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As well as Tesla, Elon Musk is also CEO of SpaceX. Unfortunately, the space exploration firm isn’t publicly listed, which means I can’t invest in it. However, there’s a UK stock that enables me to do so indirectly.
This is Baillie Gifford US Growth Trust (LSE: USA), the investment trust in the FTSE 250. Here’s why it’s worth considering.
Firing on all cylinders
First though, what’s so special about this maverick rocket company? Well, consulting firm McKinsey reckons the global space economy will be worth $1.8trn by 2035, up from $630bn in 2023. So the market opportunity for SpaceX is extremely large.
Next, the company’s a pioneer in reusable rockets. These lower launch costs hand it a massive advantage and enable many more missions.
In fact, as of 8 June, SpaceX had launched 62 rockets this year. It’s aiming for 148 launches, which would represent a significant rise on last year’s 98. That would be one every two and a half days!
Then there’s Starlink, its satellite internet constellation business. It aims to provide high-speed internet access across the globe by deploying as many as 42,000 satellites into orbit. SpaceX’s Falcon 9 rockets have taken more than 6,000 up there so far.
Reports say Starlink’s on track to generate $6.6bn in revenue this year, up from basically nothing four years ago. It may even generate $600m in positive free cash flow, which is encouraging at such an early stage.
The firm also just struck a deal with internet provider Comcast to supply Starlink access to its enterprise customers. So more growth seems certain.
Lastly, there’s Starship, the company’s 37-storey rocket that’s just had its first successful test flight. If SpaceX can get this beast up and down regularly, then that would be a game-changer for space tourism, larger payloads (including Starlink satellites), permanent Moon bases, and more.
However, its founding mission to colonise Mars isn’t going to happen anytime soon.
Why this FTSE 250 trust?
Fortuantely, SpaceX isn’t short of capital, which means it gets to pick its own investors. It chose Baillie Gifford in 2018 because it had been a patient and long-time backer of Tesla.
Today, the US Growth Trust has SpaceX as its top holding, representing 7.6% of the portfolio. That’s a significant position.
However, there are many other exciting stocks in the portfolio, including unlisted ones. One is Stripe, the internet payments company that surpassed $1trn in total payment volume in 2023. Another is artificial intelligence (AI) juggernaut Nvidia.
Top five holdings (as of 31 May)
| Weighting (%) | |
| SpaceX | 7.6% |
| Nvidia | 6.5% |
| Amazon | 5.2% |
| The Trade Desk | 5.0% |
| Stripe | 4.7% |
Starlink IPO
Now I should mention risks. The trust invests solely in US-listed growth stocks so if those fall out of favour, as happened in 2022, the share price would likely suffer.
In fact, performance has been a concern here. The trust’s five-year net asset return of 72% is notably lower than the S&P 500 (106%).
Additionally, SpaceX could encounter technical setbacks and delays, hurting valuation.
That said, I think this FTSE 250 stock’s set up to do well over the next five years as interest rates fall and the initial public offering (IPO) market reopens.
SpaceX is reportedly considering a huge Starlink IPO at some point. That could be a big boost to the trust’s value.
