Google's investment in SpaceX has yielded a 100-fold return: $94 billion in paper value
Google's strategic move a decade ago has turned into a phenomenal financial success. The stake in SpaceX acquired in 2015 is now valued at approximately $94 billion. This is a striking example of how visionary investments in private technology companies can yield astronomical returns.
At first glance, it might seem like a recent major investment, but that is not the case. Google acquired its stake in SpaceX back in January 2015, when Elon Musk's company was just beginning its rapid ascent. At that time, together with Fidelity, the tech giant invested $1 billion, securing nearly 10% of the shares. SpaceX as a whole was valued at just over $10 billion back then.
SpaceX's value has grown 100 times
Over ten years, the company's valuation has undergone massive changes. In June, SpaceX went public at a price of around $135 per share, with a valuation of $1.77 trillion, making it the largest initial public offering in history. Despite dilution of its stake to approximately 5% due to subsequent funding rounds, Google's stake has appreciated roughly 100 times.
However, this impressive figure of $94 billion reflects only paper profits. In Google's second-quarter report, the revaluation of its stake in SpaceX added about $99 billion, helping the company post a quarterly profit of $112 billion. Investments in Anthropic also contributed.
It is important to understand that behind these numbers there is almost no real cash. Out of $9.11 in earnings per share, $6.26 came from asset revaluation alone—without it, the quarter would have been ordinary. Moreover, this revaluation resulted in a tax bill of $21.9 billion.
Market reaction and real risks
The market reacted cautiously to Google's report: Alphabet shares fell by approximately 1.2%. Investors were more concerned about record spending on artificial intelligence—$44.9 billion for the quarter, which exceeded revenue by $5.9 billion. This is a traditional risk for capital-intensive tech giants.
A key nuance is that Google cannot yet freely dispose of its SpaceX stake. According to the report, $80 billion of that amount is locked up due to a lock-up period. The remaining portion will be unlocked later. The first lock-up expires in August, coinciding with SpaceX's first report as a public company.
It is worth noting that SpaceX's stock has already shown volatility: after soaring above $200, shares dropped to around $114 by July 23. The real test for Google will come after the lock-up period ends, when the company will have a genuine opportunity to realize profits.
Expert opinion: This story is a brilliant example of how long-term strategic investments in infrastructure projects can exceed even the boldest expectations. However, for crypto investors, there is an important lesson here: paper profits are not real money yet. As long as the asset is locked, its value remains just a number on the balance sheet, subject to market fluctuations.