This Big Tech Stock Has a Lot to Gain From a SpaceX IPO
Key Points
Alphabet invested in SpaceX in 2015.
SpaceX is aiming for a $1.75 trillion to $2 trillion valuation at its IPO.
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SpaceX is one of the world's most talked-about companies right now, with its plans for an initial public offering (IPO) beginning to gain momentum. According to some reports, SpaceX is looking to raise at least $75 billion at a $1.75 trillion to $2 trillion valuation, which would make it the largest IPO in history.
A handful of companies are expected to benefit significantly from SpaceX's growth, but no other big tech company is likely to benefit more from its IPO than Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL).
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In 2015, Alphabet invested $900 million in SpaceX, giving it a 7% stake in the company at a valuation of around $12 billion. If SpaceX were to hit its IPO valuation goal, it would represent a roughly 14,480% to 16,560% increase since Alphabet first invested 11 years ago.
Alphabet's current stake in SpaceX is likely around 5% after some share dilution, so a SpaceX valuation of $1.75 trillion to $2 trillion would mean Alphabet's initial $900 million investment could be worth north of $100 billion.
Admittedly, this would be just paper gains initially, but it's still a nice card to have in its deck if or when Alphabet wants to put the money to work somewhere. This is especially true as the company ramps up its spending plans to build out data centers and other AI infrastructure.
It's just another of many reasons to give Alphabet a closer look as a possible investment.
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Stefon Walters has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
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