SpaceX's stock package has brought Google $94 billion in paper profits: what lies behind the numbers
Ten years ago, in January 2015, Google and Fidelity invested $1 billion in SpaceX, acquiring nearly 10% of the company. At that time, Elon Musk's startup was valued at just over $10 billion. Today, that stake is worth approximately $94 billion — a 100-fold increase.
But behind these impressive numbers lies a complex financial reality. Each subsequent funding round diluted Google's stake. It now owns about 5% of the shares. However, the main nuance lies in the nature of this profit.
Paper Profits and Real Risks
In its second-quarter report, Google disclosed a revaluation of its stake in SpaceX, adding roughly $99 billion to its quarterly profit, which reached $112 billion. Without this adjustment, the quarter would have been ordinary. Moreover, the revaluation resulted in a tax liability of $21.9 billion.
The market reacted cautiously: Alphabet's shares fell by about 1.2% after the report was released. Investors were more concerned about record AI spending — $44.9 billion for the quarter, which exceeded revenue from this segment by $5.9 billion.
Lockup and Uncertainty
The key point: Google cannot yet sell this stake and freely use the funds. According to the report, $80 billion of the amount is locked up, with the rest to be unlocked later. The lockup expires in August, coinciding with SpaceX's first report as a public company.
SpaceX's stock has already shown volatility: after the IPO at $135, shares surged above $200, but by July 23, they had dropped to $114. The first lockup expiration is the moment of truth when Google will have the opportunity to sell. Until then, the $94 billion remains paper profit.
My analysis: This situation is a classic example of how early investments in the space sector can yield phenomenal paper returns, but realizing profits comes with high uncertainty. The real test will come after the lockup expires, when Google must decide whether to lock in profits or hold the shares longer. For crypto investors, this is a good lesson on the importance of liquidity and the difference between paper and real returns.