Google's investment in SpaceX: $94 billion in paper profits, but cannot be sold yet
Ten years ago, Google invested $1 billion in SpaceX. Today, that stake is valued at approximately $94 billion. But behind these numbers lies not only a success story, but also a complex financial reality.
In January 2015, Google, together with Fidelity, invested $1 billion in SpaceX, acquiring nearly 10% of the company. At that time, SpaceX's total valuation was just over $10 billion. It was a bet on the future, and it has paid off handsomely.
100x Growth: How It Happened
Over ten years, SpaceX's value has skyrocketed. In June, the company went public at around $135 per share, with a valuation of $1.77 trillion — the largest initial public offering in history. Google's stake has appreciated roughly 100 times. Each new funding round diluted Google's share, and today it owns about 5% of SpaceX's shares.
Why the Market Didn't Appreciate This Profit
However, when Google reflected this revaluation in its second-quarter earnings report, the market reacted cautiously. The revaluation added approximately $99 billion to quarterly profit, which reached $112 billion. But of the $9.11 earnings per share, $6.26 came specifically from the asset revaluation. Without it, the quarter would have been ordinary. Moreover, the revaluation resulted in a $21.9 billion tax bill.
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, and by the close of trading, Alphabet shares had fallen by about 1.2%.
Paper Profit: $80 Billion Locked Up
The most interesting part is that Google cannot freely use this money. According to the financial report, $80 billion of the stake's value is locked up, with the remainder to be unlocked later. Selling SpaceX shares is currently impossible: the first lock-up period expires in August, when SpaceX reports its first earnings as a public company. By July 23, SpaceX shares had fallen to around $114 after surging above $200.
My view: This situation is a classic example of how paper profits can be misleading. The real test for Google will come after the lock-up period ends, when the company can sell shares. For now, $94 billion is an impressive figure, but nothing more than a reflection of market euphoria that could just as quickly dissipate.