7%

It’s worth mentioning a risk here: The trust only invests in US-listed growth stocks, so if growth stocks fall out of favour, as happened in 2022, the share price could fall.

Indeed, performance is a concern here. The trust’s five-year return on net assets was 72%, S&P 500 (106%).

Additionally, SpaceX could encounter technical issues and delays, which could cause its valuation to fall.

That being said, as interest rates fall and the initial public offering (IPO) market reopens, we think this FTSE 250 stock will perform well over the next five years.

SpaceX is reportedly considering a big IPO for Starlink at some point, which could significantly boost the value of the trust.

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