Google's Investment in SpaceX: $94 Billion in Paper Profits, but Cannot Be Withdrawn
Ten years ago, Google bet on SpaceX, and today that stake is valued at approximately $94 billion. However, behind these numbers lies not so much a triumph as a complex financial structure.
At first glance, the news of a $94 billion position looks like another funding round. But it is not. It is about the revaluation of a stake that Google acquired back in 2015, when Elon Musk's company was just gaining momentum. In January of that year, Google and Fidelity invested $1 billion in SpaceX, receiving nearly 10% of the company. At that time, the entire SpaceX was valued at just over $10 billion.
100x Growth, but the Stake is Diluted
Over ten years, SpaceX's value has multiplied many times over. In June, the company went public at a price of about $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. However, each new funding round diluted Google's share. Today, it owns about 5% of SpaceX's shares.
The revaluation of the stake appeared in Google's second-quarter report: it added approximately $99 billion, and quarterly profit reached $112 billion. Investments in the AI company Anthropic also contributed. There is almost no real cash behind these figures. Of the $9.11 earnings per share, $6.26 came from asset revaluation — without it, the quarter would have been ordinary. Additionally, the revaluation resulted in a tax of $21.9 billion.
Market Reacted Cautiously
The market reacted cautiously. In the quarterly report, Google devoted one line to the record profit and did not name a single company. By the close of trading, shares fell by about 1.2%. Investors were more concerned with expenses: over three months, Google allocated $44.9 billion to artificial intelligence and spent $5.9 billion more than it earned. Record investments in AI alarmed market participants — analysts had warned of this risk even before the report was published.
Paper Profit and Frozen Assets
Most of Google's SpaceX shares remain "frozen." According to the report, $80 billion of the amount is locked up, and the rest will be unlocked even later. Google cannot yet sell this stake and freely use the money. Moreover, the valuations can lose growth as quickly as they gained it. After the IPO, SpaceX shares soared above $200, but by July 23, they had fallen to about $114. The first lock-up expires in August — at the same time, SpaceX will report as a public company for the first time.
My view: $94 billion is an impressive figure, but it is only paper profit. The real test will come after the lock-up expires, when Google gets the opportunity to sell. For now, it resembles more of a giant frozen position than a liquid asset. The market, judging by its reaction, understands this perfectly well.