Billionaires Including David Tepper and Philippe Laffont Piled Into SpaceX in the Second Quarter. Should You Follow?

In the second quarter, an exciting new investment opportunity emerged: Space Exploration Technologies (NASDAQ:SPCX), commonly known as SpaceX, completed its record initial public offering. And that meant everyone from small retail investors to billionaires had the opportunity to easily buy shares of the company on the market as of June 12.

Demand during and post-IPO was high, with the operation raising more than $85 billion after the exercise of an overallotment option and the stock price climbing in its first days of trading. And in the month of June, several billionaires, including Appaloosa Management's David Tepper and Coatue Management's Philippe Laffont, bought shares of this industrial and technology giant. Should you follow? Let's find out.

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A mix of growth businesses

So, first, a quick look at why investors were so excited about this particular IPO. SpaceX offers a unique and interesting mix of growth-oriented businesses -- artificial intelligence (AI), space, and satellite-based connectivity. Meanwhile, the company is led by Elon Musk, known for his commitment to innovation and accomplishing what's never been done before. These two elements appeal to certain growth investors, and that helped stir up excitement as SpaceX prepared for its market debut.

All of this also attracted the attention -- and investment dollars -- of billionaires. A quick look through recent 13Fs shows that a number of them piled into SpaceX stock in the second quarter. (Managers of more than $100 million must report their latest moves on a quarterly basis to regulators on Form 13F.)

Billionaires buy SpaceX

Billionaires buying SpaceX include:

• David Tepper of Appaloosa Management bought 225,000 SpaceX shares, giving it a 0.5% weight in the portfolio and a ranking of 22.
• Philippe Laffont of Coatue Management bought 18,561,780 SpaceX shares. It has a 6.52% weight in the portfolio and is the fourth-biggest position.
• Michael Platt of BlueCrest Capital Management bought 1,417,000 SpaceX shares. That makes it the portfolio's No. 2 position with a weight of 7.98%.
• Chase Coleman of Tiger Global Management bought 375,000 SpaceX shares, and that represents 0.27% of the portfolio and a ranking of 34.

So, clearly, the SpaceX story is winning over some of the world's most successful investors. Now, let's consider whether you should follow these investing giants into the stock.

It's important to note that, while we may learn a lot from billionaire investors and gain inspiration, we shouldn't follow all of their moves. Even the billionaires themselves often make completely different decisions -- with one buying a particular stock while another sells it. This is because each individual may have a different strategy, investment horizon, and feelings about risk -- and this is just to mention a few elements that guide investing decisions. As a result, what may be right for certain billionaires may not be the best move for you or me.

Considering the risk

Now, let's return to our question: Considering all of this, should you follow this wave of billionaires into the SpaceX story? This depends on our comfort with risk. SpaceX carries plenty of it at the moment.

So far, its big breadwinner is the Starlink connectivity unit, which brought in $4 billion in revenue in the latest quarter and $1.6 billion in operating income. But the other two businesses, though generating revenue growth, each delivered an operating loss. And the AI business in particular requires enormous investment, to the tune of $15 billion in capital expenditures in the second quarter alone. To put this into perspective, SpaceX's total revenue for the quarter came in at $7.8 billion.

SpaceX represents enormous opportunity, but to reach its goals, it must invest heavily -- and it's also key to remember that many of these goals, such as developing data centers in space, rely on technology that hasn't been fully proven yet.

All of this means that, if you're an aggressive investor with a well-diversified portfolio, you might consider following the billionaires and getting in on this stock early -- but for most of us, it's a better idea to watch this stock from the sidelines until visibility improves.

Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.