Google's Investment in SpaceX: $94 Billion Paper Profit and Hidden Risks for the Giant
The market was shaken by the news that Google's stake in SpaceX is estimated at approximately $94 billion. However, behind this impressive figure lies not a fresh investment, but a story from a decade ago that clearly demonstrates how strategic patience and a bet on innovation can yield phenomenal, yet largely virtual, profits.
How it began: the brilliant bet of 2015
In January 2015, Google, together with Fidelity, invested $1 billion in SpaceX, receiving in return nearly 10% of the company's shares. At that time, the entire SpaceX was valued at just over $10 billion. This was a funding round led by Google, which now looks like one of the most successful venture investments of the decade.
The value soared, the stake was "diluted"
Over the years, SpaceX has become a dominant player in the space launch and satellite internet market. Its valuation skyrocketed. In June 2024, the company went public at a price of about $135 per share, with a total valuation of $1.77 trillion. This made it the largest initial public offering in history. Google's stake appreciated roughly 100 times. However, each new funding round "diluted" Google's share. Today, it owns about 5% of SpaceX's shares.
Paper profit and market reaction
This colossal appreciation was reflected in Google's second-quarter report. The revaluation of the stake added about $99 billion, resulting in quarterly profit reaching $112 billion. However, behind these figures, there is almost no real cash. Out of $9.11 earnings per share, $6.26 came precisely from asset revaluation. Without it, the quarter would have been ordinary. Moreover, this revaluation led to a tax of $21.9 billion.
The market reacted cautiously. In the quarterly report, Google highlighted the record profit in a single line and did not name any company. By the close of trading, Alphabet shares fell by about 1.2%. Investors were more concerned about expenses: over three months, Google allocated $44.9 billion to artificial intelligence, spending $5.9 billion more than it earned. Record investments in AI alarmed market participants.
"Frozen" asset and the real test
Most importantly: Google cannot freely sell this stake. According to the report, $80 billion of this amount is locked up, and the rest will be "unfrozen" later. The first lock-up expires in August, when SpaceX reports as a public company for the first time. The stock price has already fallen: after the IPO, shares soared above $200, but by July 23, they had dropped to about $114.
Cryptalist Analysis
From my perspective, this situation is a classic example of "paper wealth" in the high-tech world. $94 billion looks impressive, but it's just numbers in a report. The real test will come after the lock-up period ends, when Google gets the opportunity to sell. Until then, it remains a brilliant but illiquid bet that has not yet brought the company real cash, only creating tax liabilities. For crypto investors, this is an important lesson: even the most brilliant investments can be "frozen" for years, and their true value is determined not by valuation, but by the ability to exit.