Google's investment in SpaceX: 100-fold growth over a decade — paper profit of $94 billion
The market has just witnessed one of the most impressive long-term investments in the history of the technology sector. Google's stake in SpaceX is now valued at approximately $94 billion. However, behind this astronomical figure lies not a new investment, but the result of a patient strategy laid out back in 2015.
How $1 billion turned into $94 billion
In January 2015, Google, together with Fidelity, invested $1 billion in SpaceX, acquiring nearly 10% of the company. At that time, the entire SpaceX was valued at just over $10 billion. Since then, the company's value has skyrocketed. In June of this year, SpaceX went public at a price of around $135 per share, and the company's total valuation reached $1.77 trillion. This is the largest initial public offering in history. Accordingly, Google's stake has appreciated roughly 100 times. However, due to subsequent funding rounds that diluted its share, Google now owns about 5% of SpaceX's shares.
Why the market didn't notice the record profit
This revaluation appeared in Google's second-quarter report, adding about $99 billion to quarterly profit and bringing it to a record $112 billion. But behind these numbers, there is almost no real cash. Out of the $9.11 earnings per share, as much as $6.26 came specifically from the asset revaluation. Without it, the quarter would have been quite ordinary. Moreover, the revaluation resulted in a tax of $21.9 billion.
The market reacted cautiously. In the quarterly report, Google mentioned the record profit in a single line, without naming any company. By the close of trading, Alphabet's 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 had already worried market participants before the report was published.
The "frozen" billion: what's next?
It's important to understand: Google cannot yet sell this stake and freely use the money. According to the report, $80 billion of the amount is locked up, and the rest will be unlocked later. The first lock-up expires in August — at the same time, SpaceX will report as a public company for the first time.
SpaceX's stock prices could fall as quickly as they rose. After the IPO, shares soared above $200, but by July 23, they had dropped to around $114. The real test for Google will come after the lock-up period ends, when the company has the opportunity to sell.
My analysis: This story is a brilliant example of venture foresight. Google didn't just bet on space; it invested in the future of internet infrastructure (Starlink). However, $94 billion is still just a "paper" value. The key question is whether Google can convert this fantastic revaluation into real cash flows without crashing the SpaceX stock market. The August report and the expiration of the lock-up will be the first serious test.