Exploring SpaceX’s Employee Share Sales: A Peek Inside the Financial Orbit
SpaceX, like many highly valued startups, occasionally allows its employees to monetize their shares by selling them to company-approved outside investors. Recently, TechCrunch obtained insights into a tender offer from SpaceX dating back to May 2022. Elon Musk mentioned on X that such sales occur approximately every six months, offering a glimpse into the investors authorized to partake in these secondary share purchases and the favorable deals they receive.
During this particular offer, investors paid $70 per share to employees—a stark contrast to the $270 per share price during a primary round in 2022. In primary rounds, where the company directly raises capital, shares are typically sold at much higher prices. The last time SpaceX shares were priced similarly in a primary round was back in 2015 during Series G at $77.46 per share, according to PitchBook.
The significant discount arises because employees hold common stock, while primary round investors usually acquire preferred stock, which includes dividends and liquidation preferences.
{TechCrunch}
- Preferred shareholders would be the first in line if SpaceX were sold, with a priority claim of $6.67 billion as of 2022.
- Following additional funding of $750 million, this sum would likely increase proportionately.
If SpaceX’s valuation reaches its astronomical $350 billion mark, these liquidation preferences won’t affect common stockholders adversely. However, in a scenario where the company sells for less than $7 billion, common stockholders might find themselves at a loss.
As for dividends, SpaceX reportedly never paid any up until 2019. However, should the board decide to distribute dividends, payouts would vary based on the acquisition timeline of shares—ranging from mere pennies to over $10 depending on when shares were bought.
Employees received favorable news in February 2022 with a 10-for-1 stock split of Class A, B, and C common shares. This split did not apply to preferred shares. The document doesn’t clarify the distinctions among these classes of common shares, though in public companies, such differences often relate to voting rights.
Secondary sales remain one of the few avenues for employees to sell their shares since it’s uncertain when or if SpaceX will go public. Encouragingly, Bloomberg reported that the next tender offer might be priced between $108 and $110 per share.
Bloomberg also highlighted that authorized buyers are mostly within Spaces’ orbit—investors closely tied to Elon Musk or his ventures.
{Bloomberg}
- Andreessen Horowitz: Authorized to acquire nearly 4.3 million shares for approximately $300 million. Recently became a lead investor in SpaceX’s $750 million round in 2023 at a $137 billion valuation.
- Aliya Capital Partners: Associated with Aliya Growth Fund and authorized for over 1.4 million shares at nearly $100 million. Known for its bullish stance on Musk ventures.
- Gigafund: Co-founded by Luke Nosek, allocated over 1.4 million shares costing nearly $100 million. Has strong ties with Musk through prior PayPal connections.
- 137 Ventures: Known for secondary market purchases and authorized just under 1.1 million shares at nearly $75 million.
- Point 2 Prove Investment: Allocated 1 million shares costing $70 million; linked to Vy Capital.
- Atreides Management: Allocated nearly 429,000 shares at around $30 million; maintains substantial investments in Musk’s companies like Tesla.
- TCP Exploration Fund 2022: Associated with Troy Capital Partners and allocated over 357,000 shares for nearly $25 million.
The documents also mention two other investors authorized for additional combined purchases worth about $50 million; however, details regarding their connections remain sparse. As various funds opted not to comment on these transactions aside from Atreides who declined to engage further—this narrative offers a compelling look into how strategic alliances shape SpaceX’s financial tapestry.
